TIDMDNK
RNS Number : 5479J
Danakali Limited
06 December 2018
Announcement Thursday, 6 December 2018
============= ==========================
US$200m debt finance mandate executed
-- Debt finance mandate executed following signing of US$200M term sheet
-- African development financial institutions Afreximbank and
AFC will act as Mandated Lead Arrangers
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali or the Company)
is pleased to announce that the Colluli Mining Share Company (CMSC)
has executed a mandate to provide fully underwritten debt finance
facilities of US$200M to fund the construction and development of
the Colluli Potash Project (Colluli or the Project) in Eritrea,
East Africa (Mandate). African development financial institutions
(DFIs) African Export-Import Bank (Afreximbank) and Africa Finance
Corporation (AFC) will act as the Mandated Lead Arrangers. The
Mandate follows the signing of a US$200M non-binding indicative
term sheet (Term Sheet).
The execution of the Mandate is a critical project financing and
execution milestone. Afreximbank and AFC are highly reputable
African DFIs with extensive experience in providing project
financing to African projects across the continent and were chosen
as Mandated Lead Arrangers due to their extensive African project
finance experience and the strength of their investor reach. In
2017 Afreximbank was lead / co-lead arranger on 11 syndicated debt
transactions totalling over US$3Bn. In the same period AFC was
mandated on over US$1Bn of transactions.
Once the remaining aspects of due diligence are finalised and
preconditions satisfied the Mandated Lead Arrangers will proceed to
credit approval and execution of the syndicated loan facility with
CMSC (Facility). Drawdown will follow after satisfaction of the
conditions precedent to be agreed in the Facility. See Appendix A
for a Colluli debt funding process overview.
Chief Financial Officer of Danakali, Stuart Tarrant said: "The
execution of the Mandate represents a significant milestone for the
Colluli project funding. We are very pleased to be partnering with
strong, experienced African financial institutions. Initial bank
due diligence and subsequent negotiations have significantly
advanced the project financing process and built on the
finalisation of the binding offtake agreement with EuroChem placing
CMSC in strong position to advance the Colluli Project ."
Endeavour Financial is acting as debt financial adviser to
Danakali and CMSC.
About Afreximbank
Afreximbank is the foremost Pan-African multilateral financial
institution devoted to financing and promoting intra- and
extra-African trade. The Bank was established in October 1993 by
African governments, African private and institutional investors,
and non-African investors. Afreximbank's mission is to stimulate a
consistent expansion, diversification and development of African
trade while operating as a first class, profit-oriented, socially
responsible financial institution and a centre of excellence in
African trade matters. Afrieximbank have won numerous awards for
their work.
For more information, visit https://afreximbank.com/.
About AFC
AFC is a private sector-led investment bank and development
finance institution created to help mobilise and channel required
capital towards driving Africa's economic development. AFC offers a
unique value proposition as an Africa-focused multilateral
financial institution covering 3 complementary service areas:
project development, financial advisory and principal investing. In
addition to these core services AFC has significant experience and
expertise in project management and will ensure that the objectives
of all parties involved are met through careful monitoring of the
project from beginning to end. AFC's core mission is to address
Africa's infrastructure development needs while seeking a
competitive return on capital for its shareholders.
For more information, visit http://www.africafc.org.
For more information, please contact:
Danakali
Seamus Cornelius William Sandover
Executive Chairman Head of Corporate Development &
+61 8 6315 1444 External Affairs
+61 499 776 998
Corporate Broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / Matthew Hasson / James David Simonson / George Yeomans
Black / /
Paul Gillam Sarah Hourahane
+44 (0)20 7260 1000 danakali@instinctif.com
+44 (0)207 457 2020
Appendix A: Colluli debt funding process overview
Debt milestones completed
Date Area Detail
======= ================== =============================================================
Jan-18 Technical
reports * FEED completed and provided to potential debt
financiers
------- ------------------ -------------------------------------------------------------
Feb-18 Formal kick-off
* Information Memorandum provided to potential debt
financiers
------- ------------------ -------------------------------------------------------------
Feb-18 Due diligence
* Independent Marketing Report provided to potential
debt financiers
------- ------------------ -------------------------------------------------------------
Jun-18 Due diligence
* Independent Social & Environmental and Technical
Engineer Reports provided to potential debt
financiers
------- ------------------ -------------------------------------------------------------
Jul-18 Due diligence
* Legal Due Diligence Report provided to potential debt
financiers
------- ------------------ -------------------------------------------------------------
Jun-18 Offtake
* EuroChem offtake agreement provided to potential debt
financiers
------- ------------------ -------------------------------------------------------------
Jul-18 Due diligence * Bank club and Eritrea Government discussions
------- ------------------ -------------------------------------------------------------
Sep-18 Project contracts
* DRA Global (DRA) confirmed as preferred EPCM
contractor
------- ------------------ -------------------------------------------------------------
Dec-18 Term Sheet
* Finalisation and execution of debt funding term sheet
------- ------------------ -------------------------------------------------------------
Dec-18 Mandate
* Afreximbank and AFC confirmed as Mandated Lead
Arrangers
------- ------------------ -------------------------------------------------------------
Debt milestones remaining
Area Detail
================== ============================================================
Project contracts
* Finalisation of contracts with DRA, Inglett & Stubbs
International, and preferred mining contractor
------------------ ------------------------------------------------------------
Commitments * Final credit approval from debt financiers
------------------ ------------------------------------------------------------
Commitments
* Execution of the Facility Agreement and related
documents
------------------ ------------------------------------------------------------
Commitments
* Financial Close with conditions precedent met
================== ============================================================
- - -S - - -
About Danakali
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company)
is an ASX- and LSE-listed potash company focused on the development
of the Colluli Potash Project (Colluli or the Project). 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).
The Project is located in the Danakil Depression region of
Eritrea, East Africa, and is 75km from the Red Sea coast, making it
one of the most accessible potash deposits globally. Mineralisation
within the Colluli resource commences at just 16m, making it the
world's shallowest potash deposit. The resource is amenable to open
pit mining, which allows higher overall resource recovery to be
achieved, is generally safer than underground mining, and is highly
advantageous for modular growth.
The Company has completed a Front End Engineering Design (FEED)
for the production of potassium sulphate, otherwise known as SOP.
SOP is a chloride free, specialty fertiliser which carries a
substantial price premium relative to the more common potash type;
potassium chloride (or MOP). Economic resources for production of
SOP are geologically scarce. The unique composition of the Colluli
resource favours low energy input, high potassium yield conversion
to SOP using commercially proven technology. One of the key
advantages of the resource is that the salts are present in solid
form (in contrast with production of SOP from brines) which reduces
infrastructure costs and substantially reduces the time required to
achieve full production capacity.
The resource is favourably positioned to supply the world's
fastest growing markets. A binding take-or-pay offtake agreement
has been confirmed with EuroChem Trading GmbH (EuroChem) for up to
100% (minimum 87%) of Colluli Module I SOP production.
The Company's vision is to bring Colluli into production using
the principles of risk management, resource utilisation and
modularity, using the starting module (Module I) as a growth
platform to develop the resource to its full potential.
Competent Persons Statement (Sulphate of Potash and Kieserite
Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 1,289Mt @11% K(2) 0 Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) 0
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) 0
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) 0
Equiv. and 9% Kieserite of Inferred Resource.
The information relating to the Colluli Mineral Resource
estimate is extracted from the report entitled "Colluli Review
Delivers Mineral Resource Estimate of 1.289Bt" disclosed on 25
February 2015 and the report entitled "In excess of 85 million
tonnes of Kieserite defined within Colluli Project Resource adds to
multi agri-commodity potential" disclosed on 15 August 2016, which
are available to view at www.danakali.com.au. The Company confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or
Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified
from the original market announcement.
Competent Persons Statement (Sulphate of Potash Ore Reserve)
Colluli Proved and Probable Ore Reserve is reported according to
the JORC Code and estimated at 1,100Mt @ 10.5% K(2) O Equiv. The
Ore Reserve is classified as 285Mt @ 11.3% K(2) O Equiv. Proved and
815Mt @ 10.3% K(2) O Equiv. Probable. The Colluli SOP Mineral
Resource includes those Mineral Resources modified to produce the
Colluli SOP Ore Reserves.
The information relating to the January 2018 Colluli Ore Reserve
is extracted from the report entitled "Colluli Ore Reserve update"
disclosed on 19 February 2018 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
Competent Persons Statement (Rock Salt Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 347Mt @ 96.9% NaCl. The
Mineral Resource estimate contains 28Mt @ 97.2% NaCl of Measured
Resource, 180Mt @ 96.6% NaCl of Indicated Resource and 139Mt @
97.2% NaCl of Inferred Resource.
The information relating to the Colluli Rock Salt Mineral
Resource estimate is extracted from the report entitled "+300Mt
Rock Salt Mineral Resource Estimate Completed for Colluli"
disclosed on 23 September 2015 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
AMC Consultants Pty Ltd (AMC) independence
In reporting the Mineral Resources and Ore Reserves referred to
in this public release, AMC acted as an independent party, has no
interest in the outcomes of Colluli and has no business
relationship with Danakali other than undertaking those individual
technical consulting assignments as engaged, and being paid
according to standard per diem rates with reimbursement for
out-of-pocket expenses. Therefore, AMC and the Competent Persons
believe that there is no conflict of interest in undertaking the
assignments which are the subject of the statements.
Quality control and quality assurance
Danakali exploration programs follow standard operating and
quality assurance procedures to ensure that all sampling techniques
and sample results meet international reporting standards. Drill
holes are located using GPS coordinates using WGS84 Datum, all
mineralisation intervals are downhole and are true width
intervals.
The samples are derived from HQ diamond drill core, which in the
case of carnallite ores, are sealed in heat-sealed plastic tubing
immediately as it is drilled to preserve the sample. Significant
sample intervals are dry quarter cut using a diamond saw and then
resealed and double bagged for transport to the laboratory.
Halite blanks and duplicate samples are submitted with each
hole. Chemical analyses were conducted by Kali-Umwelttechnik GmBH,
Sondershausen, Germany, utilising flame emission spectrometry,
atomic absorption spectroscopy and ion chromatography.
Kali-Umwelttechnik (KUTEC) has extensive experience in analysis of
salt rock and brine samples and is certified according by DIN EN
ISO/IEC 17025 by the Deutsche Akkreditierungsstelle GmbH (DAR). The
laboratory follows standard procedures for the analysis of potash
salt rocks chemical analysis (K(+) , Na(+) , Mg(2+) , Ca(2+) ,
Cl(-) , SO(4) (2-) , H(2) O) and X-ray diffraction (XRD) analysis
of the same samples as for chemical analysis to determine a
qualitative mineral composition, which combined with the chemical
analysis gives a quantitative mineral composition.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company's intentions.
All statements in this document, other than statements of
historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company's filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company's ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
This information is provided by RNS, the news service of the
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END
MSCFSAFFIFASELE
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December 06, 2018 02:00 ET (07:00 GMT)
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