Name and Location
Colluli potash project, Danakil, Eritrea.

Client
The Colluli Mining Share Company (CMSC) is a joint venture (JV) between the Eritrean National Mining Company (ENAMCO) and Danakali (previously South Boulder Mines), with each company having an equal stake in the company. CMSC is responsible for the development of the project.

Project Description
The prefeasibility study (PFS) completed on the Colluli potash project has highlighted the economically robust nature of the project, which is expected to become one of the world’s most significant and lowest-cost potassium sulphate operations.

The Colluli resource comprises three potassium-bearing salts – sylvinite, carnallitite and kainitite.

These salts are suitable for high-yield, low-energy input and the production of potassium sulphate (SoP), which is a high-quality potash fertiliser carrying a price premium over the more common potassium chloride.

The project will be completed in phases. The first phase will comprise 425 000 t/y of SoP, with the second phase adding 425 000 t/y of SoP, starting production in year five.

The PFS envisages the construction of:
• an openpit potash mine located within the Danakil depression;
• ore-processing facilities at the mine site;
• evaporation ponds at the mine site;
• a new product export terminal at Ras Hafele, in Anfile bay, on the Red Sea coast;
• a new 75 km product haulage road connecting the mine site and port facility;
• a seawater pipeline from the port site to the mine site; and
• an accommodation camp and administration facility at the mine site.

The proposed processing method is the most commonly used, low-cost process for the production of SoP by adding potassium chloride (sylvite) with kainite from the kainitite.

Kainitite represents about 50% of the Colluli resource, with the remaining salts comprising sylvinite and carnallitite, which are commonly used in the production of potassium chloride.

Net Present Value/Internal Rate of Return
Phase I of the project has an after-tax net present value (NPV), at a 10% discount rate, of $462-million and an after-tax internal rate of return (IRR) of 22.3%.

Phase II has an after-tax NPV, at a 10% discount rate, of $864-million and an after-tax IRR of 24.7%.

Value
Phase I of the project is estimated at $442-million and Phase II at $282-million.

Duration
Construction of the project is expected to start in 2016 and production in 2018.

Latest Developments
More than 300-million tonnes of Joint Ore Reserves Committee-compliant rock salt minerals have been identified at the Colluli potash project, which could add potential revenues, owner Danakali has said.

The rock salt is located directly above the potassium-bearing salts within the Colluli resource, in Eritrea, and will be extracted using surface miners.

Danakali has noted that mine planning work to date has indicated that between one-million and two-million tonnes a year of rock salt could be mined at Colluli, for a 425 000 t/y SoP production module.

A definitive feasibility study (DFS) on the Colluli potash project is expected to be completed by the fourth quarter of this year.

Further evaluation of the long-term potential for a large-scale salt business to complement the planned SoP development would also be conducted following the completion of the DFS.

Key Contracts and Suppliers
Lycopodium (PFS).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Danakali, tel +61 8 6315 1444, fax +61 8 9486 7093 or email info@danakali.com.