Member Info for tonymaso

Full report in todays Shore Capital Newsletter....

DANAKALI^ (DNK, NR, CNP) – Chairman Seamus Cornelius makes
further on-market purchase; Eritrea successfully flattening COVID-19 curve.
Chairman Seamus Cornelius clearly has significant faith in Danakali’s prospects:

he has purchased on-market another 50k shares @ A$0.3753/share (i.e. c.
A$18.8k’s worth, or c.£10k).
• He had previously purchased: earlier this month, 44.6k shares @
A$0.3699/share (A$16.5k or £8.6k); and, in February 2020, 77.9k shares
@ A$0.57/share (c.A$44.3k or c.£23k). As a result, he now has direct and
indirect interests in 5.0m shares and 5.5m shares, respectively. Danakali
currently has 318.7m shares in issue.
• The Chairman hasn’t been the only buying. Encouragingly, just last week,
CEO Niels Wage bought A$18.8k’s (c.£10k) worth of Danakali shares (50k
shares @ A$0.375/share, or c.19.5p/share).
Meanwhile, according to the blog of the UNDP (United Nations Development
Programme) Africa, Eritrea has been successfully leveraging on social capital to
“flatten the [COVID-19] Curve”. At the time the article was published (1st May,
2020), Eritrea reportedly had only 39 infections and zero deaths. The article
credited this to the Eritrean government’s communal approach, which involved
“engaging communities as frontline disseminators of risk-communication, and
promoting social distancing”.
Danakali is developing the Colluli SOP (Sulphate of Potash) project in Eritrea.
According to the company’s March 2020 report, Phase 2 of the Engineering,
Procurement & Construction Management (EPCM) programme is “materially on
track”, and that Danakali remains relatively well-funded for the time being (ending
the period with A$22.7m of cash).
• Much of the Phase 2 EPCM work currently underway is desk-based in
nature, focused on completing the capital re-estimate and revision of the
project schedule.
• The cash pile is sufficient to last 8.8 quarters, assuming March 2020
quarter’s burn rate (excluding one-offs) – with the possibility of even longer,
given that Danakali anticipates “prudent spending” (restricted to areas
critical to Colluli’s development) resulting in a lower burn rate from Q2
2020.
Colluli is a 50:50 joint venture (CMSC) with the Eritrean National Mining
Corporation (ENAMCO).
• The project has a JORC 2012-compliant resource of 1.1Bt @ 10.5% K2O
for 203Mt of contained SOP-equivalent, which in theory could potentially
allow a mine life of nearly 200 years.
• Colluli is currently envisaged as a 60-year project developed in two stages:
Module I is to produce 472ktpa SOP; Module II would see this increasing
to 944ktpa from Year 6.
• A FEED study was completed in January 2018, wherein the capital cost of
Module I was estimated at US$302m. On a 100% basis, FEED estimates
of post-tax NPV10% (real) and IRR were US$902m and 29.9%, respectively,
assuming an average SOP price of US$569/t and a standard:granular
product split of 56:44.

Thanks Jono

Think its very misunderstood.... quick summary...

- The 200 year mine life is correct - whats crazy is that the deposit is shallow and never been closed off - meaning it could actually be even bigger! But is already the largest SOP (and possibly MOP) deposit in the world
- SOP is the most valuable form of potash - and Colluli's SOP has been tested to be the highest quality SOP in the world (nb there are three elements you need to grow everything, and they are irreplaceable - Nitrogen, Phosphate and Potassium or Potash. Potash is the most valuable of the three.
- Colluli is the only open pit potash project in the world - why? Because they are all ~ 1 km underground. So its the cheapest to produce, and the lowest risk. It also sits on a major shipping channel - The Red Sea.

So to summarise, Colluli is the largest, best quality, cheapest to produce and lowest risk potash project in the world. Which makes it the most strategic and valuable of all potash deposits.

Management has been extremely conservative, which is the reason that the price is where it is now. But with the funding all but complete, a fire is about to be lit here...
-

So this is getting very, very interesting now...

When you read the following JP Morgan announcement below, and put it with the start of this thread ie only mining project on the planet to have UN sustainability approvals - there is about to be a huge amount of interest in this company...

New York, January 21, 2020
J.P. Morgan (NYSE: JPM) today announced the creation of the J.P. Morgan Development Finance Institution (DFI) to expand its development-oriented financing activities in emerging markets. In consultation with leading development institutions, J.P. Morgan has created rules-based criteria to help identify business activities and opportunities that generate both financial and developmental returns.
“By defining eligible transactions and anticipating their impact, we can help attract much-needed private investment to developing countries,” said Daniel Pinto, Co-President of JPMorgan Chase and CEO of the Corporate & Investment Bank. “Our aim is to increase engagement with clients and investors interested in financing critical projects and transactions in emerging markets.”
By defining eligible transactions and anticipating their impact, we can help attract much-needed private investment to developing countries. Our aim is to increase engagement with clients and investors interested in financing critical projects and transactions in emerging markets. Daniel Pinto, CEO of Corporate & Investment Bank, J.P. Morgan

Leading J.P. Morgan’s new effort is Faheen Allibhoy, a seasoned manager and investment professional with deep experience in emerging markets and development finance. Allibhoy, who will be based in New York, had an 18-year career at the International Finance Corporation, most recently as Country Manager responsible for operations and client relationships in West Africa. Daniel Zelikow, Global Head of J.P. Morgan’s Public Sector Group and Co-Head of the Infrastructure Finance and Advisory practice, will chair the DFI’s governing board.
The United Nations estimates that achieving the Sustainable Development Goals – which seek to address basic infrastructure, food security, climate change, health, and education – by 2030 will require $5 to $7 trillion per year, with an annual investment gap of about $2.5 trillion in developing countries. By galvanizing private capital towards this ambition, the J.P. Morgan DFI aims to help narrow the funding gap.
With its newly-launched Development Finance Institution, J.P. Morgan expects to attract additional investment into emerging economies – including connecting philanthropic or concessional funds with private capital to spur investment through blended finance models. In 2019 alone, J.P. Morgan served clients in 82 of the 144 World Bank-eligible borrowing countries. The DFI estimates that J.P. Morgan will be able to finance development activities valued at more than $100 billion annually from investment banking transactions alone, with additional contributions from its markets busines

Yeah its pretty unique - and a great way for Sirius shareholders to make some money back!

Hi Slurms,

Actually I'm not a believer in polyhalite, other than it is a 500,000 tpa market. I am a believer in potash however, which is the most valuable of the three elements needed to grow everything on the planet (Nitrogen, Phosphate and Potash or potassium), and is irreplaceable. SOP is the best quality potash available as it doesnt leave residual salt when its used (hence the price premium).

No I dont really want to see DNK taken over - there is a lot, lot more upside for shareholders when it goes into production - and construction is about to start NOW.

It's tradeable on the London, German and Australian Stock Exchanges Jiffy. Generally pretty liquid on one or more of those exchanges.

Absolutely. DNK has the most strategic and valuable deposit potash deposit in the world.

Ridiculously undervalued, and a great way for SXX shareholders to make their money back.

Tobin have a look at Danakali (DNK). Listed in London and Australia.

Quick rundown....
- Its the biggest potash deposit in the world
- Its the best quality (ie the best quality SOP, far more valuable than MOP) deposit in the world
- Its the cheapest to produce potash project in the world
- Its the lowest risk potash project in the world (nb the perceived risk is it is in Eritrea - but Eritrea and Ethiopia have now established complete peace (Ethiopian President won the Nobel Peace Prize for it)
- $250 million of the $300 Million capex is raised - the balance is imminent.
.... and its ridiculously cheap, primarily because the promotion has been hopeless.

No Steelydam,

What I'm saying (and Numis are saying) is that you should actually look at Danakali (DNK) because its cheaper, and a better project in every way...

BTW, the answer to your question is there are so many buyers queued up is because when there is a takeover bid, people take the view that they cant lose money, and are a chance of making money if there is another competing bid. The perceived worst case is if they buy at 5.4 they can sell at 5.5 into the bid (though keep in mind the bid isnt binding... until it becomes binding!

Gets me Steelydam - why would you buy now, when you could be switching into the largest, best quality, lowest risk, lowest cost potash project in the world? Thats Numis' opinion anyway...

Danakali watches Anglo’s move on Sirius as potash space heats up

Anglo American’s offer for Sirius Minerals values the UK potash project holder at £386mln (US$508mln).

Danakali is at the pre-development stage of the Colluli Potash Project in Eritrea

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SBMSF) is closely watching the progress of Anglo American plc’s (LON:AAL) takeover bid for Sirius Minerals PLC (LON:SXX) as the potash market heats up.

The global mining giant’s offer for Sirius, which owns the Woodsmith Potash Project in the UK, values the target at £386mln (US$508mln).

Danakali’s keen interest comes as it is in the pre-development stages of the world-class Colluli Potash Project in Eritrea.
Demand for world-class projects

A report prepared for Danakali by Numis said: “Anglo American's potential offer for Sirius Minerals ... highlights the potential for consolidation in the potash space and the demand for world-class projects, of which Colluli is one.

“In contrast to Woodsmith, Colluli is near-surface, with lower capital intensity and produces a product for which there is an established global market and pricing mechanism.”

Anglo’s proposal represents a premium of 34.1% to the closing price of 4.1 pence per Sirius share on January 7, 2020, and 46.5% to the volume-weighted average price of 3.75 pence per share since the September 17, 2019, strategic review announcement.

The Board of Sirius has indicated to Anglo American that it expects to be able to recommend a firm offer for Sirius if made at the price stated in the initial offer.
Strong interest in potash

Danakali said that Anglo had the resources to develop the asset and was looking to shift away from commodities such as thermal coal.

The LSE and ASX listed company said the offer indicated that major miners were taking a strong interest in potash and other green commodities.

In its report, Numis said: “We retain a Buy recommendation for Danakali and a target price of 70 pence based on 0.6x NAV, with the main upcoming catalysts being finalising the project funding package and commencing development.

“DNK achieved a number of key milestones in 2019, securing both project debt and a strategic investor to underpin the development of Colluli.”

Danakali watches Anglo’s move on Sirius as potash space heats up

Anglo American’s offer for Sirius Minerals values the UK potash project holder at £386mln (US$508mln).
Danakali Ltd - Danakali watches Anglo’s move on Sirius as potash space heats up
Danakali is at the pre-development stage of the Colluli Potash Project in Eritrea

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SBMSF) is closely watching the progress of Anglo American plc’s (LON:AAL) takeover bid for Sirius Minerals PLC (LON:SXX) as the potash market heats up.

The global mining giant’s offer for Sirius, which owns the Woodsmith Potash Project in the UK, values the target at £386mln (US$508mln).

Danakali’s keen interest comes as it is in the pre-development stages of the world-class Colluli Potash Project in Eritrea.
Demand for world-class projects

A report prepared for Danakali by Numis said: “Anglo American's potential offer for Sirius Minerals ... highlights the potential for consolidation in the potash space and the demand for world-class projects, of which Colluli is one.

“In contrast to Woodsmith, Colluli is near-surface, with lower capital intensity and produces a product for which there is an established global market and pricing mechanism.”

Anglo’s proposal represents a premium of 34.1% to the closing price of 4.1 pence per Sirius share on January 7, 2020, and 46.5% to the volume-weighted average price of 3.75 pence per share since the September 17, 2019, strategic review announcement.

The Board of Sirius has indicated to Anglo American that it expects to be able to recommend a firm offer for Sirius if made at the price stated in the initial offer.
Strong interest in potash

Danakali said that Anglo had the resources to develop the asset and was looking to shift away from commodities such as thermal coal.

The LSE and ASX listed company said the offer indicated that major miners were taking a strong interest in potash and other green commodities.

In its report, Numis said: “We retain a Buy recommendation for Danakali and a target price of 70 pence based on 0.6x NAV, with the main upcoming catalysts being finalising the project funding package and commencing development.

“DNK achieved a number of key milestones in 2019, securing both project debt and a strategic investor to underpin the development of Colluli.”
“Fits well with Anglo’s strategy”

Anglo said in a statement: “Anglo American identified the project as being of potential interest some time ago, given the quality of the underlying asset in terms of scale, resource life, operating cost profile and the nature and quality of its product.

“The project has the potential to fit well with Anglo American’s established strategy of focusing on world-class assets, particularly in the context of Anglo American’s portfolio trajectory towards later cycle products that support a fast-growing global population and a cleaner, greener, more sustainable world.”

Hi Slurms

Yes I think that has always been the perception.

But given the Ethiopian Prime Minister was recently awarded the Nobel Peace Prize and the two countries have opened the border, it is fair to say the old tensions no longer exist.

Geopolitical risks exist everywhere - including the UK. What are the import duties going to look like post Brexit guys?

I have been to Eritrea, and can assure you that much of the bad reputation was a result of previous Ethiopian regimes, unhappy that when Eritrea won their war of independence with Ethiopia, they took all the ports, leaving Ethiopia landlocked - a pretty good reason to be unhappy! So with the borders now open, those tensions have dissolved.

Colluli is the biggest potash deposit in the world (and has never been closed off).
Its the best quality potash deposit in the world.
Its the cheapest to produce potash in the world.
and... (in the words of the DNK CEO) it is the lowest risk potash to produce in the world.

Which in essence, means it is the most strategic and valuable potash deposit in the world. (Dont believe me? Look it up.)

So if a potash company in Yorkshire that has in essence failed because it couldnt attract funding has just been taken over for twice the price - whats DNK worth?