Danakali flags improvements to Eritrea potash project

Australia’s Danakali (ASX, LON:DNK) said on Wednesday it has completed an updated process plant and infrastructure study for its Colluli potash project in Eritrea, which has identified optimization opportunities for the proposed mine.

The Perth-based company, which has completed phase two of engineering, procurement and construction management (EPCM) work at Colluli, said main potential improvements are related to the environmental and economic aspects of the project.

Upgrades include a beach well intake for the water intake treatment area, which has a lower environmental impact and was found preferable to a subsea intake pipeline.

A third-party review of the work by DRA Global found the beach well intake minimised risk to subsea and coastal habitats by avoiding onshore pipeline construction and offshore installation.

Another optimization was dry harvesting from back end recovery ponds, resulting in a less complex processing design.

Danakali has also selected RA International as camp provider which will give the project a fit for purpose manufactured camp.

Chief executive officer Niels Wage said the assessment provides “increased certainty and understanding” of the project and its schedule.

“The detail review process again validates the robustness of the project and previous technical studies.”

“It is also pleasing to see that a number of optimisation opportunities in the process are established that will further de-risk the project,” Wage added.

Game changer

Colluli, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO), is on track for production in 2022.

In the initial phase of operations, the mine would produce more than 472,000 tonnes a year of sulphate of potash (SOP), a premium grade fertilizer.

Annual output could rise to almost 944,000 tonnes if Danakali decides to go ahead with a second phase of development, as the project has a possible 200-year plus mine-life.

The company will now begin phase three of construction at the project, which has been called “a game-changer” for the East African nation’s economy.

Danakali’s further de-risk of Colluli coincides with the move towards diplomatic relations between the once feuding countries of Eritrea and Ethiopia, which officially declared peace in July 2018.

Until that year, Eritrea was on the United Nations’ sanctions list.