Dual-listed Danakali, developer of the Colluli Potash Project in Eritrea, intends to seek admission for trading on the London Stock Exchange Main Market.
Admission and trading in the ordinary shares is expected to commence at 08h00 BST on or around 24 July 2018.
Danakali’s ordinary shares will remain listed on the Australian Stock Exchange (ASX).
- Danakali has a market capitalisation of approximately A$193 million (£108 M) and its key shareholders include Well Efficient (13.3%), JP Morgan Asset Management UK (7.7%) and Capital Group (6.3%)
- Danakali’s core strategy is to become a leading Sulphate of Potash (SOP) producer through the development of the world-class Colluli Potash Project, located in the Danakil Depression region of Eritrea, East Africa
- The project represents one of the lowest cost, shallowest and most advanced greenfield SOP development projects globally
- The project is 100% owned by the Colluli Mining Share Company (CMSC), a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO)
- The project comprises a JORC-2012 compliant Ore Reserve estimate of 1,100 Mt @ 10.5% K2O for 203 Mt of contained SOP equivalent, allowing an almost 200 year mine life
- The project will be developed using a modular approach, with production from Module I expected to produce 472 ktpa SOP, and Module II will increase total SOP production to 944 ktpa
- Front End Engineering Design (FEED) confirmed a post-tax project NPV of US$902 million and IRR of 29.9% for Colluli Modules I & II
- The Company recently announced an offtake agreement between CMSC and EuroChem Trading (EuroChem); EuroChem will take, pay, market and distribute up to 100% (minimum 87%) of Colluli’s Module I SOP production
- SOP is used on high-value, chloride-sensitive crops such as fruits, nuts and coffee plants and commands a substantial premium over the more widely available Muriate of Potash (MOP) that has a high chloride content
- Potential additional upside through potash diversification and the monetisation of other commodities within the Colluli resource
- The company believes admission will increase its reach to institutional investors in the UK, Europe, Africa and the Middle East, increase share trading liquidity, and further raise the profile of the project
“We are delighted to announce our formal intention to list on the LSE. This has been a key strategic objective for us this year, along with the signing of the offtake agreement with EuroChem and the completion of the FEED study,” says Danakali executive chairman, Seamus Cornelius.
“The LSE listing provides us with additional access to sophisticated investors in London and internationally with a strong appetite for advanced stage development projects and a good understanding of the African mining and resource environment.
“Danakali presents an attractive investment opportunity through providing exposure to one of the most advanced and economically attractive SOP projects globally with a post-tax project valuation of US$902 million and IRR of 29.9% for Modules I & II, expected first quartile operating costs, industry leading capital intensity, and an almost 200-year mine life. The Colluli deposit is unrivalled in the SOP industry.
“We, and our partner ENAMCO, are excited to be progressing the development of this world-class project, and delivering a long-term and stable supply of premium fertiliser for years to come. It also promises to be a major contributor to the Eritrean economy through exports, employment and skills.
“We look forward to bringing Colluli into production, and building value for our shareholders and stakeholders.”