Danakali and the Eritrean Government’s plan to put the Colluli potash mine into production is accelerating after the Eritrean Ministry of Energy & Mines accepted the project’s Notice of Commencement of Mine Development.
Acceptance of the notice is one of the conditions precedent to the financing for the Colluli project and is a positive step toward achieving financial close of the project facilities, Danakali said.
Prior to issuing this notice, the jointly-owned Colluli Mining Share Company (CMSC) had satisfied several key Colluli development preconditions including executing a Mining Agreement and having a Mining Licenses issued; submitting and obtaining approval for the Social & Environmental Impact Assessment Study and Social & Environmental Management Plans; and submitting the commercial sulphate of potash production expectations over the life of the mine.
Colluli, owned 50:50 by Danakali and the Eritrean National Mining Corporation, has a JORC-2012 compliant measured, indicated and inferred resource of 1,289 Mt at 11% K20 equivalent and 7% kieserite.
Upon accepting the notice, the ministry, Danakali said, also showed support for the financing of the Colluli project by:
- Granting time to commence the commercial production within 36 months from submission of the notice, (mid-December 2022);
- Consenting to the security to be granted in support of the financing; and
- Consenting to the account structure for the financing for the Colluli project.
The notice was submitted to the ministry by the CMSC on December 17, 2019, however the process has been slower than expected due to COVID-19-related lockdowns in Eritrea.
In accordance with the Mining Agreement, CMSC has 36 months from submission date to spend $200 million within the Mining Licence Area, Danakali said.
Along with the acceptance of the notice, the ministry has also granted all required permits, licences and authorisations for infrastructure construction and development outside the Colluli Mining Licence area. This includes the Sea Water Intake and Treatment Area at Anfile Bay (WITA); pipeline and access corridor of 87 km between the WITA and the Colluli process plant; and Colluli site access road of 57 km connecting Colluli to Marsa Fatuma.
Niels Wage, CEO of Danakali, said: “This year, the project team has made significant progress through management of DRA during Phase 1 and 2 of the EPCM works and most recently by commencing the necessary test works, enabling us to maintain forward momentum of the project development.
“I look forward to updating the market on the progress of our project in due course.”
The company has previously said production could commence in 2022.