Australia’s Danakali has divested its 50% stake in the Colluli Mining Share Company (CMSC), which owns the Colluli potash project in Eritrea to China’s Sichuan Road and Bridge Group (SRBG).
CMSC was established as a 50:50 joint venture between Danakali and Eritrean National Mining Corporation (ENAMCO) for developing the Colluli project.
According to the deal, SRBG will acquire all of Danakali’s stake in the CMSC for $135m, as well as a shareholder loan of $31m owned by CMSC to Dankali.
Holding an interest in CMSC through its subsidiary STB Eritrea, Danakali has now received $105m as the first tranche payment.
It will receive the second tranche payment of $16m within the next six months.
Danakali will distribute 90% of the net proceeds from the transaction to its shareholders and shift focus towards identifying new projects for investment.
Danakali executive chairman Seamus Cornelius said: “This is an excellent outcome for all stakeholders made possible by a lot of hard work by too many people to name over many years. Special thanks and acknowledgement must be made to ENAMCO, the Eritrean Ministry of Mines and Energy and SRBG.”
The Colluli potash project is estimated to have near-surface high-grade sulphate of potash (SOP) reserve of 1.1 billion tonnes, making it one of the world’s largest of its kind.
With an operational life of 200 years, the Colluli project is being developed in two phases.
SRBG is owned by Shudao Investment Group (SDIG).