Danakali Ltd (ASX:DNK) (LON:DNK) is on track for first production from Colluli Sulphate of Potash Project in Eritrea during 2022 after Africa Finance Corporation (AFC) agreed to a US$50 million strategic equity investment.
The company has entered into a subscription agreement with AFC for a placement of fully paid ordinary shares to raise the funds, which will facilitate the start project execution activities.
Part of overall funding
This placement is equivalent to around A$74 million and will be part of the overall funding package used for the development and construction of the Colluli project in Eritreas Danakil Depression region.
Colluli is fully permitted and construction-ready, with both the EPCM contract and senior debt documentation well advanced.
“Milestone for Danakali”
Danakalis chief executive officer Niels Wage said: “I am very pleased to have secured AFC as a strategic equity investment partner.
“It marks a significant milestone for Danakali and continues our momentum towards financial close.
“Danakali has made good progress over the past 12 months having secured a large proportion of the development capex for Module I and demonstrated a sustainable approach to the future development of Colluli.”
The placement takes AFCs total participation to US$150 million which demonstrates their major and long-term commitment to the project, Danakali and Eritrea.
This amount comprises US$50 million in Danakali equity plus US$100 million of credit approved Colluli Mining Share Company (CMSC) senior debt.
“Endorsement of project”
Wage said, “An investor with the reputation of AFC is a great endorsement of the project and will provide a strong platform to attract further investment.
“We are excited to commence project execution activities and look forward to providing updates to our shareholders and other stakeholders.”
The placement will be undertaken in two tranches:
- The first tranche will consist of about 53 million new shares issued to AFC at an issue price of A60 cents per share to raise A$31.8 million (US$21.5 million); and
- The second tranche, which is subject to Danakali shareholder approval and execution of senior debt documentation, will consist of about 70 million new shares at the same issue price as Tranche 1 to raise the remaining A$42 million (US$28.5 million).
The offer price of A60 cents per share represents a 6% discount to Danakalis latest close price and a 5% discount to Danakalis 30-day VWAP.
Colluli “stands apart”
AFC's chief executive officer Samaila D Zubairu, said: “We assess hundreds of potential investment opportunities across Africa every year.
“Colluli stands apart from other opportunities due to its long-life, low-cost,Read More – Source