Danakali Ltd (ASX:DNK) has announced that Afreximbank has formally granted credit approval to provide a US$42 million guarantee for the construction of power plant for the Colluli Potash Project in Eritrea.
The preferred contractor, Inglett & Stubbs International (ISI), will use the guarantee to facilitate senior debt funding that will be used towards construction of the project’s power plant.
Earlier this week, Danakali received credit approval for a US$200 million senior debt facility from African Export-Import Bank (Afreximbank), in partnership with Africa Finance Corporation (AFC).
Notably, the US$42 million guarantee is separate from the project financing requirements and does not represent an increased debt obligation for Colluli Mining Share Company (CMSC).
Credit approval is a critical project financing and execution milestone and represents the conclusion of an extensive due diligence process.
Today’s credit approval for the Guarantee further demonstrates Afreximbank’s confidence in Colluli and comfort investing in Eritrea.
The Guarantee allows ISI’s project financing to advance towards completion.
ISI will utilize a build own operate transfer (BOOT) model, which diversifies project risk by utilizing the experience of proven operators.
ISI’s power generation solution is designed to match the Front End Engineering Design power requirements and has been integrated into the FEED results.
Danakali 2018 Colluli Project Update