AFC’s strategic equity investment is part of the overall funding package for development and construction of the Colluli Sulphate of Potash Project in Eritrea.
Tranche 1 consists of 53 million new Danakali shares in issued to AFC at a price of 60 cents per share to raise US$21.5 million (A$31.8 million).
Tranche 1 proceeds will be used to commence Colluli project execution.
Tranche 2 investment
Tranche 2 will consist of about 70 million shares at the same issue price as Tranche 1 to raise the remaining US$28.5 million (A$42.0 million).
It is subject to Danakali shareholder approval at a general meeting expected to be held in February 2020, execution of senior debt documentation and other conditions precedent.
“Milestone for Danakali”
Danakali’s chief executive officer Niels Wage recently said: “I am very pleased to have secured AFC as a strategic equity investment partner.
“It marks a significant milestone for Danakali and continues our momentum towards financial close.
“Danakali has made good progress over the past 12 months having secured a large proportion of the development capex for Module I and demonstrated a sustainable approach to the future development of Colluli.”
The placement takes AFC’s total participation to US$150 million which demonstrates their major and long-term commitment to the project, Danakali and Eritrea.
This amount comprises US$50 million in Danakali equity plus US$100 million of credit approved Colluli Mining Share Company (CMSC) senior debt.