TIDMDNK
RNS Number : 0088A
Danakali Limited
27 May 2021
Announcement Thursday, 27 May 2021
============= ======================
Colluli Project Update:
Colluli will use seawater in game changing production
breakthrough at Colluli
Highlights
-- Unlimited source of production water using filtered Red Sea
seawater drives Water Intake Treatment Area ( WITA ) optimisation
and redesign
-- WITA capex, opex, sustaining capital significantly reduced with WITA redesign
-- Environmental impact in optimised WITA design massively reduced
-- 2021 process test results demonstrate filtered seawater
assures high quality, predictable, in spec Sulphate of Potash ( SOP
) production
-- Construction complexity reduced which de-risks the project schedule
Danakali Limited (ASX: DNK, LSE: DNK) ( Danakali, the Company )
is pleased to announce that extensive test work has confirmed
significant economic, construction, operational and environmental
optimisations at the WITA using filtered sea water. This testwork
has confirmed that filtered sea water is a reliable, unlimited and
economic option in Colluli's Sulphate of Potash ( SOP ) production
process.
CMSC confirms it will now rely upon a combination of beach well
intake, smaller pumping station and greater renewable energy to
pump filtered sea water to the SOP processing plant at the Colluli
mine site. ( See Video
link: https://www.danakali.com.au/medias/project-videos ).
The proposed new WITA boasts the following advantages:
-- Has a materially smaller onshore and offshore footprint,
significantly reducing the environmental impact particularly on the
ocean flora and fauna
-- Requires an estimated 75% less power reducing opex, fuel
costs and CO-(2) emissions. Colluli investigating renewable energy,
solar, wind and battery storage option at redesigned WITA
-- Requires less capex for a smaller plant at Anfile Bay driving
economic and environmental improvements and materially reducing
sustaining capex required over the LOM
Testing in 2015 proved that SOP could be made from Colluli ore,
but only at higher water rates with Reverse Osmosis fresh water.
What was achieved with recent test work with Saskatchewan Research
Council in 2021 demonstrates that high quality product only using
seawater is assured.
Executive Chairman, Seamus Cornelius commented : "Using filtered
seawater as an unlimited input in our production process is not
only a world first, but also a long-term game changer. This will
reduce capex, opex and sustaining capex over a very long time and
have a massively positive environmental impact onshore and in the
Red Sea for the 200 years Life of Mine. With the WITA redesign our
energy requirements are materially reduced, bringing us closer to
our Zero Carbon goals. I am extremely proud of our team in Canada
who focused on developing and repeatedly testing the ore streams
and other inputs to create the most operationally efficient and
cost-effective SOP production method for Colluli which allows us to
produce the required high quality and quantity of SOP for our
offtake partners."
This announcement authorised for release by the Board of
Danakali Limited.
For more information, please contact:
Danakali
Seamus Cornelius Mark Riseley
Executive Chairman Head of Corporate Development
+61 8 6266 8368 & IR
+61 8 6266 8368
Visit the Company's website : www.danakali.com
Follow Danakali on LinkedIn:
www.linkedin.com/company/danakali-limited
Subscribe to Danakali on YouTube:
www.youtube.com/channel/UChGKN4-M4lOvPKxs9b-IJvw
About Danakali
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company)
is an ASX- and LSE-listed potash company focused on the development
of the Colluli Sulphate of Potash Project (Colluli or the Project).
The Project is 100% owned by the Colluli Mining Share Company
(CMSC), a 50:50 joint venture between Danakali and the Eritrean
National Mining Corporation (ENAMCO).
The Project is located in the Danakil Depression region of
Eritrea, East Africa, and is 75km from the Red Sea coast, making it
one of the most accessible potash deposits globally. Mineralisation
within the Colluli resource commences at just 16m, making it the
world's shallowest known potash deposit. The resource is amenable
to open cut mining, which allows higher overall resource recovery
to be achieved, is generally safer than underground mining, and is
highly advantageous for modular growth.
The Company has completed a Front-End Engineering Design (FEED)
for the production of potassium sulphate, otherwise known as
Sulphate of Potash or SOP. SOP is a chloride free, specialty
fertiliser which carries a substantial price premium relative to
the more common potash type; potassium chloride (or MOP). Economic
resources for production of SOP are geologically scarce. The unique
composition of the Colluli resource favours low energy input, high
potassium yield conversion to SOP using commercially proven
technology. One of the key advantages of the resource is that the
salts are present in solid form (in contrast with production of SOP
from brines) which reduces infrastructure costs and substantially
reduces the time required to achieve full production capacity.
The resource is favourably positioned to supply the world's
fastest growing markets. A binding take-or-pay offtake agreement
has been confirmed with EuroChem Trading GmbH (EuroChem) for up to
100% (minimum 87%) of Colluli Module I SOP production.
Development Finance Institutions, Africa Finance Corporation
(AFC) and African Export Import Bank (Afreximbank), have obtained
formal credit approval to provide CMSC with US$200M in senior debt
finance. The credit documentation was executed in December 2019,
allowing drawdown of CMSC senior debt on satisfaction of customary
conditions precedent. This represents the majority of funding
required for the development and construction of the Colluli.
Project execution has commenced and the Company's vision is to
bring Colluli into production using the principles of risk
management, resource utilisation and modularity, using the starting
module (Module I) as a growth platform to develop the resource to
its full potential.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company ' s
intentions. All statements in this document, other than statements
of historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company ' s filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company ' s ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
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