Danakali – A Potash Miner to Watch

Development News
danakali potash miner Eritrea
Danakali’s Colluli potash project in Eritrea is an absolute game changer with a unique and unrivalled potash deposits.

By CapEri,

Danakali (ASX:DNK) shares are signaling bullish signs as the last trading week of 2015 comes to an end. The short-term price trend outperforms the long term since shortly before Christmas with a share price development of + 0.02 (7.41%) closing at 0.29-cent AUD.

This leaves the price at half the level of a 12-month price target set by some investment analysts and the list of indications that the price target could be outperformed is increasing.

The company’s recent Definitive Feasibility Study (DFS) revealed improved economics of the Colluli potash project confirming a Phase 1 development capital reduction of 30%. 

Colluli is a very large potash reserve located strategically well to serve booming population growth in Africa and Asia, while also lying close to traditional Middle Eastern and European markets.

The operation is based on a open pit mine using methods to take full advantage of shallow mineralization (16 m below surfaced.) This depth of mineralization contributes significantly to the low cost characteristic of the project.

Danakali might export the potash via Eritrea’s expanding Red Sea port Massawa located 180 km from the mine. The port is expected to add two new terminals under construction by China Harbour Engineering Co. Ltd. in 2017.

The upgrade of port facilities comprises the design and construction of a 70,000t bulk cargo terminal and a 50,000t multi-purpose terminal, according to the Chinese company.

Global potassium demand is estimated to grow at an average annual rate of 2.5 percent between 2014 and 2019, according to the International Fertilizer Industry Association (IFA).

Investment risk in Eritrea is declining rapidly given recent improvements in international relations with the EU and other countries.

The European Union announced €200 million in new long term support to promote poverty reduction and socio-economic development in Eritrea.

Development cooperation between Germany and Eritrea has been reinstated after nearly a decade with the visit of German Development Minister Gerd Müller in December.

Early this year Eritrea joined an alliance with the Gulf States Qatar, UAE and Saudi Arabia to oversee strategic sea lanes and security in the Red Sea, adding to its further improved relations in the region.

A new multi-million dollar port in Massawa
Construction of a new multi-million dollar 70,000 ton bulk cargo terminal and a 50,000 ton multi-purpose terminal are on the pipeline by the Chinese construction firm China Harbour Engineering Co.Ltd, in Massawa