THE chances of Danakali building up to full potash production from its Colluli project in Eritrea on schedule were “diminishing”, said the firm’s chairman, Seamus Cornelius.
Commenting in his annual review, Cornelius was blunt in his assessment following the collapse in Danakali shares in March. “Given that we are coming to the end of 2020 the chances of us bringing Colluli into production in 2022 are diminishing.
“Meeting the 2022 production target date depends on us closing out funding and starting construction early in 2021,” he added.
Danakali, listed in Australia and the UK, has the majority of the $250m finance to build Colluli, but in October it failed to secure the $28.5m balance of some $50m in equity finance offered by the development finance institution, Africa Finance Corporation (AFC).
The collapse in Danakali’s share price in March just as the World Health Organisation declared Covid-19 disease a pandemic, means a general issue of shares for cash is not an option currently. “As the saying goes, all options are on the table,” he said.
Colluli, which Danakali shares with the Eritrean National Mining Corporation, is scoped to produce 472,000 tons a year of potash in sulphate (SOP) in its first phase before scaling up to second phase production of 944,000 tons annually.
Cornelius also defended the reputation of Eritrea which is currently caught up in a separatist conflict playing out in neighbouring Ethiopia. A 20-year long war between the two nations ended in 2018.
“Eritrea has for far too long been subject to unwarranted and unscrupulous criticism and worse by some foreign governments, NGO’s, well-known news outlets and talking heads who should know better,” said Cornelius in his review.
He said the country had done “… a remarkable job with scarce resources and achieved superior outcomes in the key areas of food security, water conservation, environmental protection, public health and education”.
SOP is a type of potash that is low on chloride, which is helpful to crop development, and is not as water intensive as rival products. There are a number of mineral fertiliser products in the market including muriate of potash (MOP) which Johannesburg-listed Kore is hoping to produce from its Republic of Congo prospect, Dougou Extension.