PERTH (miningweekly.com) – Potash developer Danakali has executed a mandate for $200-million debt financing to fund the construction and development of the Colluli potash project, in Eritrea.
The ASX- and LSE-listed company on Thursday told shareholders that African Export-Import Bank and Africa Finance Corporation will act as the mandated lead arrangers for the debt.
“The execution of the mandate represents a significant milestone for the Colulli project funding. We are very pleased to be partnering with strong, experienced African financial institutions,” said Danakali CFO Stuart Tarrant.
“Initial bank due diligence and subsequent negotiations have significantly advanced the project financing process and built on the finalization of the binding offtake agreements with EroChem placing the Colluli Mining Share Company in a strong position to advance the Colluli project.”
Once the remaining aspects of the due diligence have been finalised and the pre-conditions have been met, the mandated lead arrangers will proceed to credit approval and the execution of the syndicated loan facility.
Drawdown of the facility will follow from the satisfaction of the conditions precedent, which will be agreed to in the facility.
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 project is fully permitted following the signing of a mining agreement, and the subsequent award of the requisite mining licences in early 2017.