Power Generation Bids Complete for World Class Colluli Project


Danakali Ltd. (ASX:DNK; OTC:DNKLY) is pleased to advise that all bids for power generation for the Colluli potash project have been received, and that a comprehensive evaluation of the tenders has commenced. The bidding process followed an expressions of interest phase which was completed in January1 . Colluli is the most advanced greenfield SOP development in the world and is making good progress towards construction.

Tender documents have been received from a group of highly reputable power providers with extensive experience in both Africa and other developing jurisdictions. The bids were based on the power generation technical specifications determined in the definitive feasibility study. These specifications are currently being refined as part of the front-end engineering design (FEED) process which commenced in January and is progressing well.

Evaluation of the bids from the shortlisted parties is expected to be completed by late April, after which the preferred service provider will be selected and commercial terms finalised.

The definitive feasibility study for the Colluli project contemplated power generation utilising a build own operate transfer (BOOT) model, which formed the basis of the formal tendering process.

Managing Director, Paul Donaldson said “We are pleased to be advancing our contracting process and we look forward to the evaluation of the power generation bids, as well as the selection and appointment of our preferred power generation service provider. We are also very happy with the high level of interest we have received to date, which is a clear endorsement of both the project and the jurisdiction. The frontend engineering process is progressing well, and we are currently hosting a visit of site engineers within Eritrea for detailed engagements with local service providers and completion of detailed logistics studies for the delivery of the plant components.”

Danakali Limited, in conjunction with the Eritrean National Mining Corporation (ENAMCO), is developing the world class Colluli Potash Project located in the Danakil region of Eritrea, East Africa. Colluli is the largest and shallowest known evaporite deposit in the world with a solid form ore reserve estimate of over 1.1bn tonnes2 .

Permitting for the project was completed in February 2017, providing the Colluli Mining Share Company (CMSC) exclusive rights to apply for mining licenses within the Colluli tenements. Seven mining licenses have also been granted. Colluli is the most fundable and economically attractive advanced stage SOP Danakali Limited, Level1, 234 Churchill Avenue, Churchill Court, Subiaco, Perth, WA 6008 Page 2 of 4 ABN 56 097 904 302 Tel: +61 8 6315 1444 greenfield sulphate of potash (SOP) development in the world. The project demonstrates outstanding economics including industry leading capital intensity, bottom quartile operating costs, close proximity to coast and key markets and unrivalled product diversification potential.

Globally recognised, and highly reputable engineering and construction firm, Fluor was appointed as the lead for the FEED process for the project2 . Fluor is a highly reputable, globally recognised engineering and construction firm with extensive experience in potash and Africa. Approval of the social and environmental impact assessment (SEIA) for the project was given by the Ministry of Land, Water and Environment in December 2016. The award of the Mining Agreement and Mining License for the project was completed in February.

1. ASX announcement, January 2017

2. ASX announcement, May 2015

Forward Looking Statements and Disclaimer

The information in this document is published to inform you about Danakali Limited (the “Company” or “DNK”) and its activities. DNK 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 the Colluli Project 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 and financial assumptions made in this presentation are consistent with assumptions detailed in the Company’s ASX announcements dated 25 February 2015, 4 March 2015, 19 May 2015, 23 September 2015, 30 November 2015, 15 August 2016 and 1 February 2017 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.

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