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Danakali clears ‘significant milestone’ as Colluli licence is granted

1st February 2017

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Eritrean Energy and Mines Ministry has awarded potash developer Danakali a mining licence for its Colluli tenements, following the signing of a mining agreement.

ASX-listed Danakali told shareholders on Wednesday that the licence allowed for the exploitation of potassium, calcium, sodium and magnesium salts from the Colluli resource, as well as bromine.

The licence spans over 60 km2 of the 100 km2 agreement area, and represents over 60 years of the 200-year mine life determined in the Colluli definitive feasibility study.

Danakali noted that additional licences could be applied for within the agreement area, as required, to sustain or grow the operations.

“This is another very significant milestone for both Danakali and the Colluli Mining Share Company (CMSC). There is a clear and compelling investment case that supports the Colluli development and we have consistently stated that our joint venture partnership is a project enabler,” said MD Paul Donaldson.

“The fact that Colluli is the most advanced sulphate of potash project in the world is a testament to that.”

Donaldson said that the award of the agreement and mining licences was also a clear demonstration that Eritrea was open for business.

Meanwhile, the mining agreement inked with the Eritrean Ministry of Energy and Mines provides CMSC exclusive exploitation rights of all mineral resources within the agreement area, the exclusive right to apply for and be granted one or more mining licences within the agreement area, and the exclusive right of land use within the agreement area over the life of the resource.

Provided the conditions of the mining licences are met, the agreement is applicable to the development phase, operational phase and the reclamation and closure of the project area. Furthermore, it allows CMSC the freedom to construct all industrial, administrative, residential, medical and other buildings and facilities necessary for a mining operation, and subject to applicable laws, allows the company access to transport infrastructure, port facilities, power, fuel, telephone or other communication, and water, services owned or provided by the government.

The agreement also has provisions for offshore accounts, remittances of after-tax profits and dividends accruing from the investment, proceeds from asset sales, and principal, interest and amounts due on foreign loans.

A 2015 feasibility study estimated that the Stage 1 development of Colluli will require a capital investment of $442-million. The study examined a two-module development with an expected production of 425 000 t/y of sulphate potash for the first five years of operation, increasing to 850 000 t/y for the remainder of the proposed 30-year mine life.

The Phase 1 development will include a project-owned and -built road, as well as a 900 000 t/y product export terminal.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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