LONDON: Danakali Limited has entered into a subscription agreement with Africa Finance Corporation (AFC) for a placement of fully paid ordinary shares to raise US$50 million.

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

Colluli is fully permitted and construction ready, with both the EPCM contract and senior debt documentation well advanced. The Placement facilitates commencement of project execution activities which places Colluli on track for production during 2022.

The placement takes AFC’s total participation to US$150 million (US$50M in Danakali equity plus US$100M of credit approved Colluli Mining Share Company (CMSC) senior debt) demonstrating their major and long-term commitment to the Project, Danakali and Eritrea.

Chief Executive Officer of Danakali, Niels Wage, said: “I am very pleased to have secured AFC as a strategic equity investment partner. It marks a significant milestone for Danakali and continues our momentum towards financial close. Danakali has made good progress over the past 12 months having secured a large proportion of the development capex for Module I and demonstrated a sustainable approach to the future development of Colluli. An investor with the reputation of AFC is a great endorsement of the project and will provide a strong platform to attract further investment. We are excited to commence project execution activities and look forward to providing updates to our shareholders and other stakeholders.”

Chief Executive Officer of AFC, Samaila D. Zubairu, said: “We assess hundreds of potential investment opportunities across Africa every year. Colluli stands apart from other opportunities due to its long life, low cost, low technical risk and proximity to infrastructure. We look forward to a cooperative alliance with Danakali in delivering the Colluli Sulphate of Potash Project.”