Danakali’s H1 loss widens on rising costs at Colluli

Colluli is close to the Port of Massawa, which has been utilized by Zijin’s Bisha copper-zinc mine for almost 10 years. (Image courtesy of Reinhard Dietrich | Wikimedia Commons)

Australia’s Danakali (ASX, LON:DNK) on Friday released its financial report for the six months ended June 30. Losses widened in the first half of 2019 as the company continues to develop its flagship project in East Africa.

The potash project developer posted a pretax loss of $1.5 million for the first half of 2019, compared to a loss of $1.1 million a year earlier. Part of this expanded loss can be traced to rising administrative costs at the Colluli project, it said.

Colluli, located in the Danakil Depression region of Eritrea, is expected to be one of the world’s most significant and lowest cost sources of sulphate of potash (SOP). The project is a joint venture between the Eritrean National Mining Co and Danakali, with each having 50% ownership of the joint venture company, Colluli Mining Share Co.

In August, Danakali secured a $200 million financing to develop the Colluli project. Construction of the mine is expected to take two and a half years. Annual production could reach almost 944,000 tonnes of SOP over a possible 200-plus-year mine life.

Recent Colluli front-end engineering design results reaffirmed the “outstanding” project economics, Danakali highlighted in Friday’s press release.

Interest revenue also fell by 41% for the six-month period, while net profit on financial assets declined to $521,661 from $1.2 million year-on-year.

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