Australia’s Danakali (ASX, LON:DNK) said on Thursday it plans to spend the rest of the year focused on closing the required financing to bring its Colluli potash project closer to construction, as Eritrea eases covid-19 restrictions.
Reporting results for the six months to June 30, the Perth-based miner said it’s considering a range of options to fund pending work at Colluli, a 50:50 joint venture between the company and the Eritrean National Mining Corporation (ENAMCO).
“We started 2020 with the kick-off of the project development for Colluli and despite the unprecedented and challenging covid-19 pandemic, we have been able to make good progress with our engineering, procurement and construction management activities,” chief executive officer Niels Wage said in the statement.
The project, Wage noted, is on track for production in 2022.
In the initial phase of operations, Colluli would produce more than 472,000 tonnes a year of sulphate of potash (SOP), a premium grade fertilizer.
Annual output could rise to almost 944,000 tonnes if Danakali decides to go ahead with a second phase of development, as the project has a possible 200-year plus mine-life.
The miner, which posted a widened loss of $1.7 million from $1.5 million in the same period last year, said that plans for the remainder of 2020 include finalizing conditions to receive $28.5 million from the African Finance Corporation (AFC).
Danakali also said that administration expenses in the first half of the year were 36% higher, at $1.7 million up from $1.3 million in 2019.
The company will also begin phase three of construction at the project, which has been called “a game-changer” for the East African nation’s economy.
Colluli’s development coincides with the move towards diplomatic relations between the once feuding countries of Eritrea and Ethiopia, which officially declared peace in July 2018.
Until that year, Eritrea was on the United Nations’ sanctions list.