Danakali has announced that its Colluli potash project in Eritrea, East Africa has secured credit approval for a $200m senior debt facility.

Africa Finance Corporation and African Export Import Bank have obtained formal credit approval to provide debt financing to Colluli Mining Share Company (CMSC).

The facility, funded equally by the mandated lead arrangers, will be part of the overall project funding package. It will be used towards the development of the Colluli potash project in the Danakil Depression region of Eritrea.

Danakali chief executive officer Niels Wage said: “Final credit approval from leading development finance institutions AFC and Afreximbank for $200m of senior debt represents outstanding progress and a significant derisking milestone for the Colluli project financing.

“The facility is set to provide the majority of the funding required for construction and project execution.

“We look forward to working with the Mandated Lead Arrangers to complete conditions precedent and reach financial close. I am very pleased to achieve credit approval as it represents one of the last remaining milestones prior to project execution.”

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CMSC and the mandated lead arrangers will now work towards final documentation, thereby, executing the facility.

Endeavour Financial has been appointed as debt financial advisor to Danakali and CMSC, while Standard Chartered is acting as corporate financial advisor to Danakali.

In February 2017, CMSC signed a mining agreement with the Eritrean Ministry of Energy and Mines for the potash project.

CMSC is a 50:50 joint venture (JV) between Danakali Limited and the Eritrean National Mining Corporation (ENAMCO) and owns 100% of the Colluli potash project.

In April 2016, Danakali signed MoUs with eight multi-national companies for the offtake of sulphate of potash (SOP) from this Eritrean potash project.