Name and Location
Danakil potash project, Ethiopia.

Client
Allana Potash.

Project Description
Total muriate of potash (MoP) product from proven and probable sylvinite reserves at the Danakil project is estimated at 23.7-million tonnes.

A feasibility study completed on the Danakil project envisages commercial operations that produce one-million tonnes a year of a standard-grade MoP product over an initial estimated operating life of about 25 years from the sylvinite reserves.

Production will take place through solution mining, solar evaporation and flotation.

Solar evaporation of the saturated brine solution is possible at the project, owing to the year-round daily temperatures averaging 34°C, with very little rainfall.

Value
Capital expenditure is estimated at $642-million, including production, port and logistics, and contingency.

Duration
First product is expected in 2015, with bulk shipments expected to ramp up from 2016 to a one-million-tonnes-a-year production rate by the end of 2017.

Latest Developments
Allana reported in November 2014 that optimisation studies and additional project infrastructure activities were also under way at Danakil.

Optimisation studies included additional solution mining at Well SW3 and an aquifer stress test (AST) on one of the alluvial fan complexes to assess the potential optimum production flow rates to supply water for future mining operations. In addition, significant progress was made on port infrastructure construction at Tadjoura and road access to the port in Djibouti.

Meanwhile, solution mining at Well SW3 has begun, with part of the undercut leaching operation in the Kainitite horizon below the Sylvinite horizon. Well SW3 will use a hydrocarbon blanket and a double-leach string to optimise solution mining, leaching and recoveries. The potassium chloride-rich brine will be pumped into evaporation ponds to generate a crystal crop, which will be utilised in process optimisation work. In addition, a crystal crop will also be generated from the Kainitite-rich brine, which will be used to confirm the process testing and design in the sulphate of potash (SoP) preliminary economic assessment (PEA) currently under way. Brine production from the leaching of the Sylvinite horizon is expected to start in February 2015.

The aquifer stress test (AST) will be conducted on the western portion of the project area on one planned well field within an alluvial fan. In this programme, nine additional observation wells have been drilled to monitor the reaction of the aquifer and three additional pumping wells have been completed. Five pumping wells will draw 100 m3/h of water from each well for a total production of 500 m3/h. This quantity of water matches the amount of water required from this well field for solution mining operations. The AST pumping will be conducted for 30 to 60 days and then recharge rates will be monitored in the observation wells to confirm regional recharge of 35-million to 55-million cubic metres of water a year. The long-term pumping tests were scheduled to start in mid-November 2014.

Port construction continues at Tadjoura and work is on schedule. Delivery of the piling materials has been completed, with quay wall construction proceeding and buildings and structures to house port operations and administration. Site utilities are well advanced. Perimeter fencing, road and water control structure construction are also well under way. The schedule for completion remains late 2016. Road infrastructure work in Djibouti, between the new port site and the Ethiopian border, is also progressing and this roadway is on schedule to be completed by the end of 2015.

The financing activity for the project construction is proceeding, with technical evaluation work under the lenders' due diligence programme well advanced and additional lender interest being confirmed. Potential commercial bank debt capacity is being developed to complement participation from development financing institution/export credit agency lenders under current mandate agreements. Several European and US-based banks have been working with Allana to complement the debt from the current development financing institutions. The project economics remain attractive and all lender mandates and indications of debt capacity have been sustained and supportive.
Key Contracts and Suppliers
AMEC Americas (Feed).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Allana Potash senior VP: corporate development Richard Kelertas, tel +1 514 717 6256 or email rkelertas@allanapotash.com.
AMEC Americas, tel +1 905 829 5400.