Name and Location
Colluli potash project, Danakil, Eritrea.

Client
The Colluli Mining Share Company (CMSC) is a joint venture (JV) between the Eritrean National Mining Company (Enamco) and Danakali (previously South Boulder Mines), with each company having an equal stake in the company.

CMSC is responsible for the development of the project.

Project Description
The mine life of Colluli currently exceeds 200 years, facilitated by the 1.1-billion-tonne ore reserve.

The Colluli resource comprises three potassium-bearing salts – sylvinite, carnallitite and kainitite.

These salts are suitable for high-yield, low-energy input and the production of potassium sulphate (SOP) – a high-quality potash fertiliser with a price premium over the more common potassium chloride.

The project will be completed in phases. The first phase will comprise 425 000 t/y of SOP, with the second phase adding 425 000 t/y of SOP.

The operation will use openpit mining methods to take advantage of Colluli’s shallow mineralisation, which starts at just 16 m.

The depth of mineralisation makes it the shallowest known evaporite project in the world.

The project will include ore-processing facilities and evaporation ponds at the mine site, an upgraded 50 km product haulage road connecting the mine site to the main road to the Port of Massawa, a 85 km desalinated water pipeline from the coast to the mine site, and an accommodation camp and administration facility.

Net Present Value/Internal Rate of Return
The project has an after-tax net present valued, at a 10% real discount rate, of $860-million and an internal rate of return of 29%, with the payback period for Phase I estimated at 3.5 years.

Value
Phase I of the project is estimated at $298-million.

The capital cost for Phase II is estimated at $175-million.

Duration
Phase I commissioning is currently targeted for the fourth quarter of 2018.

Phase II will start production in Year 6.

Latest Developments
Danakali has announced that the two-month public review period for the miner’s Colluli potash project’s social- and environmental-impact assessment (SEIA) and associated management plans (SEMP) are complete, with only positive feedback received on the content, quality and comprehensiveness of the assessment and management plans.

“This is a great outcome and reinforces the excellent work done . . . to support the project development,” Danakali MD Paul Donaldson has said, adding that the work was made available to the international community for the two-month review period.

“We are also happy to have hosted a site visit in recent weeks for the relevant Eritrean ministries to support the mining licence application process,” Donaldson notes.

The public-review period for the SEIA and SEMP is consistent with the requirements of the Equator Principles, a framework adopted by financial institutions for determining, assessing and managing environmental and social risks in projects.

The company has confirmed that no issues have been raised by the public review and feedback process.

Danakali is currently awaiting mining licence approvals for the project. Representatives from relevant government ministries assigned to the approvals process visited the site in June to assist with evaluation of the SEIA and SEMP.

Funding discussions are under way and the company has signed memorandums of understanding for 800 000 t/y of SOP.

Key Contracts and Suppliers
Lycopodium (PFS).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Danakali, tel +61 8 6315 1444, fax +61 8 9486 7093 or email info@danakali.com.