Australia’s Danakali (ASX, LON: DNK) said it plans to spend the rest of the year raising funds to bring its Colluli potash project in Eritrea closer to construction.
Reporting on the first two quarters of 2020, the Perth-based miner said it’s considering a range of options to fund work at Colluli, which is 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 Niels Wage said in a statement.
The project, Wage noted, is on track for production in 2022.
In the initial phase of operations, Colluli would annually produce more than 472,000 tonnes sulphate of potash (SOP), a premium grade fertilizer.
Annual output could rise to almost 944,000 tonnes should Danakali begin a second phase of development, as the project has a 200-year mine-life.
The miner, which posted a loss of US$1.7 million, up from US$1.5 million in the same period last year, said that plans for the remainder of 2020 include finalizing conditions to receive US$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 US$1.7 million, up from US$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.