ERITREA Colluli front end engineering design team completed

ASX Release 23rd January 2017

Final appointments to Colluli front end engineering design team completed – optimisation process commences

Danakali Limited (ASX:DNK) is pleased to advise that the final appointments to the Colluli front end engineering design (FEED) team have been made and the optimisation process has commenced. The final two appointments include Knight Piésold (“KP”) and Elemental Engineering (“EE”).

KP provide services to the mining, power, water resources, infrastructure and oil and gas industries and specialise in creating tailored solutions at every stage of a project life cycle while delivering sustainable bottom-line results. They have led numerous award-winning projects to completion and have an intimate understanding of the Colluli project as a result of the significant contribution they made to both the prefeasibility and definitive feasibility studies in the areas of surface water modelling, hydrogeology, potassium recovery pond design and site geotechnical investigations. KP are highly familiar with Eritrea through their involvement in three of the four mining projects in country. KP representatives oversaw a
portion of the fieldwork conducted at the future Colluli mine site throughout the study phases, completed work for the Zara gold mine which was commissioned in 2016 and provided assistance to Sunridge Gold’s Asmara Cu-Zn-Au Project.

EE provides world leading process simulation and process development services to the minerals processing industry and completed the mass balance modelling work for both the prefeasibility and definitive feasibility studies for Colluli.

The FEED process is being led by the engineering and construction firm Fluor, who were appointed in early January. The process has commenced with the FEED team assembling for the first phase of value engineering and optimisation. This phase will identify key capital reduction and optimisation areas, prior to the development of the final equipment lists and procurement packages. Non-process infrastructure work package specification and market engagement will commence shortly after the completion of the value engineering phase and includes the preparation and scope of services and supply for work packages. The FEED phase will also deliver the overall contracting strategy and detailed implementation schedule.

As a precursor for the competitive tendering of the mining contract, an expression of interest process is underway. Work is also expected to commence in the near future on breaking the definitive feasibility study mining schedule into further detail to support the mining contract tendering process.

Managing Director, Paul Donaldson said “We are excited to be advancing the Colluli project and bringing the project construction closer to reality. Assembling and aligning a quality team, highly familiar with the project to support the final project definition work has been a priority for the project team, and they have successfully delivered.”

Colluli is one of the most advanced greenfield sulphate of potash (SOP) developments in the world, and demonstrates outstanding economics including industry leading capital intensity, bottom quartile operating costs, close proximity to coast and key markets and unrivalled product diversification potential.

The completed DFS estimated a post-tax NPV of US$860m and an IRR of 29%1,2,3.

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