Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF) made strong progress during the September quarter and is well-funded with A$25.3 million in cash as it progresses development of the Colluli Sulphate of Potash (SOP) Project in Eritrea.
During the quarter, the manufacturing of the Reverse Osmosis Plant progressed on schedule with an order placed for a new Sewerage Treatment (ST) Plant.
Notably, Danakali delisted from the London Stock Exchange with full support from the key stakeholders and shareholders, as part of the company’s strategy to increase operational efficiencies in support of its funding requirements.
The Colluli Potash Project is 100%-owned by Colluli Mining Share Company (CMSC,) a 50:50 joint venture between Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF) and the Eritrean National Mining Corporation (ENAMCO).
CMSC is progressing to become a leading producer and exporter of sulphate of potash (SOP), the premium potash type.
Corporate matters
Discussions have progressed with Danakali’s senior debt lenders, African Finance Corporation and Afrieximbank, in regard to increasing senior debt limits at the CMSC level.
During the period, CRU International completed an independent SOP price forecast that indicated the long-term weighted average SOP price to CMSC key target markets is US$668/tonne.
At the office, Robert Connochie retired from the Board of Directors of Danakali as an independent non-executive director on August 31, 2021, as part of a restructuring aimed at aligning the composition of the board to future requirements of the project development works.
Financial summary
Dankali’s consolidated cash on hand was A$25.3 million at the end of the quarter, which is estimated to be sufficient for more than 14 quarters.
There was a total of 368,334,346 fully paid ordinary shares on issue with a total of 1,080,000 shares issued during the quarter.
There were 10 million unlisted options exercisable at $0.64 expiring on July 30, 2025, issued which increased the total unlisted options to around $15.26 million.
Promisingly, Danakali invested an additional $905,000 to further develop the Colluli SOP Project in Eritrea.
About project
The project is located in the Danakil Depression region of Eritrea, East Africa, and is about 75 kilometres from the Red Sea coast, making it one of the most accessible potash deposits globally.
Mineralisation within the Colluli resource commences at just 16 metres, making it the world's shallowest known potash deposit.
The resource is amenable to open cut mining, which allows higher overall resource recovery to be achieved, is generally safer than underground mining, and is highly advantageous for modular growth.