Danakli Ltd (ASX:DNK) has revealed positive results from its near-complete front end engineering design (FEED) optimisation work for its top-tier Colluli Potash Project in Eritrea.
Significantly, preliminary FEED results show that the project’s module I development capital cost has decreased by 2% compared to the definitive feasibility study (DFS) estimate.
Furthermore, while the cost has been lowered, the FEED production capacity has increased by 11%.
Validates the quality of the work completed during the DFS
These preliminary results from the FEED work verify that Colluli carries industry-leading capital intensity for advanced stage sulphate-of-potash (SOP) projects globally.
The FEED work is being completed by globally recognised, multi-national engineering company, Fluor Corporation (NYSE:FLR).
Notably, the FEED process carries a higher level of accuracy than the DFS and provides an independent engineering data point which validates the work completed by Lycopodium in the DFS.
Final FEED optimisation results expected to be released in January 2018
Paul Donaldson, managing director, said: “We are happy to provide this update to shareholders as our FEED optimisation work nears completion.
“Danakali is closing in on a year of exciting and substantial progress and achievement, with 2018 is set to be a defining year for the company as we look to secure offtake and funding for this world-class project.”
The FEED economics are expected to be complete and released in January 2018 following a full review of the revised economics and ore reserve.
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Colluli continues to demonstrate that it is a standout, world-class SOP project.
It is the most advanced greenfield SOP development in the world and has the highest level of rigour and accuracy in its capital and operating costs.
Unlike other SOP projects, Colluli is close to the coast and key markets and has unrivalled growth and product diversification potential.
Furthermore, unlike SOP brine projects, extraction of salts in solid form means the production rate is not subject to weather conditions, providing unmatched reliability of supply.
Shares have nearly doubled over the past 12 months
Danakali has had a strong finish to 2017 with the delivery of another robust piece of study work at its flagship 50% owned Colluli Potash Project.
As the project advances towards financing, development and production, the company has both strengthened its board and more recently flagged a secondary listing in the UK.
READ: Danakali seeks London listing for increased liquidity and access to funds
Advanced negotiations are ongoing with a list of prospective parties, working towards final binding agreements.
Discussions regarding project finance are well progressed pending final equipment lists (FEED reliant), confirmation of key operating contracts (close), and offtake confirmation (well advanced).
In the interim, Danakali is well funded and has the capacity to raise a further $3.4 million from options expiring March 2018 with a $0.35 strike price.