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DNK - Danakali Limited

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Courtesy of of Bobby Kennedy from another forum

Consolidation prior to a break out with the project coming along quite well

Iggy
 
DNK has been in a consolidation for two years, but you're right, there's a small consolidation on the daily chart that provides an acceptable RR for a move higher.

 
Credit approval received by Inglett & Stubbs International for Colluli power plant
• Afreximbank has confirmed that formal credit approval has been granted for a US$42M guarantee in support of Inglett & Stubbs International’s Colluli power plant • Increases Afreximbank’s participation in Colluli to US$142M, demonstrating their confidence in the Project and comfort investing in Eritrea Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company) is pleased to announce that African ExportImport Bank (Afreximbank) has granted credit approval to provide preferred power contractor, Inglett & Stubbs International (ISI) with a US$42M guarantee which will facilitate senior debt funding for the Colluli Sulphate of Potash Project’s (Colluli or the Project) power plant (the Guarantee). As announced separately on Monday, 5 August 2019, Afreximbank, in partnership with Africa Finance Corporation (AFC, together the Mandated Lead Arrangers), has also obtained approval to provide the Colluli Mining Share Company (CMSC) with a US$200M senior debt facility to fund construction and project execution for the Project. Obtaining credit approval for the Guarantee further demonstrates Afreximbank’s confidence in Colluli and comfort investing in Eritrea. The Guarantee allows ISI’s project financing to advance towards completion. ISI’s senior debt facility will be utilised to construct a power plant at Colluli. ISI will utilise a Build Own Operate Transfer (BOOT) model. The BOOT model diversifies project risk by utilising the experience of proven operators. ISI’s power generation solution is designed to match the Front End Engineering Design (FEED) power requirements and has been integrated into the FEED results.
https://www.danakali.com.au/images/...approval_received_for_Colluli_power_plant.pdf
 
Danakali is developing Colluli, an advanced and economically attractive SOP development project

The key attributes are -
Almost 200-year mine life at industry-significant production rate
• US$10Bn of cash flow over first 60 years
• Low development capital of US$302M for Module I
• Project level NPV of US$902M with IRR of 29.9% for Modules I & II
• Danakali attributable NPV of US$439M with IRR of 31.3% for Modules I & II

Danakali is a potential 10 bagger providing the development plan comes together. The Eritrea Government has 50% ownership which will support the development. This is now my only speccie as I have moved into retirement and gone for more ETFs and Blue Chips Shares. I felt this one will be worth hanging on to.

Iggy
 

I like DNK very much for its strong asset and potential.
However, I believe some of its claims are too much
"US$10Bn of cash flow over the first 60 years " is an elusive claim considering the equipment design life would be 20-25 years. There would be obsolence on technology. Hence massive capital investment. Module I, II and III - for how long to last? A good project manager and investment specialist on capital investment use salt and pepper to digest the claim. Just my two cents
 
Miner said:
BHP is going to invest on potash and surely they know something. But that puts dnk forefront.
Click to expand...

Had a bit of a sticky beak at this today … more research required, but it has gone on the watchlist
 
From Quarterlies Report 30th Jan 2020 -
▪ Development commenced
— DRA Global (DRA) engaged for the provision of EPCM services
— Early works commenced
— Owner’s Team mobilised
— Global project management firm Turner and Townsend appointed to support Owner’s Team
— Earth Moving Worldwide (EMW) confirmed as preferred mining services provider

▪ US$50M strategic equity investment by the Africa Finance Corporation (AFC)
— Leading African infrastructure solutions provider AFC secured as strategic investor for Colluli — Eritrea ratified as AFC’s 24th member state
— AFC affirm Colluli as a ‘stand-out’ project with strategic importance
— Equity investment to be made in two traches ▪ US$200M CMSC senior debt documentation executed with AFC and African Export Import Bank
— CMSC has executed the debt documentation (a condition precedent to the second tranche of the AFC equity investment) following extensive engagement with the Mandated Lead Arrangers
— Confirms total funding commitment to date of US$250M for Colluli

▪ Appointment of Chief Sustainability Officer
— Highly experienced mining executive, Mr. Todd Romaine, appointed as Chief Sustainability Officer
— Mr. Romaine brings over 15 years of industry experience overseeing Corporate Social Responsibility (CSR) programs including policy & process development, operational governance, environmental monitoring and public awareness initiatives with stakeholders and the public
— Significant Eritrea and international experience from previous role as Vice President, CSR & Government Relations at Canadian miner Nevsun Resources Key activities planned

▪ Close remaining project financing requirements
— Close out tranche 2 of AFC equity investment
— Satisfy conditions precedent to allow CMSC senior debt drawdown
— Execute company equity strategy to close out remaining project financing requirements

▪ Progression of project development
— Purchase of critical equipment including acquisition of water processing facility
— Continuation of preliminary Engineering Procurement Construction Management (EPCM) work and construction schedule optimisation
— Commence pre-construction geotechnical work

▪ Finalise mining and power agreements

Financial position ▪ Cash position of A$33.8M as at 31 December 2019

Looking positive
Iggy
 
Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company) is pleased to share the Company’s Investing in African Mining Indaba conference presentation. Indaba takes place this week and will be attended by members of the Danakali Executive team. The presentation covers Danakali’s compelling investment case1 :
• High quality Board and Executive team with deep project execution experience
• Binding 10 year offtake with EuroChem
• US$250m of funding
• Sulphate of Potash (SOP) is the premium, high margin potash type
• First quartile operating costs
― <US$150/t (mine gate)
• Unrivalled scale
― 1.1Bt Ore Reserve and almost 200 year mine life
• Strong cash flow
― US$85M p.a. to Danakali at full production
• Lowest capital intensity and highest returns
― Danakali NPV10,real US$439m, IRR 31.3%
➔ Low cost
➔ Premium product
➔ Development underway
➔ Production and revenue in 2022

https://www.danakali.com.au/images/stories/axs-announcements/2020/20200203_Investment_case.pdf

Iggy
 
DNK mine approval -https://www.danakali.com.au/images/...s/2020/20200722_Mine_Development_Approval.pdf

Mine Development Approval
• Notice of Commencement of Mine Development accepted by Eritrean Ministry of Energy & Mines
• Eritrean Ministry of Energy & Mines consents to security and account structure for the financing for the Colluli project
• All development preconditions under the CMSC Mining Agreement have been satisfied
• Permits granted for infrastructure development and quarries Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company), is pleased to announce that the Notice of Commencement of Mine Development (the Notice) which Colluli Mining Share Company (CMSC) lodged with the Eritrean Ministry of Energy & Mines (MoEM), has been accepted by the MoEM. Additionally, upon acceptance of the Notice the MoEM has also shown 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. 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. In order to issue the Notice, CMSC satisfied the following key Colluli development preconditions:
• Mining Agreement executed and Mining Licenses issued;
• Submitted and obtained approval for the Social & Environmental Impact Assessment Study and Social & Environmental Management Plans; and
• Submitted the commercial Sulphate of Potash production expectations over the life of the mine. The Notice was submitted to the MoEM by CMSC on 17 December 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 US$200M within the Mining Licence Area. CMSC had previously obtained all licences and permits within the Colluli Mining Licence, and along with the acceptance of the Notice, the MoEM has also granted all required permits, licences and authorisations for infrastructure construction and development outside the Colluli Mining Licence area. Infrastructure to be developed and upgraded outside the Colluli Mine Licence area includes:
• Sea Water Intake and Treatment Area at Anfile Bay (WITA);
• Pipeline and access corridor of 87km between the WITA and the Colluli process plant; and
• Colluli site access road of 57km connecting Colluli to Marsa Fatuma. Niels Wage, CEO of Danakali, commented: “I am pleased to report that the Eritrean Ministry of Energy & Mines has formally accepted CMSC’s Notice of Commencement of Mine Development. This year, the project team has made significant progressthrough 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”. Announcement authorised for release by the Board of Danakali.

Iggy
 
More positive news

Appointment of UK Adviser
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali or the Company), is pleased to announce the appointment of Canaccord Genuity Limited (Canaccord) as the Company’s sole broker in the United Kingdom with immediate effect. Canacccord will support Danakali’s equity raising strategy aimed at closing the funding gap for the project financing of Colluli Mining Share Company (CMSC or the Project). Niels Wage, Chief Exectutive Officer, commented: “We are delighted to announce the appointment of Canaccord as our sole broker in London, who we believe are strongly suited to support Danakali in attracting the financing required for the Colluli Project.

Iggy
 
DNK has announced their preferred contractor for the construction phase of the mine - RA International.

RA is listed on the LSE’s AIM (AIM: RAI) and specialises in building, operating, and maintaining facilities in remote and challenging conditions across Africa providing complex humanitarian, governmental, mining, and other commercial developments and services. RA will supply, deliver and install a Mine Accommodation Camp as well as a Plant Administration and Service facilities for the Colluli mine site. Additionally, RA will provide comprehensive Camp Services incorporating catering, cleaning, laundry, pest and vector control, grounds keeping and waste management. The Plant Administration and Services facilities will incorporate administration offices, medical clinic, warehouses, and workshops (see Figure 1). The Accommodation Camp has been designed to accommodate 600 persons during the production phase with the flexibility to accommodate 1,115 persons during the construction phase. The 600-person camp capacity is exclusive of camp services personnel which will have an additional camp, provided by RA, located within the overall camp boundary.

https://www.londonstockexchange.com...t-of-accommodation-support-contactor/14659870

Iggy
 
The project continues but some investors are disillusioned which is reflected in the current shareprice. The latest update seems to talk about optimisation and a more defined scope which seems to be marketing speak to me. One day soon it will take off...



Colluli Project Update EPCM Phase 2 Complete

– updated FEED and Schedule; Optimisation opportunities defined

• EPCM Phase 2 deliverables from DRA review has been completed
• Project now benefits from a more defined scope and de-risked design and the robustness of the FEED results have been confirmed
• Design optimisations identified with environmental and economic improvements:

o Beach Well intake confirmed for Water Intake Treatment Area (WITA) with lower environmental impact
o Dry harvesting method from backend recovery ponds with less complex processing design
o Selection of RA International as camp provider gives Colluli access to a fit for purpose, manufactured camp.

Danakali Limited (ASX: DNK, LSE: DNK, Danakali, or the Company) is pleased to provide this project update of the Colluli Potash Project (Colluli or the Project), located in Eritrea, East Africa. The Project is 100% owned by the Colluli Mining Share Company (CMSC), a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO).

FEED Updated: We are pleased to advise that EPCM Phase 1 and 2, which relate to the process plant and associated infrastructure work have been completed. These phases provide greater certainty of scope definition following the third-party review by DRA Global.

Optimisation: In the EPCM Phases 1 and 2 a number of optimisation opportunities were identified. Examples are:

o WITA area: A trade-off study has confirmed the use of a Beach Wells intake method is preferred in lieu of a subsea intake pipeline. This optimisation is beneficial to the environment, minimising risk to the subsea and coastal habitats by avoiding onshore pipeline construction and offshore installation. Furthermore, the design eliminates chlorine dosing and improves the quality of the discharge water as the pre-treatment feedwater requires less chemicals.

o As announced on 20 August 2020, RA International was selected as the preferred Camp provider. With a pre-manufactured, high quality camp that is containerised and ready to mobilize, it can be installed at a significant discount and immediate economic benefits are created. The short availability of this camp significantly de-risks our execution schedule and allows an earlier commencement of site activities.

Iggy
 
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