Name of the Project
Colluli potash project.

Location
Danakil, Eritrea.

Client
The Colluli Mining Share Company (CMSC) is a joint venture 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 mine life of Colluli currently exceeds 200 years, facilitated by the 1.11-billion-tonne ore reserve.

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) – a high-quality potash fertiliser with a price premium over the more common potassium chloride.

A systematic debottlenecking of the processing plant configuration has added a further 47 000 t/y of sulphate of potash output capacity at the project.

Additional capacity will increase Stage 1 SoP output to 472 000 t/y, up from the planned 425 000 t/y identified in the project’s definitive feasibility study.

The value engineering and optimisation work has also identified further opportunities to reduce development capital and water consumption, which is being costed as part of the front-end engineering design process.

The operation will use openpit mining methods to take advantage of Colluli’s shallow mineralisation, which starts at 16 m, making it the shallowest known evaporite project in the world.

The project will include ore-processing facilities and evaporation ponds at the mine site, an upgraded 50 km product haulage road connecting the mine site to the main road to the Port of Massawa, an 85 km desalinated water pipeline from the coast to the mine site, and an accommodation camp and administration facility.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at a 10% real discount rate, of $860-million and an internal rate of return of 29%, with the payback period for Phase I estimated at 3.5 years.

Value
Phase I of the project is estimated at $298-million.

The capital cost for Phase II is estimated at $175-million.

Duration
Phase I commissioning is currently targeted for the fourth quarter of 2018.

Phase II will start production in Year 6.

Latest Developments
Danakali has signed a binding take-or-pay offtake agreement with EuroChem for up to 100% of SoP to be produced at Colluli.

Under the ten-year agreement, EuroChem will take a minimum of 87% of the Stage 1 Colluli production, with the option to extend the offtake agreement for a further three years.

EuroChem has the option to terminate the offtake agreement if Danakali fails to make its commercial production deadline of July 2022, with either party also having the option to terminate the agreement if project financing cannot be secured, and first draw-down is not achieved within 14 months of signing the agreement.

EuroChem will be allowed to market and distribute the Colluli SoP, and can use a portion of the product to produce complex nitrogen phosphate potassium for fertilisers at its facilities in Europe. The balance of the SoP will be sold through its international channels.

CMSC will have the option to sell up to 13% of the Colluli SoP through alternative sales channels.

Key Contracts and Suppliers
Lycopodium (prefeasibility study).

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.