Executive summary

The Colluli potash project in Eritrea is now not only the world’s largest and most advanced but also economically attractive and fundable Sulphate of Potash (SOP) greenfield development project, with a mine life in excess of 200 years.


Danakali is developing the Colluli Potash Project (Colluli, or the Project), an advanced and economically attractive Sulphate of Potash (SOP) development project. Colluli is ‘shovel ready’; all material permits are in place, binding take-or-pay offtake has been achieved and Front End Engineering Design (FEED) has firmly established Colluli as an advanced and attractive SOP greenfield development project.


World class Resource and Reserve

The Colluli deposit, located in the Danakil Depression in Eritrea, comprises a massive JORC-2012 compliant Ore Reserve estimate of 1,100Mt @ 10.5% K2O for 203Mt of contained SOP equivalent.

The Danakil Depression is the only known potash basin in the world with the most favourable combination of potassium salts for low cost, high yield production of SOP using simple commercially proven processing techniques.

Shallow mineralisation

Colluli is the shallowest known evaporite deposit in the world with mineralisation starting at just 16m allowing simple, safe, low cost, open-cut mining.

Salts extracted in solid form

Colluli is the only known SOP resource that allows extraction of potassium salts in solid form. Primary production of SOP typically comes from potassium rich brines, which require considerable evaporation.
Extracting the salts in solid form allows the salts to be processed immediately, significantly reducing the time between mining and revenue generation, and it reduces the evaporation pond footprint which contributes to a lower overall capital intensity.

Close proximity to coast and established infrastructure

Colluli is the closest known SOP deposit to a coastline anywhere in the world, only 75km from the Red Sea. An existing coastal road to the established port of Massawa runs proximate to Colluli. The port of Massawa is equipped with bulk and container loading facilities.

Continued emergence of Eritrea amid rapid diplomatic progress in the Horn of Africa

Restoration of diplomatic relations among Horn of Africa countries including Eritrea, Ethiopia, Djibouti and Somalia has signalled an end to tensions in the region. Rapid diplomatic progress has enabled the opening of borders established trade between Eritrea and Ethiopia, and the lifting of UN sanctions on Eritrea.

Eritrea was the only sub-Saharan African country to meet its Millenium Development Goals by 2015.


FEED study provides stakeholders with detail, accuracy and confidence

FEED confirmed Colluli as an advanced and economically attractive project relative to other SOP greenfield development projects.

FEED articulates a modular development approach underpinning a highly scalable, long life project:

• Module I is expected to produce 472ktpa of premium SOP product; and
• Module II will increase total SOP production to 944ktpa.

Binding offtake agreement with EuroChem

EuroChem will take, pay, market and distribute up to 100% (minimum 87% at CMSC’s option) of Colluli Module I SOP production for at least 10 years.

Danakali is the only known greenfield SOP developer with a take-or-pay offtake agreement; instrumental in providing cash flow certainly to unlock project funding.

Execution of US$200M senior debt mandate and term sheet with esteemed African DFIs

Colluli Mining Share Company (CMSC) has successfully executed a US$200M senior debt mandate and term sheet, which will provide a large proportion of the funding required for construction and development of the Project. The funding is supported by two leading African development finance institutions (DFIs): the African Export-Import Bank (Afreximbank) and the Africa Finance Corporation (AFC), who are acting as Mandated Lead Arrangers.

Fully permitted

Colluli is fully permitted following the signing of the Mining Agreement in February 2017; and the subsequent awarding of the requisite Mining Licenses.


Attractive returns to shareholders

Industry leading capital intensity and expected first quartile operating costs facilitate a project post tax NPV of US$902M and post-tax IRR of 29.9%, with a post financing NVP of US$439M and post-finance IRR of 31.3% attributable to Danakali. Such returns set Danakali apart from SOP development peers.

High return expansion potential

Significant incremental growth potential through further SOP or other potash type modules, and multi-commodity opportunities. Appreciable amounts of Rock Salt (mined as overburden), Gypsum, Kieserite and Magnesium Chloride are present and could enhance project economics. Sulphate of Potash Magnesia (SOP-M) and Rock Salt product specifications have been developed.

There is a potential site for port development only 87km (by road) away from Colluli.

Colluli is not only the shallowest known potash deposit in the world but also the closest to coast
Colluli is not only the shallowest known potash deposit in the world but also the closest to coast – 75km from the Red Sea coast – providing unrivalled logistics advantage over the other potash development projects in the Danakil Depression.

An outstanding economic, social and community dividend

Danakali is committed to improving the lives of the local communities in which it operates and Colluli will play a significant part in the economic development of Eritrea.

FEED, the Social & Environmental Impact Assessment (SEIA) and Social & Environmental Management Plans (SEMPs) confirms Colluli’a positive impact through insrastructure, job creation, taxes, royalties, and associated economic development.

>> ALSO READ : Eritrean Gov’t Approves Danakali’s Social and Environmental Plans (SEMPs)

Hundreds of direct permanent jobs for Eritrean nationals will be created. Long term training for trades and professionals will be developed.

UNDP report outlines potential for Colluli to boost the Eritrean economy and support the country’s SDGs

The release of a report on Colluli commissioned by the United Nations Development Programme (UNDP) highlights the potential for Colluli to boost the Eritrean economy and support the country’s UN Sustainable
Development Goals (SDGs).

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Danakali Releases 2018 Annual Report

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