Danakali receives credit approval for $200m finance for Colluli project

Eritrean Potash mining company, Danakali, has announced that Africa Finance Corp. (AFC) and African Export-Import Bank (Afreximbank, together with the Mandated Lead Arrangers), have obtained formal credit approval to provide the Colluli Mining Share Co. (CMSC) with US$200 million in senior debt finance (the Facility).

In the initial phase of operation, Colluli would produce more than 425,000 tonnes a year of sulphate of potash (SOP), a premium grade of fertilizer. The annual output could rise to almost 850,000 tonnes if Danakali decides to go ahead with the second phase of development.

The Facility will be part of the overall project funding package used for development and construction of the Colluli Potash Project (Colluli or the Project) in the Danakil Depression region of Eritrea, East Africa.

The Facility, funded equally by the Mandated Lead Arrangers, remains subject to completion of final documentation and will be subject to conditions precedent to drawdown. It will be underwritten by the Mandated Lead Arrangers and includes formal approval of export credit support from the Export Credit Insurance Corporation of South Africa SOC Ltd (ECIC). ECIC is South Africa’s statutory export credit and foreign investment insurance provider, and this transaction will represent the first time they have provided export credit support to a non-South African bank.

The credit approval represents the conclusion of an extensive due diligence process by the Mandated Lead Arrangers and ECIC which included:

• Colluli site visits by the Mandated Lead Arrangers and independent experts.
• Meetings with the Eritrean National Mining Corp. (ENAMCO), Eritrean Ministries and other key Eritrean stakeholders.
• Extensive technical, marketing, environmental, social and legal evaluations including the assessment of independent expert reports.

Successful completion of the credit approval process is a strong endorsement for Eritrea, the calibre of the Project, the strength of the binding take-or-pay offtake agreement executed with EuroChem and the quality of the Front-End Engineering Design (FEED) study. CMSC and the Mandated Lead Arrangers will now proceed to final documentation and ultimately the execution of the Facility, which is on track to be the first mining senior debt project financing drawdown in Eritrea.