Name of the Project
Colluli potash project.

Location
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 1.11-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 475 000 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 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, an 85 km desalinated water pipeline from the coast to the mine site, and an accommodation camp and administration facility.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, 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 added a further 47 000 t/y of sulphate of potash output capacity at its Colluli project, after a systematic debottlenecking of the processing plant configuration.

The additional capacity will increase Stage 1 SOP output to 472 000 t/y, up from the planned 425 000 t/y identified in the project’s definitive feasibility study (DFS).

In addition to the increase in output, the value engineering and optimisation work has also identified further opportunities to reduce development capital and water consumption, which is being costed as part of the front-end engineering design process.

“This excellent result is a direct consequence of clever process plant design during the DFS,” Danakali MD Paul Donaldson has said.

“The liberation of over 10% production capacity with no expected increase in capital costs is clearly value-accretive relative to the DFS and further improves on the industry-leading capital intensity and outstanding economics demonstrated by the project.”

Donaldson has added that refined and optimised pit schedules reflecting the optimised production rate will now be developed to support the mining contract tendering process.

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.