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Danakali reaps reward from optimisation phase at Colluli

Published: 08:00 04 May 2017 AEST

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Shares in Danakali are up 40% in 2017

Danakali (ASX:DNK) has completed the optimisation phase of the front end engineering design (FEED) process at its Colluli Potash Project located in the East African country of Eritrea.

The process added 11% or 47,000 tonnes per annum of expected production capacity as well as identified a number of significant development capital reduction opportunities.

These opportunities have been incorporated into the optimised configuration and are being costed as part of the FEED process, which is well advanced and progressing to schedule.

Paul Donaldson, managing director, commented: “This is an excellent result and a direct consequence of clever process plant design during the definitive feasibility study.

“The liberation of over 10% production capacity with no expected increase in capital cost is clearly value accretive relative to the definitive feasibility study and further improves on the industry leading capital intensity and outstanding economics demonstrated by the project.” 


Colluli Potash Project

Colluli is the most advanced greenfield and lowest cost sulphate of potash (SOP) development project in the world and is making good progress towards construction.

Permitting was completed in February 2017, clearing the way to apply for mining licenses within the Colluli tenements.

Danakali's 50:50 partner is the Eritrean National Mining Corporation (ENAMCO).

The project will be developed in two stages – stage one at 425,000 tonnes per annum and the stage two expansion to 850,000 tonnes per annum.

The ongoing FEED process has now identified an additional 47,000 tonnes per annum of additional capacity for stage one.


FEED optimisation process

The additional expected capacity has been confirmed by FEED lead engineer, Fluor, and is the result of a comprehensive process engineering and infrastructure review.

The additional capacity increases the stage one expected annual product output to 472,000 tonnes per annum of SOP from the planned throughput of 425,000 tonnes per annum.

In addition to the increase in expected product output, the value engineering and optimisation work has identified development capital and further water reduction opportunities.

Refined water modelling is underway and optimisation of the construction schedule has also commenced.


Analysis

Danakali continues to progress towards construction at Colluli with the ongoing FEED process continuing to add value to an already world-class project.

Refined and optimised pit schedules reflecting the optimised production rate will now be developed to support the mining contract tendering process.

Award of the mining contract is an important near term milestone for Danakali and follows the expressions of interest process that was completed early last month.

The shortlisted parties will formally bid in a competitive tendering process.

Danakali shares are up 40% year to date, currently priced at $0.675.

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