Danakali: Binding Take-or-Pay Offtake Confirmed for up to 100% of Colluli Module I SOP Production
12 Junho 2018 - 6:25AM
Business Wire
- EuroChem will take, pay, market and
distribute up to 100% of Colluli Module I SOP production
- 10 year term, with an option, if
mutually agreed, to extend for a further 3 years
- EuroChem is an outstanding partner
with global reach and extensive fertiliser capabilities
- Reinforces Colluli’s position as the
most advanced and economically attractive SOP greenfield
development project
- Critical milestone for project
funding processes
Danakali Limited (ASX: DNK) (Danakali, or the
Company), on behalf of Colluli Mining Share Company
(CMSC), is pleased to announce that a binding take-or-pay
offtake agreement has been reached with EuroChem Trading GmbH
(EuroChem) for up to 100% of Module I Sulphate of Potash
(SOP) production from the Colluli Potash Project
(Colluli, or the Project) (the Agreement). The
Project, located in Eritrea, East Africa, is 100% owned by CMSC, a
50:50 joint venture between Danakali and the Eritrean National
Mining Corporation (ENAMCO).
EuroChem will take, pay, market and distribute up to 100%
(minimum 87%) of Colluli Module I SOP production. EuroChem may
use a portion of Colluli SOP to produce complex Nitrogen Phosphate
Potassium (NPK) fertilisers at its facilities in Antwerp, Belgium
and Nevinnomyssk, Russia. The balance of SOP provided to EuroChem
will be sold through their international channels. CMSC has the
option to sell up to 13% through alternative sales channels.
The term of the Agreement is 10 years from the date of
commissioning of the Colluli SOP processing plant, with an option
to extend for a further 3 years if agreed by EuroChem and CMSC.
EuroChem may terminate the Agreement if first commercial production
has not occurred by 1 July 2022; well beyond CMSC’s production
commencement expectations. Either party may terminate the Agreement
if a project financing agreement has not been executed and first
drawdown achieved within 14 months of the signing of the Agreement.
The Danakali and CMSC Boards, and the Eritrean Ministry of Energy
and Mines, have approved CMSC’s entry into the Agreement.
EuroChem is an outstanding partner with global reach and
extensive fertiliser expertise and experience. The Agreement
represents a strong endorsement for the Project. EuroChem has
agreed to provide technical support to the Project on terms to be
agreed. EuroChem Group AG (EuroChem Group) will provide a
parent company guarantee as part of the Agreement.
The Agreement is instrumental in unlocking project
funding. The take-or-pay nature of the Agreement (and
associated terms) provides cash flow certainty and strengthens the
Colluli and Danakali investment propositions. Other important debt
milestones are also well progressed, including operational contract
and procurement and supplier list finalisation.
Danakali Chief Executive Officer, Danny Goeman said: “We
could not be happier with this result. EuroChem is an outstanding
partner for the Project. EuroChem has a wealth of experience and
expertise in the fertiliser sector. We would like to thank EuroChem
for their part in what was a smooth and productive negotiation
process that has resulted in an excellent outcome for both
parties.”
Norton Rose Fulbright acted as Danakali’s legal adviser in
relation to the Agreement, supporting negotiations and associated
legal drafting.
See the full announcement here:
http://www.danakali.com.au/investor-relations/asx-announcements
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180612005672/en/
Danakali LimitedDanny GoemanChief Executive
Officer+61 8 6315 1444orWilliam SandoverHead of Corporate
Development & External Affairs+61 499 776 998
Danakali (ASX:DNK)
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