Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SBMSF) remains well-funded to complete planned development activities at the world-class Colluli Sulphate of Potash (SOP) Project in Eritrea assisted by equity funding from Africa Finance Corporation (AFC).
The US$21.5 million (A$31.8 million) first tranche funding of AFC’s overall US$150 million funding package was received previously while Tranche 2 funding of US$28.5 million (A$42 million) has now been deferred.
This extension has been agreed by both parties to allow for the stabilisation of market and global conditions.
Due to AFC’s ongoing funding commitment for the development and construction of Colluli, the project remains on track for production during 2022.
Colluli is 100% owned by the Colluli Mining Share Company (CMSC), a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO).
Deadline now November 21
The deadline for Tranche 2 completion is now on or before November 21, 2020, which allows time for satisfaction of the remaining conditions precedent.
It is considered necessary in response to, amongst other things, the constraints arising from global restrictions imposed due to the COVID-19 pandemic.
Danakali's chief executive officer Niels Wage said: “We are pleased to announce this extension.
“The progress reflects the constructive dialogue and partnership between the company and AFC, which is highlighted by the recent appointment to the board of AFC’s president and CEO Samaila D Zubairu and senior director for Investment Operations and Execution Taiwo Adeniji as non-executive directors.”
AFC remains committed to Colluli and has reiterated its confidence in delivery and success of the project.
AFC president and CEO said Samaila D Zubairu said: “AFC continues to be a great supporter of Colluli and we are confident in Danakali’s competence to successfully deliver the project.
“We remain committed to our US$150 million funding across the CMSC Senior Debt and equity investments.”
Danakali is continuing with planned corporate initiatives and is undertaking the current activities related to EPCM Phase 2.
AFC is an Africa-focused multilateral financial institution covering three complementary service areas: project development, financial advisory and principal investing.
In addition to these core services, AFC has significant experience and expertise in project management and will ensure that the objectives of all parties involved are met through careful monitoring of the project from beginning to end.
AFC’s core mission is to address Africa’s infrastructure development needs while seeking a competitive return on capital for its shareholders.
Danakali has completed a Front End Engineering Design (FEED) for the production of potassium sulphate, otherwise known as Sulphate of Potash, from Colluli.
SOP is a chloride-free, specialty fertiliser which carries a substantial price premium relative to the more common potash type; potassium chloride or MOP.