Danakali rejects shareholders call for liquidation

12th May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – ASX-listed Danakali on Friday rejected calls from a major shareholder to return all of the capital generated from the sale of the Colluli asset earlier this year to shareholders, and for the company to be liquidated.

Danakali in March wrapped up the sale of its 50% shareholding in the Colluli sulphate of potash (SoP) project, in Eritrea, to Sichuan Road and Bridge Group, after striking a $166-million deal in January.

The first tranche of $105-million was paid in March, and a further $16-million second tranche payment is due at the end of September.

Danakali has previously said that following the completion of the transaction, the company would distribute 90% of the net proceeds to shareholders and would continue as a listed company to identify new projects and potential new alternative growth opportunities.

Shareholder NGE Capital, which holds a 5.43% interest in Danakali with 20-million shares, and which is the second largest shareholder that is not an entity related to a director of Danakali, has called on the company to return 100% of its capital to shareholders, and to wind up the company.

“We are concerned with the lack of a publicly disclosed plan for the proposed return of capital and the future of the Company, following completion of the sale of the Company’s interest in the Colluli potash project on March 31, 2023, and subsequent suspension from quotation under ASX Listing Rules,” NGE said in a statement.

The company noted that Danakali had not made a definitive written commitment about returning any capital to shareholders, and had failed to set out a formal decision about the proposed distribution and the form that this would take.

Furthermore, NGE said that the Danakali board had made a formal decision to include a resolution in the company’s upcoming annual general meeting to seek shareholder approval to increase its ability to raise equity funding through an additional 10% placement capacity.

“At a time when the company does not have any current projects or activities or a clear plan for the future, we question why the board is focusing its efforts on actions to raise equity and dilute shareholders, instead of returning capital to shareholders. We question how this resolution is in shareholders’ interests,” NGE said in a letter to Danakali.

The shareholder also said there was a lack of urgency in sourcing a new project to allow Danakali’s shares to be returned to official quotation, and that the board had not been given a mandate by shareholders to pursue other projects.

“We believe that the board’s plan to invest in a new project will risk significant shareholder value, whilst increasing the financial, operational and execution risk borne by shareholders,” NGE said.

Danakali said on Friday that the company had considered the correspondence from NGE, but had concluded there was no reason to divert from its existing, "long-standing and consistent strategy" in relation to the proceeds from the Colluli sale.

Executive chairperson Seamus Cornelius said the board remained committed to both the current distribution plan and to driving further shareholder value through new projects.

“Our ambition as a board is to deliver value for our investors, and repatriating to them 90% of the proceeds of the Colluli sale is absolutely aligned with this guiding principle,” said Cornelius.

“An overwhelming 99.55% of shareholders voted in favour of the sale of the Colluli potash project at the general meeting held March 2, and we’re committed to delivering what we think is right and what our investors have supported.

“NGE came on the Danakali register in October 2022 with full knowledge of the intention to distribute 90% of the Colluli sale proceeds, which had already been announced to the market on October 3, 2022.”

Cornelius said he fully expected Danakali shares to re-commence trading on the ASX in due course once a new project had been secured.

Edited by Creamer Media Reporter


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