Eritrea: Ministry Approves Social and Environmental Impact Assessment

Business 6-12-2016 Cap Eri 345
Critical milestone achieved for Mining License approvals.

Danakali Limited (ASX:DNK) (“Danakali” or the “Company”) is pleased to announce that the Eritrean Ministry of Land, Water and Environment (the Ministry) has accepted and approved the Social and Environmental Impact Assessment (SEIA) for the Colluli Project. The SEIA was submitted in April following a series of stakeholder engagements that were conducted post the completion of the definitive feasibility study (DFS), as announced on 30 November 2015.

Approval of the SEIA represents a critical milestone in the advancement of the Colluli Project and paves the way for the approval and issuance of the mining license and final project development approvals.

The acceptance and approval follows a comprehensive review of the SEIA by an Impact Review Committee, appointed by the Ministry. A series of engagements between the Committee and Danakali and Colluli Mining Share Company (CMSC) representatives, and an evaluation of the assessment relative to the original terms of reference took place over the last eight months. Representatives of the Impact Review Committee visited the Colluli Project site in June 2016, followed by a visit in mid-July by the Eritrean Ministry of Energy and Mines, accompanied by senior officials of that ministry.

In its approval letter, the Ministry wrote “Having reviewed the responses from the company in its entirety, the Department of Environment appreciates CMSC for its proper addressing and incorporation of all the comments provided and accepts the SEIA.”

Managing Director, Paul Donaldson said “This is a significant positive step in the approvals process and is the outcome of a very comprehensive body of work which was conducted throughout the feasibility phase, and a thorough review by representatives of the Ministry and the Impact Review Committee. The Company continues progressing its Mining Agreement and Mining License, and we are positive that we can conclude this step of the process shortly. The Mining Agreement and License are the final approvals by the Ministry of Energy and Mines, meaning the company is getting closer to commencing the execution of the project.”

About Danakali Ltd

Danakali is an ASX listed company and 50% owner of the Colluli Potash Project in Eritrea, East Africa. The company is currently developing the Colluli Project in partnership with the Eritrean National Mining Company (ENAMCO). The project is located in the Danakil Depression region of Eritrea, and is ~75km from the Red Sea coast, making it one of the most accessible potash deposits globally. Mineralisation within the Colluli resource commences at just 16m, making it the world’s shallowest potash deposit. The resource is amendable to open pit mining, which allows higher overall resource recovery to be achieved, is generally safer than underground mining and is highly advantageous for modular growth. The company has completed a definitive feasibility study for the production of potassium sulphate, otherwise known as SOP. SOP is a chloride free, specialty fertiliser which carries a substantial price premium relative to the more common potash type; potassium chloride. Economic resources for production of SOP are geologically scarce. The unique composition of the Colluli resource favours low energy input, high potassium yield conversion to SOP using commercially proven technology. One of the key advantages of the resource is that the salts are present in solid form (in contrast with production of SOP from brines) with which reduces infrastructure costs and substantially reduces the time required to achieve full production capacity. The resource is favourably positioned to supply the world’s fastest growing markets. Our vision is to bring the Colluli project into production using the principles of risk management, resource utilisation and modularity, using the starting module as a growth platform to develop the resource to its full potential.

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