Eritrea’s Colluli potash project is the world’s largest and most advanced Sulphate of Potash (SOP) greenfield development project with a mine life in excess of 200 years.
Australia’s Danakali Ltd. (ASX: DNK) has agreed to sell its 50 per cent shareholding in its flagship Colluli potash project in Eritrea, almost 13 years after partnering with the Eritrean National Mining Corporation (ENAMCO), to a Chinese company Sichuan Road and Bridge Group for US$166 million (A$258.8 million).
Colluli Mining Share Company (CMSC) is a joint venture between Danakali Ltd. and Eritrean National Mining Corporation (ENAMCO) that was established to develop the Colluli potash project.
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Danakali has now signed a term sheet to sell its interest in CMSC, which is held through its subsidiary, STB Eritrea.
Subject to conditions, the US$166 million deal is expected to be finalized between March 31 and May 31, 2023.
The transaction comprises of US$135 million for the CMSC equity and US$31 million (subject to adjustment for deferred payment) for the STB-ENAMCO shareholder loan.
The Colluli potash project is considered one of the world’s most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer.
The project has the world’s largest JORC compliant reserve at 1.1 billion tonnes. It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt.
There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required.
A United Nations report published in 2019 suggested that Colluli could significantly boost the economy of Eritrea.
The project is the only known source of potash that allows extraction of the fertilizer in solid form. It also has access to solar, wind and geothermal energy systems – the East African rift.
DNK shares are up 30.77 per cent to trade at 34 cents.