Benefits of dual-listing on the LSE include liquidity, access to funds, the relative size of other companies, profile benefits, costs, and the company’s growth potential.
The project is located in the Danakil Depression region of Eritrea, and is circa 75 kilometres from the Red Sea coast, making it one of the most accessible potash deposits globally.
The company is currently developing Colluli in partnership with the Eritrean National Mining Corporation (ENAMCO). Mineralisation within the Colluli resource commences at just 16 metres, making it the world’s shallowest potash deposit.
The resource is amenable to open pit mining, which allows higher overall resource recovery to be achieved, and this is generally safer than underground mining, making it highly advantageous for modular growth.
Danakali has completed a definitive feasibility study (DFS) for the production of potassium sulphate, otherwise known as salt of potash (SOP), a chloride free, specialty fertiliser which carries a substantial price premium relative to the more common potash type, potassium chloride (or MOP).
Management expects that the dual listing will be executed by the June half of 2018. The dual listing is in line with the Danakali's equity strategy which includes effectively mobilising significant UK, European, and Middle East institutional interest, increasing share trading liquidity, and further raising the profile of the Colluli Project.
Management views LSE as the world’s leading stock exchange for African miners
Paul Donaldson, chief executive, highlighted the fact that analysis and advice sought by the company from external parties indicated that the LSE is clearly the world’s leading stock exchange for African focused mining companies.
He noted that there are currently limited opportunities for exposure to mining companies of Danakali's size and quality on the LSE, and it is expected that this dynamic will serve to strengthen interest.
Danakali has been working with UK brokers and advisors, and expects to make appointments in the immediate term. The company is well funded and currently has no specific plans to raise capital in line with the LSE listing.
Furthermore, the company’s shares will continue to be listed and trade on the ASX. Donaldson acknowledged that the ASX remained an important listing jurisdiction for Danakali as it progressed the project.
This is supported by the fact that the company has strong broker support in Australia, has accumulated a substantial retail and high net worth following on the ASX, and has experienced material share price gains since the release of the Colluli DFS and completion of project permitting.
Offtake discussions in progress
Offtake discussions for Colluli are well advanced and running in parallel with funding workstreams and front-end engineering design (FEED) is nearing completion.
Summing up the benefits of the dual listing, Donaldson said, “The decision to list on the LSE is the result of careful consideration and reflects our learnings from extensive interactions with investment communities globally with respect to the company and the Colluli Project."