REG - Danakali Limited - Quarterly Report and Appendix 5B

DanakaliAnnouncement

31/07/2018 07:05

RNS Number : 2211W
Danakali Limited
31 July 2018
 


 




LSE announcement


Tuesday, 31 July 2018




 
For ASX version with pictures visit the ASX website: https://www.asx.com.au/asx/share-price-research/company/DNK
 
QUARTERLY REPORT

For the period ending 30 June 2018

 
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company) is pleased to provide this quarterly update on the activities and financial position of the Company and its Colluli Potash Project (Colluli or the Project), located in Eritrea, East Africa. 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).
 
Highlights
 
§ Binding take-or-pay offtake agreement confirmed for up to 100% (minimum 87%) of Colluli Module I SOP production with EuroChem1
 
§ Admission to the Standard Segment of the Official List of the Financial Conduct Authority and trading on the LSE Main Market2
 
§ Appointment of Seamus Cornelius as Executive Chairman, following resignation of CEO, Danny Goeman
 
§ Appointment of CCO, Niels Wage to lead product sales, logistics and export strategy
 
§ Significant positive developments in Eritrean-Ethiopian relations including signing of peace treaty providing a platform of stability for the region
 
Key activities planned for the September 2018 Quarter
 
§ Assess CEO candidates
 
§ Confirmation of preferred EPCM contractor
 
§ Confirmation of preferred mining contractor, finalisation of negotiations and advancement of contract terms
 
§ Continue due diligence process for debt portion of project financing
 
§ Extensive investor awareness exercises in the UK and other jurisdictions
 
§ Detailed assessment of operations readiness processes and systems to position Danakali and CMSC for development and production
 
§ CMSC to finalise the SEMPs, with sign-off expected shortly after submission
 
Corporate
 
§ Cash position of A$14.4M as at 30 June 2018
 
§ The Company's AGM was held on Friday, 11 May 2018
 
 
Project
 
Colluli project execution preparedness is well underway. Danakali and CMSC are focused on logistics and other technical collaboration aspects with offtake partner EuroChem, operational contracts, operations readiness, funding and corporate social responsibility initiatives.
 
Offtake - Binding take-or-pay offtake confirmed3
 
Danakali, on behalf of CMSC, has announced a binding take-or-pay offtake agreement with EuroChem Trading GmbH (EuroChem) for up to 100% (minimum 87%) of Module I Sulphate of Potash (SOP) production from Colluli. 10 year term from the date of first commissioning of the Colluli SOP processing plant, with an option, if mutually agreed, to extend for a further 3 years.
 
The offtake agreement reinforces Colluli's position as an advanced stage and economically attractive project relative to other SOP greenfield development projects. The offtake agreement is also expected to be instrumental in unlocking project funding and represents a strong endorsement for the Project. The take-or-pay nature of the offtake agreement (and associated terms) provides cash flow certainty and strengthens the Colluli and Danakali investment propositions.
 
EuroChem - An outstanding partner
 
EuroChem has global reach and extensive fertiliser expertise and experience.
§ Leading global producer of nitrogen, phosphate, and potash fertilisers, as well as certain industrial and mining products
§ Aiming to be one of the world's top 5 fertiliser producers - by both nutrient capacity and profitability
§ Vertically integrated with activities spanning mining, fertiliser production, logistics and distribution
§ CY2017 revenue of US$4.9B and EBITDA of US$1.1B4
 
EuroChem may use a portion of Colluli SOP to produce complex Nitrogen Phosphate Potassium (NPK) fertilisers at its facilities in Antwerp, Belgium, and Nevinnomyssk, Russia. The balance of SOP provided to EuroChem will be sold through their international channels. CMSC has the option to sell up to 13% of production through alternative sales channels.
 
EuroChem has agreed to provide technical support to the Project on terms to be agreed. EuroChem Group AG will provide a parent company guarantee as part of the offtake agreement.
 




"We are excited about participating in this project with CMSC, as part of our growing global presence. Colluli is one of the closest SOP deposits to a coastline anywhere in the world and, in solid form, the salts at Colluli can be processed immediately, significantly reducing the time between mining and revenue generation."
EuroChem Group AG CEO, Dmitry Strezhnev




 
Eritrea - Eritrean officials visit Ethiopia for first time in 20 years
 
Significant positive developments in Eritrean-Ethiopian relations throughout June and July 2018.
§ Eritrean President Isaia Afwerki and Ethiopian Prime Minister Abiy Ahmed announced the re-establishment of diplomatic and trade ties5
§ First time leaders of the countries had met in almost 20 years6
§ Leaders of both nations have signed a historic peace treaty7
§ Prime Minister Abiy and President Isaias agreed to reopen embassies in the respective capitals8
§ Ethiopia has submitted a request for the U.N. to lift Eritrean sanctions (primarily consisting of arms embargoes), with U.N. Chief Antonio Guterres also stating that sanctions may no longer be needed9
§ Ethiopian Airlines resumed flying from Addis Ababa to Asmara10
§ Ethiopia will soon be able to send freight trains to Assab, Eritrea's port on the Red Sea11
§ Telephone services between the two countries have been restored12
§ The Ethiopian and Eritrean soccer teams are set to play their first match in 20 years in Asmara in August13
§ The United Arab Emirates' highest award, The Order of Zayed, was conferred on the Eritrean and Ethiopian leaders in recognition of their work for peace between the two nations14
 
The progress in relations between Eritrea and Ethiopia enhances the opportunities for increased and sustained economic development for Eritrea and represents a de-risking event for foreign investment.
 
Project financing - LSE listing represents a key component of project funding strategy
 
Equity - LSE listing completed
 
The Company's Ordinary Shares were admitted to the Standard Segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's (LSE) Main Market at 8.00am BST on 24 July 2018, ticker "DNK" 15.
 




"We are delighted to deliver on another of our strategic goals for 2018. The LSE listing should increase our profile, liquidity and breadth of potential investors. It is a key milestone as we move towards construction and production at the Colluli Potash Project."
Danakali Executive Chairman, Mr. Seamus Cornelius




 
To facilitate trading of Danakali's shares on the Standard Segment of the LSE Main Market, Danakali has established a Depositary Interest (DI) facility, under which it has appointed Computershare Investor Services Plc (Computershare UK) as the depositary. Securities of Australian issuers such as Danakali cannot be directly registered, transferred or settled through CREST (which is the electronic settlement system in the UK). The DI facility overcomes this by creating entitlements to Danakali's shares (the DIs), which are deemed to be UK securities and therefore admissible to CREST. The underlying shares are listed and traded on the Standard Segment of the LSE Main Market, while the DIs are transferred in CREST to settle those trades.
 
If shareholders choose to move their securities to the UK to trade/or hold and become the holder of DIs, their shares are no longer held in their name on Danakali's Australian share register. Instead they are held by Computershare UK's Australian custodian. DI holders become the beneficial holder of those Danakali shares, with the DIs held on Danakali's UK DI register in CREST on their behalf by their broker.
 
Further information can be found on the Company's website at: danakali.com.au/investor-relations/LSE-listing-documents.
 
Numis Securities, Financial Adviser to the Company's LSE listing, has initiated research coverage on Danakali.
 
Debt - Due diligence continues
 
Ongoing discussions with potential debt providers. Multiple potential debt providers are well progressed with their due diligence. Detailed meetings and site visits are planned for the upcoming quarter.
 
Key contracts - Final negotiations
 
EPCM - final approvals for preferred contractor
 
Work continues with the shortlisted Engineering Procurement Construction and Management (EPCM) contractors. It is expected that the preferred EPCM contractor will be selected early in the second half of 2018.
 
Mining - final approvals and negotiations for preferred contractor
 
Negotiations with the shortlisted mining contractors advanced during the June 2018 Quarter. It is expected that the preferred mining contractor will be selected early in the second half of 2018.
 
Social and environmental - SEMPs approach finalisation
 
Following a period of consultation and further works, the Eritrean Ministry of Land, Water & Environment has requested that CMSC finalise the Social and Environmental Management Plans (SEMPs) by incorporating recently agreed responses and changes. The final SEMPs have been submitted and sign-off is expected imminently.
 
Operations readiness - Key systems development underway
 
Key components of the social and environmental, human resources, safety, risk and business management systems are under development in readiness for the commencement of project execution.
 
Corporate
 
Leadership transition - Appointment of Executive Chairman and CCO
 
On 14 June 2018 Danakali announced the following leadership changes:
§ Appointment of Non-Executive Chairman, Mr. Seamus Cornelius, as Executive Chairman
§ Appointment of Mr. Niels Wage as Chief Commercial Officer (CCO)
§ Resignation of Chief Executive Officer (CEO), Mr. Danny Goeman
 
Seamus Cornelius - Executive Chairman
Mr. Cornelius had served as Non-Executive Chairman of Danakali since July 2013. Mr. Cornelius is a corporate lawyer and former partner of one of Australia's leading law firms. He has a high degree of expertise in cross-border transactions, particularly in the resources and finance sectors.
 
Niels Wage - Chief Commercial Officer
The Company is pleased to advise that highly experienced industry executive, Mr. Niels Wage has been appointed as CCO. Mr. Wage has significant shipping, trading and commodity experience, and has held a number of senior management roles at BHP including Vice President Potash, Vice President Freight and Vice President Diamonds.
 
At Danakali, Mr. Wage will be responsible for workstreams including:
§ Conducting a detailed joint logistics study with EuroChem
§ Further developing CMSC's product sales strategy
§ Developing plans for CMSC's own product export terminal at Anfile Bay, 87km from Colluli
§ Assessing the expansion of CMSC's product range
 
Mr. Goeman joined Danakali in 2016 as Head of Marketing before assuming the role of CEO in 2017. During his time with the Company, Mr Goeman developed the offtake strategy and contract framework, and led the offtake negotiations on behalf of CMSC. Mr. Goeman's leadership resulted in the execution of a binding take or pay offtake agreement with EuroChem covering up to 100% (minimum 87%) of the planned Module I SOP production from Colluli.
 
Mr. Goeman has accepted an offer to become Global Director Sales & Marketing for Fortescue Metals Group (ASX: FMG) and will finish at Danakali on 3 August 2018. The Company thanks Mr. Goeman for his service to Danakali and CMSC and wishes him all the best in his new role.
 
A CEO assessment process to identify the right individual to take Colluli into development and production is well underway. Mr. Cornelius will remain as Executive Chairman until 3 months after the appointment of a new CEO.
 
Policies - Several policies updated in line with LSE listing
 
The following Company policies have been updated in line with UK laws and regulations in line with the Company's LSE listing:
§ the Code for Dealing in Danakali Securities has been updated to comply with the Market Abuse Regulation (MAR);
§ the Continuous Disclosure Policy has also been updated to comply with MAR; and
§ the Anti-Corruption Policy has been replaced by an Anti-Bribery Policy, and complies with the UK's Bribery Act 2010
 
Annual General Meeting
 
The Company's Annual General Meeting (AGM) was held on Friday, 11 May 2018 at 10.00am AWST. For more information, refer to the Notice of AGM announced 10 April 2018 and results of the meeting announced 11 May 2018.
 
Capital - Moderate expenditure ahead of project execution
 
Consolidated cash on hand was A$14.4M as at 30 June 2018.
 
During the June 2018 Quarter, the Company issued the following fully paid ordinary shares:
§ 2,272,728 shares on exercise of unlisted options at A$0.35 each16
§ 200,000 shares on exercise of unlisted options at A$0.45 each
§ 738,346 shares on cashless exercise of 1,949,000 unlisted options at A$0.405 each (shares issued at A$0.652 each)
§ 116,586 shares on cashless exercise of 750,000 unlisted options at A$0.527 each (shares issued at A$0.624 each)
§ 90,740 shares on cashless exercise of 600,000 unlisted options at A$0.55 each (shares issued at A$0.648 each)
§ 151,234 shares on cashless exercise of 1,000,000 unlisted options at A$0.55 each (shares issued at A$0.648 each)
§ 10,000 shares on vesting of performance rights (Class 7: 10,000)
At 30 June 2018, there were a total of 263,811,414 fully paid ordinary shares on issue.
 
The following unlisted options were exercised during the June 2018 Quarter raising a total of A$0.09M:
§ 200,000 unlisted options with an exercise price of A$0.45 each expiring 23 June 2018
§ 1,949,000 unlisted options with an exercise price of A$0.405 each expiring 13 May 2018
§ 750,000 unlisted options with an exercise price of A$0.527 each expiring 29 May 2018
§ 600,000 unlisted options with an exercise price of A$0.55 each expiring 31 May 2018
§ 1,000,000 unlisted options with an exercise price of A$0.55 each expiring 31 December 2018
75,000 unlisted option with an exercise price of A$0.35 expired on 13 May 2018 without being exercised. There were no unlisted options issued during the June 2018 Quarter. At 30 June 2018, there were a total of 3,840,000 unlisted options on issue at various exercise prices and expiry dates.
 
The following performance rights vested and were converted to shares during the June 2018 Quarter:
§ 10,000 Class 7 performance rights vested and converted to shares
At 30 June 2018, there were a total of 1,373,000 performance rights on issue.
 
Interests in mining tenements
 
The 7 Mining Licenses awarded to CMSC span over 60km2 of the 100km2 Mining Agreement area17.
 
Table 1: Tenement holdings
 




Tenement:


Colluli, Eritrea




Nature of interest


Owned




License type


Mining Licences




Current equity


50%




 
There was no change in tenement holding during the June 2018 Quarter.
 
For more information, please contact:
 




Danakali


 




Seamus Cornelius
Executive Chairman
+61 8 6315 1444


William Sandover
Head of Corporate Development & External Affairs
+61 499 776 998




 
Financial Adviser - Numis Securities


 
UK IR/PR - Instinctif Partners




John Prior / Matthew Hasson / James Black /
Paul Gillam
+44 (0)20 7260 1000


David Simonson / George Yeomans /
Sarah Hourahane
danakali@instinctif.com
+44 (0)207 457 2020




 
 
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
(a)   Introduced 01/07/96  Origin Appendix 8  Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
 




Name of entity




Danakali Limited




ABN


 


Quarter ended ("current quarter")




57 097 904 302


 


30 June 2018



 
 
 
 



 




Consolidated statement of cash flows


Current quarter $A'000


Year to date
(6 months)

$A'000






1.


Cash flows from operating activities


-


-




1.1


Receipts from customers




1.2


Payments for


-


-




 


(a)   exploration & evaluation




 


(b)   development


-


-




 


(c)   production


-


-




 


(d)   staff costs


(348)


(440)




 


(e)   administration and corporate costs


(594)


(951)




1.3


Dividends received (see note 3)


-


-




1.4


Interest received


44


90




1.5


Interest and other costs of finance paid


-


-




1.6


Income taxes paid


-


-




1.7


Research and development refunds


-


-




1.8


Other (provide details if material)


-


-




1.9


Net cash from / (used in) operating activities


(898)


(1,301)




 




2.


Cash flows from investing activities


-


-




2.1


Payments to acquire:




 


(a)   property, plant and equipment




 


(b)   tenements (see item 10)


-


-




 


(c)   investments


-


-




 


(d)   other non-current assets


-


-




2.2


Proceeds from the disposal of:


-


-




 


(a)   property, plant and equipment




 


(b)   tenements (see item 10)


-


-




 


(c)   investments


-


-




 


(d)   other non-current assets


-


-




2.3


Cash flows from loans to other entities


-


-




2.4


Dividends received (see note 3)


-


-




2.5


Other - Funding of Joint Venture


(1,241)


(3,725)




2.6


Net cash from / (used in) investing activities


(1,241)


(3,725)




 




3.


Cash flows from financing activities


-


-




3.1


Proceeds from issues of shares




3.2


Proceeds from issue of convertible notes


-


-




3.3


Proceeds from exercise of share options


90


3,886




3.4


Transaction costs related to issues of shares, convertible notes or options


-


-




3.5


Proceeds from borrowings


-


-




3.6


Repayment of borrowings


-


-




3.7


Transaction costs related to loans and borrowings


-


-




3.8


Dividends paid


-


-




3.9


Other (provide details if material)


-


-




3.10


Net cash from / (used in) financing activities


90


3,886




 




4.


Net increase / (decrease) in cash and cash equivalents for the period


16,426


15,505




4.1


Cash and cash equivalents at beginning of period




4.2


Net cash from / (used in) operating activities (item 1.9 above)


(898)


(1,301)




4.3


Net cash from / (used in) investing activities (item 2.6 above)


(1,241)


(3,725)




4.4


Net cash from / (used in) financing activities (item 3.10 above)


90


3,886




4.5


Effect of movement in exchange rates on cash held


24


36




4.6


Cash and cash equivalents at end of period


14,401


14,401



 
 
 
 
 



 




5.


Reconciliation of cash and cash equivalents

at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts


Current quarter

$A'000


Previous quarter

$A'000




5.1


Bank balances


14,401


16,426




5.2


Call deposits


-


-




5.3


Bank overdrafts


-


-




5.4


Other (provide details)


-


-




5.5


Cash and cash equivalents at end of quarter (should equal item 4.6 above)


14,401


16,426




 




6.


Payments to directors of the entity and their associates


Current quarter

$A'000




6.1


Aggregate amount of payments to these parties included in item 1.2 and 2.5


142




6.2


Aggregate amount of cash flow from loans to these parties included in item 2.3


-




6.3


Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2




Item 1.2 includes aggregate amounts paid to directors including salary, directors' fees, and superannuation (excluding the reimbursement of expenses)
 




 




7.


Payments to related entities of the entity and their associates


Current quarter

$A'000




7.1


Aggregate amount of payments to these parties included in item 1.2


-




7.2


Aggregate amount of cash flow from loans to these parties included in item 2.3


-




7.3


Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2




 




 




8.


Financing facilities available

Add notes as necessary for an understanding of the position


Total facility amount at quarter end

$A'000


Amount drawn at quarter end

$A'000




8.1


Loan facilities


Nil


Nil




8.2


Credit standby arrangements


Nil


Nil




8.3


Other (please specify)


Nil


Nil




8.4


Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.




 
 
 




 




9.


Estimated cash outflows for next quarter


$A'000




9.1


Exploration and evaluation


-




9.2


Development


-




9.3


Production


-




9.4


Staff costs


(165)




9.5


Administration and corporate costs


(598)




9.6


Other - Funding of Joint Venture


(3,504)




9.7


Total estimated cash outflows


(4,267)




 




10.


Changes in tenements

(items 2.1(b) and 2.2(b) above)


Tenement reference and location


Nature of interest


Interest at beginning of quarter


Interest at end of quarter




10.1


Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced


-


-


-


-




10.2


Interests in mining tenements and petroleum tenements acquired or increased


-


-


-


-




 

+ See chapter 19 for defined terms

1 September 2016

 
Compliance statement
1        This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2        This statement gives a true and fair view of the matters disclosed.
 
Sign here:                     (Joint Company Secretary)                                  Date: 31 July 2018
 
Print name:       Melissa Chapman
 
Notes
1.       The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2.       If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3.       Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
 
About Danakali
 
Danakali Limited (ASX: DNK) (Danakali, or the Company) is an ASX-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% K20 Equiv. and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K20 Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K20 Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K20 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% K2O Equiv. The Ore Reserve is classified as 285Mt @ 11.3% K2O Equiv. Proved and 815Mt @ 10.3% K2O 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 "+300M Tonne 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+, Mg2+, Ca2+, Cl-, SO42-, H2O) 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.




1 ASX announcement, 12 June 2018


2 ASX announcement, 24 July 2018


3 ASX announcement, 12 June 2018


4 http://www.eurochemgroup.com/en/home/#


5 BBC News, Eritrea and Ethiopia to re-establish diplomatic ties, 9 July 2018


6 BBC News, Eritrea and Ethiopia to re-establish diplomatic ties, 9 July 2018


7 The Wall Street Journal, Eritrea, Ethiopia sign historic peace deal, 9 July 2018


8 BBC News, Eritrea and Ethiopia to re-establish diplomatic ties, 9 July 2018


9 Bloomberg, Once Bitter Foes, Ethiopia and Eritrea Promise 'Bridge of Love', 9 July 2018


10 The Globe and Mail, Ethiopia and Eritrea finally give peace a chance, 20 July 2018


11 The Globe and Mail, Ethiopia and Eritrea finally give peace a chance, 20 July 2018


12 The Globe and Mail, Ethiopia and Eritrea finally give peace a chance, 20 July 2018


13 BBC, Ethiopia and Eritrea set for first match in 20 years, 23 July 2018


14 Africa News, Ethiopia-Eritrea leaders meet in UAE, awarded for peace deal, 24 July 2018


15 ASX announcement, 24 July 2018


16 Shares were issued on 4 April 2018 in respect of options at A$0.35 which were exercised prior to their expiry on 30 March 2018 (funds received in the June 2018 Quarter)


17 ASX announcements, CMSC enters into Mining Agreement for world class Colluli Potash Project, 1 February 2017, and Award of Mining Licenses for world class Colluli Potash Project, 1 February 2017





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