PERTH (miningweekly.com) – A definitive feasibility study (DFS) into the Colluli potash project, in Eritrea, has reduced the expected capital expenditure to bring the project into production by about 30%, owner Danakali reported on Monday.

A March prefeasibility study into the project had estimated that the Stage 1 development would require a capital investment of $442-million.

The study examined a two-module development with an expected production of 425 000 t/y sulphate potash for the first five years of operation, increasing to 850 000 t/y for the remainder of the proposed 30-year mine life.

The Phase 1 development would include a project-owned and -built road, as well as a 900 000 t/y product export terminal.

Based on these same parameters, the DFS had decreased the expected Phase 1 capital investment to $298-million. The Phase 1 net present value had been estimated at $439-million and the post tax internal rate of return at 25.4%.

“We are very happy with the DFS outcomes for Colluli. It confirms a robust, low capital intensity, low operating cost project with attractive economic returns and a high level of expandability,” said Danakali MD Paul Donaldson.

“The DFS also confirms that Colluli is one of the most attractive potash projects in the world. The 1.1-bilion-tonne ore reserve that underpins the project, in combination with the suite of potassium salts and proximity to the coast and future markets, makes Colluli positively unique.”

The project was estimated to have an average total cash costs of $255/t during the Phase 1 development, decreasing to $227/t during Phase 2.

Donaldson said that Colluli had the potential to grow to an ultimate capacity of four- to five-million tonnes a year of potash products, while rock salt, magnesium chloride and magnesium sulphate within the resource also presented significant project upside.

“We are looking forward to working with our joint venture partners over the upcoming months to advance the approvals process and secure the funding for the project development,” he added.

The mining licence application process would be initiated in the first quarter of next year and the project would be commissioned in the fourth quarter of 2018.

Along with initiating the mining licence application, Danakali would also pursue a select number of optimisation activities to further enhance the project economics, the construction timeline and to reduce the potential project risks.