Eritrean potash project signs eight nonbinding offtake MoUs

ASX-listed potash developer Danakali has signed nonbinding memorandums of understanding (MoUs) with eight multinational parties throughout Northern Africa, Europe, the Middle East and North America for the offtake of sulphate from its 50%-owned Colluli potash project, in Eritrea, East Africa. The project is 100%-owned by the Colluli Mining Share Company (CMSC).

High-quality representative samples produced from the Colluli resource were provided for quality-control assessment by prospective customers. The combined offtake volumes in the MoUs exceeded 800 000 t/y in both standard and granular form, which is comparable to Colluli’s design production capacity of 425 000 t/y.

Danakali notes that engagement with potential Asian customers has yet to start, but the project’s capacity represents strong potential for additional product volume interest.

The Colluli definitive feasibility study (DFS) has been submitted to the Eritrean Ministry of Energy and Mines. DFS due diligence will be conducted as a prerequisite to the award of a mining licence.

Social- and environmental-impact assess-ments and associated management plans – including a risk management framework, adopted by financial institutions, for deter- mining, assessing and managing environ- mental and social risk in projects – have been completed to the Equator Principles.

Danakali and CMSC have completed post-DFS stakeholder engagements.

Over the past 12 months, Danakali and CMSC have made significant progress at Colluli. The project team released the DFS in November last year, which was completed by industry-recognised mining, engineering, civil and environmental consultants.

The DFS highlights that Colluli is the premium potash and multi-agricultural com- modity investment opportunity globally.

The favourable suite of potassium-bearing salts, shallow mineralisation, proximity to the coast and simple, proven processing technology provide Colluli with industry-leading capital intensity, bottom-quartile operating costs, low incremental growth capital and significant product-diversification potential.

These outcomes are underpinned by a 1.1-billion-ton ore reserve, which delivers an estimated mine life of more than 200 years at the DFS production volumes.

The Colluli project is located in the Danakil basin, which potentially contains the largest unexploited potash geological setting globally. The unique attributes of the resource, however, provides it with a distinct advantage over other developments.

“Eritrea is at the epicentre of booming population growth and ideally located to supply the key fertiliser markets of the future,” Danakali highlights.

The company successfully raised about A$5.5-million last month to start front-end engineering design work, initiate the mine-contract tendering process, complete the mining approvals process, secure offtake arrangements, progress strategic relation- ships and secure project funding and work- ing capital.

“We are happy with the progress that has been made to date on the Colluli project. The outcomes of the DFS demonstrate that Colluli is positively unique. No other potash project in the world has the growth, product diversification and upside potential of Colluli,” concludes Danakali MD Paul Donaldson.