Australia’s Danakali (ASX, LON:DNK) has secured a further $50 million investment from its ally Africa Finance Corporation (AFC), which will allow it to speed up development of its world-class Colluli sulphate of project (SOP) in Eritrea.
The company has entered into a subscription agreement with AFC for a placement of fully paid ordinary shares to raise the funds needed to begin production of SOP, a premium grade fertilizer, in 2022.
Upon the placement’s completion, AFC will hold 32% of Danakali, granting the company’s rights to nominate up to two directors to Danakali’s board.
The Perth-based company received last year a $200 million senior debt facility from AFC. Together with African Export Important Bank (Afreximbank), the financial institution has provided the majority of the overall funding for Colluli, which is expected to become one of the world’s most significant and lowest cost sources of SOP.
In October, the company said it would spend $1.4 million until the end of the year to build the mine, considered “a game changer” for Eritrea’s economy.
“The government will benefit from the longer-term development of the project, and the expected significant boost to royalties, taxation and exports, and from jobs and skills and economic development of the region,” chief executive Niels Wage told MINING.COM in July.
The development of the Colluli potash projects coincides with the move towards diplomatic relations between the once feuding countries of Eritrea and Ethiopia, which officially declared peace last year.