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), which is a high-quality potash fertiliser carrying 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, starting production in Year 6.
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 signed nonbinding memorandums of understanding (MoUs) with eight multinational parties throughout Northern Africa, Europe, the Middle East and North America for the offtake of sulphate from the Colluli potash project in April this year.
High-quality representative samples produced from the Colluli resource were provided for quality-control assessment by prospective customers.
The combined offtake volumes in the MoUs exceeded 800 000 t/y in standard and granular form, comparable to Colluli’s design production capacity of 425 000 t/y.
Danakali has noted that engagement with potential Asian customers has yet to start, but the project’s capacity represents strong potential for additional product volume interest.
The Colluli definitive feasibility study (DFS) has been submitted to the Eritrean Ministry of Energy and Mines.
DFS due diligence will be conducted as a prerequisite for awarding a mining licence.
Social- and environmental-impact assessments and associated management plans – including a risk management framework adopted by financial institutions for determining, assessing and managing environmental and social risk in projects – have been completed to the Equator Principles.
Danakali and CMSC have also completed post-DFS stakeholder engagements.
The company successfully raised about A$5.5-million in March this year to start front-end engineering design work,
initiate the mine-contract tendering process, complete the mining approvals process, secure offtake arrangements, progress strategic relationships and secure project funding and working capital.
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.