TIDMDNK
RNS Number : 2449M
Danakali Limited
13 September 2019
Announcement Friday, 13 September 2019
============= ===========================
Danakali Half Year Financial Report
Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company),
focused on the development of the Colluli Sulphate of Potash
Project (Colluli, or the Project), is pleased to release its
Financial Report for the six month period ended 30 June 2019 (Half
Year Financial Report).
Key achievements:
-- Credit approval received for US$200M senior debt facility,
funded and underwritten equally by Mandated Lead Arrangers Africa
Finance Corporation (AFC) and African Export Import Bank
(Afreximbank);
-- Credit approval received by Inglett & Stubbs
International from Afreximbank for US$42M guarantee to facilitate
senior debt funding for the Colluli power plant;
-- Appointment of Mr. Niels Wage as Chief Executive Officer;
-- Promotion of Mr. Tony Harrington to Project Director; and
-- United Nations Development Programme report released
highlighting Colluli's potential to contribute to Eritrean economy
and 13 of the 17 United Nations Sustainable Development Goals.
Expectations for the remainder of 2019:
-- Advance remaining project funding requirements; and
-- Commence project execution.
Chief Executive Officer of Danakali, Niels Wage said: "During
2019, we have continued to achieve important milestones as we
progress towards bringing Colluli into production. With credit
approval secured, we have a large proportion of the development
capex for Module I (US$302M) secured, and an aim to commence
development later this year. This financial achievement was secured
in the context of the UNDP report released earlier in 2019, which
highlighted the Project's potential for contributing significantly
to sustainable development in Eritrea.
"With the support of AFC and Afreximbank, two leading African
development finance institutions, and Standard Chartered Bank
acting as our corporate financial adviser, we are assessing a range
of options for funding the balance of the funding required to
maintain momentum and begin development. We look forward to
unlocking operational catalysts in the coming months."
For more information, please contact:
Danakali
Niels Wage William Sandover
Chief Executive Officer Head of Corporate Development &
+61 8 6189 8635 External Affairs
+61 499 776 998
Corporate Broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / Matthew Hasson / James David Simonson / Sarah Hourahane
Black / /
Paul Gillam Dinara Shikhametova
+44 (0)20 7260 1000 danakali@instinctif.com
+44 (0)207 457 2020
Visit the Company's website: www.danakali.com
Follow Danakali on LinkedIn:
www.linkedin.com/company/danakali-limited
Subscribe to Danakali on YouTube:
www.youtube.com/channel/UChGKN4-M4lOvPKxs9b-IJvw
DANAKALI LIMITED
ABN 56 097 904 302
FINANCIAL REPORT FOR THE HALF YEARED
30 JUNE 2019
The following sections of the Financial Report are available on
our website at www.danakali.com:
Auditor's Independence Declaration
Independent Auditor's Report
This interim financial report does not include all the notes of
the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
Annual Report for the year ended 31 December 2018 and any public
announcements made by Danakali Limited during the interim reporting
period in accordance with the continuous disclosure requirements of
the Corporations Act 2001.
Corporate Information
Directors
Seamus Cornelius (Non-Executive Chairman) Zhang Jing (Non-Executive Director)
Paul Donaldson (Non-Executive Director) Robert Connochie (Non-Executive
John Fitzgerald (Non-Executive Director) Director)
Andre Liebenberg (Non-Executive
Director)
Executive Management Joint Company Secretaries
Niels Wage (Chief Executive Officer) Catherine Grant-Edwards
Stuart Tarrant (Chief Financial Officer) Melissa Chapman
Registered Office & Principal Place of Business
Level 11, Brookfield Place, 125 St Georges Terrace PERTH WA 6000
Telephone: +61 (0)8 6189 8635
Bank Auditors
National Australia Bank Ernst & Young
100 St Georges Terrace 11 Mounts Bay Road
PERTH WA 6000 PERTH WA 6000
Share Register (Australia) Share Register (United Kingdom)
Computershare Investor Services Pty Computershare Investor Services
Limited Pty Limited
Level 11, 172 St Georges Terrace The Pavilions, Bridgwater Road
PERTH WA 6000 Bristol BS13 8AE, United Kingdom
Telephone: 1300 850 505 (Inside Australia) Telephone: +44 (0) 370 702
Telephone: +61 (0)3 9415 4000 (Outside 0003
Australia)
Facsimile: +61 (0)3 9473 2500
www.computershare.com www.computershare.com
To facilitate trading of Danakali's shares on the Standard
Segment of the London Stock Exchange (LSE) Main Market, Danakali
has established a Depositary Interest (DI) facility, under which t
has appointed Computershare Investor Services Plc as the
depositary. Securities of Australian issuers such as Danakali
cannot be directly registered, transferred or settled through CREST
(which is the electronic settlement system in the UK). The DI
facility overcomes this by creating entitlements to Danakali's
shares (the DIs), which are deemed to be UK securities and
therefore admissible to CREST. The underlying shares are listed and
traded on the Standard Segment of the LSE Main Market, while the
DIs are transferred in CREST to settle those trades.
Website
www.danakali.com.au
Stock Exchange Listing
Danakali Limited Shares are listed on the Australian Stock
Exchange (ASX:DNK) and the London Stock Exchange (LSE:DNK).
American Depository Receipts
The Bank of New York Mellon sponsors DNK's Level 1 American
Depository Receipts Program (ADR) in the United States of America.
DNK's ADRs are traded on the over-the-counter (OTC) securities
market in the US under the symbol DNKLY and CUSIP: 23585T101. One
ADR represents one ordinary share in DNK.
US OTC Market information is available http://www.otcmarkets.com/stock/DNKLY/quote
here: http://www.adrbnymellon.com//?cusip=23585T101
DNK's ADR information can also be viewed shrrelations@bnymellon.com
here: OR
ADR Holders seeking information on their NEW YORK
shareholding should contact: Rick Maehr
LONDON richard.maehr@bnymellon.com
Mark Lewis Telephone +1 212 815 2275
mark.lewis@bnymellon.com
Telephone +44 207 163 7407
Your directors submit their report together with the condensed
financial statements of the consolidated entity, being Danakali
Limited (Danakali or the Company) and its controlled entities (the
Group) for the half year ended 30 June 2019.
Directors
The names of the directors who held office during or since the
end of the half year are:
Seamus Cornelius (Non-Executive Chairman) (transitioned from
Executive Chairman to Non-Executive Chairman
25 June 2019)
Paul Donaldson (Non-Executive Director)
John Fitzgerald (Non-Executive Director)
Zhang Jing (Non-Executive Director)
Robert Connochie (Non-Executive Director)
Andre Liebenberg (Non-Executive Director)
The Directors held their positions throughout the entire half
year period and up to the date of this report unless stated
otherwise.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the half-year ended
30 June 2019 was advancing the Colluli Potash Project (Colluli, or
the Project) in Eritrea, East Africa. There was no significant
change in the nature of the Group's activities during the six
months to 30 June 2019.
REVIEW AND RESULTS OF OPERATIONS
The net loss after tax of the Group for the half-year ended 30
June 2019 amounted to $1,540,083 (30 June 2018: $1,108,408). Total
consolidated cash on hand at the end of the period was $6,279,862
(31 December 2018: $9,550,585).
REVIEW OF OPERATIONS
PROJECT OVERVIEW
Colluli is located in the Danakil Depression region of Eritrea,
East Africa. Colluli is approximately 177km south-east of the
capital, Asmara, and 180km from the port of Massawa, which is
Eritrea's key import/export facility. The Project is a joint
venture between the Eritrean National Mining Company (ENAMCO) and
Danakali with each having 50% ownership of the joint venture
company, the Colluli Mining Share Company (CMSC). CMSC is
responsible for the development of the Project.
The Danakil Depression is an emerging potash province, which
commences in Eritrea and extends south across the border into
Ethiopia. It is one of the largest unexploited potash basins
globally; over 6Bt of potassium bearing salts suitable for
production of potash fertilisers have been identified in the region
to date (DNK announcement 19 February 2018 and
circumminerals.com/resources).
Colluli is located approximately 75km from the Red Sea coast
providing unrivalled future logistics potential. The Project
resides on the Eritrean side of the border, giving Colluli a
significant advantage relative to all other potash development
projects in the Danakil Depression, which need to ship from the
Tadjoura Port in Djibouti - over 600km by road from the closest
project on the Ethiopian side of the border.
Colluli boasts the shallowest mineralisation in the Danakil
Depression. Mineralisation commences at just 16m below surface. In
addition, the potassium bearing salts are present in solid form (in
contrast with production of SOP from brines). Shallow access to
salts in solid form provides Colluli with significant mining,
logistics and, in turn, capital and operating cost advantages over
other potash development projects globally. The Project also
carries a significantly lower level of complexity as a consequence
of predictable processing plant feed grade and predictable
production rates due to low reliance on ambient conditions.
Shallow mineralisation makes the resource amenable to open cut
mining: a proven, high productivity mining method. Open cut mining
provides higher resource recoveries relative to underground and
solution mining methods, is generally safer, and can be more easily
expanded.
The Colluli resource comprises three potassium bearing salts in
solid form: Sylvinite, Carnallitite and Kainitite. These salts are
suitable for high yield, low energy production of Sulphate of
Potash (SOP), which is a high-quality potash fertiliser carrying a
price premium over the more common Muriate of Potash (MOP). SOP is
chlorine free and is commonly applied to high value crops such as
fruit, vegetables, nuts, and coffee. Economic resources for primary
production of SOP are geologically scarce and there are few current
primary producers.
The JORC-2012 compliant Mineral Resource for Colluli is
estimated at 1.289Bt @ 11% K(2) O for 260Mt of contained SOP
equivalent (DNK announcement 19 February 2018). The JORC-2012
compliant Ore Reserve estimate for Colluli is estimated at 1,100Mt
@ 10.5% K2O for 203Mt of contained SOP equivalent (ASX announcement
19 February 2018). The Measured and Indicated Mineral Resources are
inclusive of those Mineral Resources modified to produce the Ore
Reserves.
Colluli will be developed to its full potential by adopting the
principles of risk management, resource utilisation and modularity,
using the first module as a platform for growth. The Colluli
Front-End Engineering Design (FEED) modules are:
-- Module I - 472ktpa SOP production; and
-- Module II - Additional 472ktpa SOP production commencing in year 6.
The massive Colluli Ore Reserve has significant capacity to
underpin further expansions and support decades of growth beyond
Modules I and II.
Colluli has significant diversification potential beyond SOP,
including the option to produce additional potash and salt products
such as MOP, SOP-M, Kieserite (MgSO(4) .H(2) O), Gypsum (CaSO(4)
.2H(2) O), Magnesium Chloride (MgCl(2) ), and Rock Salt (NaCl). The
Colluli SOP Mineral Resource also comprises an 85Mt Kieserite
(Magnesium Sulphate) Mineral Resource (DNK announcement 15 August
2016). Kieserite is a suitable fertiliser for magnesium deficient
soils. A 347Mt Rock Salt (Sodium Chloride) Mineral Resource (DNK
announcement 23 September 2015) has also been established at
Colluli. Unprocessed Rock Salt can be used for de-icing, processed
Rock Salt can be used as table salt.
A FEED for Colluli was undertaken to provide offtakers and
funders with a high level of study detail and accuracy and is the
final study stage before project execution. FEED firmly establishes
Colluli as the most progressed, economically attractive, and
fundable SOP greenfield development project globally (DNK
announcement 29 January 2018). The FEED results reaffirm the
outstanding project economics of Colluli. Industry leading capital
intensity as a result of low development capital requirements for
Module I and high annual production rate. This, combined with
forecast first quartile operating costs, resulted in a Project Net
Present Value (NPV(10) ) of US$902M and Internal Rate of Return
(IRR) of 29.9%. The Danakali attributable economic outcomes were an
NPV(10) of US$439M and IRR of 31.3%.
Mining Agreement and Mining Licenses in place
The Project is fully permitted and ready to advance into
engineering and construction upon securing funding.
CMSC entered into a mining agreement (Mining Agreement) with the
Eritrean Ministry of Energy and Mines (MoEM) and was awarded mining
licenses (Mining Licenses) for the exploitation of mineral
resources within the Colluli tenements (DNK announcement 1 February
2017).
The Mining Agreement is applicable to the entire 1.3Bt JORC-2012
compliant Mineral Resource and provides exclusive rights to CMSC to
apply for mining licenses to exploit the Potassium, Magnesium,
Calcium and Sodium salts within the resource, as well as
Bromine.
The award of the Mining Licenses followed the completion of a
series of pre-requisites including the completion and submission of
the Definitive Feasibility Study (DFS), submission of a
comprehensive social and environmental impact assessment and
associated management plans, a series of pre and post DFS
stakeholder engagements with local and regional communities and
stakeholders, and the signing of the Mining Agreement.
A Social and Environmental Impact Assessment (SEIA) and
associated Social and Environmental Management Plans (SEMPs) have
been completed to ensure consistency with the Equator Principles.
Stakeholder engagements have been completed throughout the study
phases, and the Project has strong support from local communities.
Following a period of consultation and further works, between the
Eritrean Ministry of Land, Water & Environment and CMSC, the
SEMPs finalised by CMSC were signed off in August 2018 following an
extensive review process. The SEMPs are a cornerstone of the
environmental, social and safety management system being developed
by CMSC and provide the foundation for compliance.
Offtake agreement signed and debt financing term sheet
executed
A binding take-or-pay offtake agreement has been reached with
EuroChem Trading GmbH (EuroChem) for up to 100% of Module I SOP
production from the Colluli Potash Project. EuroChem will take,
pay, market and distribute up to 100% (minimum 87%) of Colluli
Module I SOP production. 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 is an outstanding partner with global reach and
extensive fertiliser expertise and experience, and the agreement is
instrumental in unlocking project funding.
Danakali has also successfully executed a mandate to provide
fully underwritten debt finance facilities of US$200M to fund the
construction and development of the Colluli Potash Project. African
development financial institutions African Export-Import Bank
(Afreximbank) and Africa Finance Corporation (AFC) are acting as
Mandated Lead Arrangers (MLAs). The execution of the mandate is a
critical project financing and execution milestone.
On 5 August 2019, Danakali announced that the MLAs obtained
formal credit approval to provide the CMSC with the US$200M in
senior debt finance (the Facility). The facility was underwritten
by Afreximbank and AFC with export credit support from Export
Credit Insurance Corporation of South Africa SOC Limited (ECIC).
Approval marked the conclusion of an extensive due diligence
process by the Mandated Lead Arrangers and ECIC.
MINERAL RESOURCE ESTIMATES (DNK announcement 19 February
2018)
SOP Mineral Resource
From 2010 to 2012, Danakali carried out a drilling program at
Colluli, encompassing 103 diamond drillholes (including failed
holes and duplicates). Of the 103 holes collared, 83 were assayed
and used in the resource estimate. The remaining 20 holes were
either failed holes, had no potash present, were drilled for
geo-mechanical test work or, in the case of four holes, were
considered close enough to other drilling that they would not need
to be assayed for resource purposes.
An original resource estimate was completed by Ercosplan, a
German engineering firm specialised in industrial potash and salt
extraction, in April 2012, using a commonly accepted modelling
method in the potash industry commonly termed the "Region of
Influence" type model. This type of model is not a block based
model but uses a series of virtual intersecting columns around each
drillhole. The model was reported by Danakali as compliant with
Canadian National Instrument 43-101 and the JORC Code 2004.
AMC used additional drilling by Danakali in 2014 to update the
model, including a re-interpretation of the geology and the use of
a block model method for estimation, and has reported an updated
Mineral Resource in accordance with the JORC Code 2012. The updated
Mineral Resource was prepared by AMC in February 2015 and is the
Mineral Resource upon which the DFS and FEED is based. The Mineral
Resource estimate is represented below.
The JORC-2012 compliant Mineral Resource for Colluli is
estimated at 1.289Bt at 11 per cent. potassium oxide for 260Mt of
contained SOP equivalent. The JORC-2012 compliant Ore Reserve
estimate for Colluli is 1,100Mt at 10.5 per cent. potassium oxide
for 203Mt of contained SOP equivalent. The Measured and Indicated
Mineral Resources are inclusive of those Mineral Resources modified
to produce the Ore Reserves. No cut-off grade has been used to
report the Colluli SOP Mineral Resource. Consideration of mining,
metallurgical and pricing assumptions suggest that all of the
currently reported SOP Mineral Resource has a reasonable prospect
for eventual economic extraction.
Area Rock Unit Measured Indicated Inferred Total
Mt K(2) O Equiv % Mt K(2) O Equiv % Mt K(2) O Equiv % Mt K(2) O Equiv %
--- -------------- --- -------------- -------------- ----- --------------
Area A Sylvinite 66 12 38 11 10 8 115 11
------------- --- -------------- --- -------------- -------------- ----- --------------
Carnallitite 55 7 190 9 6 16 251 9
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Kainitite 86 12 199 11 1 10 285 11
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Area B Sylvinite 24 15 122 13 5 12 150 13
------------- --- -------------- --- -------------- -------------- ----- --------------
Carnallitite 25 6 114 7 8 7 147 7
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Kainitite 48 13 289 13 4 13 341 13
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Total Sylvinite 90 13 160 13 15 9 265 12
------------- --- -------------- --- -------------- -------------- ----- --------------
Carnallitite 80 7 303 8 15 11 398 8
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Kainitite 133 12 488 12 5 12 626 12
--------------------- --- -------------- --- -------------- -------------- ----- --------------
Overall Total 303 11 951 11 35 10 1,289 11
--- -------------- --- -------------- -------------- ----- --------------
The SOP Mineral Resource of 1,289 Mt contains 87 Mt (7%) of
Kieserite (DNK announcement 15 August 2016) in an announcement to
the ASX. Kieserite is a multinutrient fertilizer comprising sulphur
and magnesium. No cut-off grade has been used to report the
Kieserite within the SOP Mineral Resource.
SOP Ore Reserve(1) (DNK announcement 19 February 2018)
The first Ore Reserve estimate for the Project was reported on
19 May 2015, the second Ore Reserve estimate was reported on 30
November 2015, and the third in line with FEED on 19 February 2018.
All Ore Reserve estimates were prepared by AMC in accordance with
the 2012 JORC Code. The 29 January 2018 Ore Reserve estimate is set
out below.
Proved Probable Total
============== ============== =====================================
Occurrence K(2)
SO(4) K(2) SO(4)
K(2) K(2) K(2) equiv. equiv.
Mt O equiv. Mt O equiv. Mt O equiv. Mt(2) Mt(2)
========================== === ========= === ========= ===== ========= ======= ==========
Sylvinite (KCl.NaCl) 77 15.0% 173 12.1% 250 13.0%
-------------------------- --- --------- --- --------- ----- --------- ------- ----------
Carnallitite (KCl.MgCl(2)
.H(2) O) 77 6.9% 279 7.8% 356 7.6%
-------------------------- --- --------- --- --------- ----- --------- ------- ----------
Kainitite (KCl.MgSO(4)
.H(2) O) 131 11.8% 363 11.2% 494 11.4%
========================== === ========= === ========= ===== ========= ======= ==========
Total 285 11.3% 815 10.3% 1,100 10.5% 203
========================== === ========= === ========= ===== ========= ======= ==========
(1) The SOP Ore Reserve includes dilutant material; only
Sylvite, Carnallite and Kainite mineral species from Sylvinite,
Carnallitite and Kainitite rock types contribute to recovered
product
(2) Equivalent K(2) SO(4) (SOP) sourced from Sylvite, Carnallite
and Kainite mineral species only, shown prior to the application of
processing losses
Rock Salt Mineral Resource (DNK announcement 23 September
2015)
The estimated combined measured, indicated and inferred Rock
Salt Mineral Resource as at 23 September 2015 totals 347 Mt with
average grades of 96.9 per cent. NaCl and 2.1 per cent. CaSO4, as
shown in the table below. The Rock Salt Mineral Resource is
reported above an NaCl Cu-off grade of 95.0 per cent. and below a
CaSO4 grade cut-off of 2.5 per cent. There has been no change,
material or otherwise, to the rock salt Mineral Resource since it
was first estimated on 23 September 2015.
Classification Tonnes Grades
(Mt)
(% NaCl) (% K) (% Mg) (% CaSO(4) (% Insolubles)
)
--------- ------ ------- ----------- ---------------
Measured 28 97.2 0.05 0.05 2.2 0.23
Indicated 180 96.6 0.07 0.06 2.3 0.24
Inferred 139 97.2 0.05 0.05 1.8 0.25
------- --------- ------ ------- ----------- ---------------
Total 347 96.9 0.06 0.05 2.1 0.24
------- --------- ------ ------- ----------- ---------------
The rock salt Mineral Resource estimate is classified and
reported according to the JORC and relates only to Area A. A rock
salt Mineral Resource has not been estimated for Area B. Further,
the rock salt Mineral Resource has not been converted to an Ore
Reserve and so is not included in the economic evaluation of the
Colluli Potash Project.
PROJECT UPDATE
It is Danakali and CMSC's aim to commence project execution in
2019. In preparation, Danakali and CMSC are currently focused
on:
-- Operational contracts
_ Finalisation of EPCM contract pending funding
_ Tenders for suppliers and sub-contractors
-- Operations readiness
_ Ensuring Danakali and CMSC are set up to accept funding and
efficiently move into project execution
-- Corporate social responsibility initiatives and ongoing risk assessment
-- Securing the Owner's Team to support project execution activities
-- Safety and medical set-up and processes
-- Logistics and other technical and product optimisation
collaboration aspects with offtake partner EuroChem
Operational contracts
Specific conditions of final contracts agreed at CMSC level for
EPCM, mining services and power. Major contracts have been reviewed
by the legal counsel appointed by the Mandated Lead Arrangers.
Feedback has been received with respect to senior debt
compatibility and no material gaps exist.
Execution preparedness continued, including ongoing
collaboration with DRA Global. Several sub-contractor visits to
Asmara, the Port of Massawa and Colluli were held during the first
half of 2019. Potential mechanical services and camp provider
sub-contractors were among those that carried out preliminary due
diligence ahead of CMSC issuing tender packages.
Clear ongoing benefits resulting from the Eritrea-Ethiopia
rapprochement have been identified through CMSC's ongoing tendering
for contractors and suppliers. Potential Ethiopian contractors and
suppliers have been identified including cement suppliers, and
earthworks, civil and mechanical contractors. The ability to seek
Ethiopian suppliers and contractors is providing for increased
competition in tender processes and more efficient and economic
project execution outcomes than would otherwise have been available
prior to the rapprochement. CMSC continues to prioritise the
assessment of local capacity.
The Eritrea-Ethiopia rapprochement is also encouraging other
countries and companies to enter Eritrea. The CMSC office was
recently separately visited by 2 leading European automobile
companies developing business cases to set up truck supplies and
support in Eritrea. Both are looking into providing trucks for
Colluli. In-country options on this front have previously been
limited so this could represent a positive development from a
competition and quality perspective.
Currently fuel service contracts are being discussed with the 2
major petroleum service companies in Eritrea.
Project financing
On 5 August 2019, Danakali announced that Africa Finance
Corporation (AFC) and African Export Import Bank (Afreximbank,
together the Mandated Lead Arrangers), obtained formal credit
approval to provide CMSC with US$200M in senior debt finance (the
Facility). The facility was underwritten by Afreximbank and AFC
with export credit support from Export Credit Insurance Corporation
of South Africa SOC Limited (ECIC). Approval marked the conclusion
of an extensive due diligence process by the Mandated Lead
Arrangers and ECIC, the majority of which was undertaken during the
six months to 30 June 2019.
The Company continues to complement the Project's senior debt
funding progress with:
-- extensive awareness exercises carried out to further raise
the profile of Danakali and Colluli;
-- ongoing discussions with strategic, institutional and private
client investors and brokers globally; and
-- moving towards financial close for Colluli Module I in
parallel with the CMSC senior debt process.
The Company is carefully working towards achieving the further
funding requirements at the optimal time and on the optimal
terms.
CORPORATE
Management changes
New CEO appointed
Following a thorough global search for potential CEO candidates,
Mr. Niels Wage was appointed as CEO due to his extensive and
relevant industry experience, clear leadership capabilities, and
passion for the Colluli Potash Project and Eritrea.
Mr. Wage brings significant potash, trading and logistics
experience to the team. Prior to joining Danakali he held a number
of senior management roles at BHP, including Vice President Potash,
Vice President Freight and Vice President Diamonds. At BHP he was
also responsible for marketing, sales and supply chain for the
Jansen Potash Project. Mr. Wage previously worked in trading and
logistics for Cargill and Vopak. He has also held a series of
directorships including joint ventures between Japanese firms
K-line, Daiichi and JFE Steel and BHP, the International Plant
Nutrition Institute and RightShip. He holds a Master's Degree in
Business Economics from the University of Amsterdam and has
completed the International Directors Programme at global business
school INSEAD.
Mr. Wage joined Danakali in June 2018 as Chief Commercial
Officer (CCO). As CCO, Mr. Wage assisted the Company with building
and maintaining industry relationships including interacting with
CMSC's offtake partner, EuroChem. He has also been involved in
investigating the multicommodity and logistics optimisation
potential of the Project, further developing CMSC's product sales
strategy, advancing Danakali and CMSC's social and environmental
agenda, and supporting funding, project execution and operations
readiness processes.
New Project Director appointed
Mr. Tony Harrington was recently promoted to the role of Project
Director (from Project Manager). He brings a depth of experience to
his role as well as Eritrean and wider developing nation insight.
Mr. Harrington has over 35 years' experience managing the delivery
of projects across a diverse range of commodities, mineral
processing units and jurisdictions including East Africa, West
Africa, Southern Africa, China, Europe, UK and Australia
Annual General Meeting
The Company's annual general meeting was held on 27 May 2019
(AGM). Strong support from shareholders in the latest round of
resolutions at the Company's Annual General Meeting, including:
-- Re-election of John Fitzgerald as a Non-Executive Director;
-- Re-election of Robert Connochie as a Non-Executive Director; and
-- Replacement of the Company's Constitution
Shares
There were no new fully paid ordinary shares issued during the
period.
At 30 June 2019, there were a total of 264,422,398 fully paid
ordinary shares on issue.
Options
The following unlisted options were issued during the
period:
-- 500,000 unlisted options at an exercise price of $0.912 each expiring 11 May 2020
-- 2,025,055 unlisted options at an exercise price of $1.031 each expiring 24 January 2022
-- 583,000 unlisted options at an exercise price of $1.108 each expiring 13 March 2022
-- 561,800 unlisted options at an exercise price of $1.119 each expiring 28 March 2022
-- 1,450,000 unlisted options at an exercise price of $1.114 each expiring 30 May 2022
There were no unlisted options exercised during the period.
The following unlisted options lapsed during the period:
-- 455,800 unlisted options exercisable at $1.031 with an expiry
of 24 January 2022 lapsed on 7 June 2019
-- 400,000 unlisted options exercisable at $0.96 expired on 20 June 2019
At 30 June 2019, there were a total of 7,254,055 unlisted
options on issue at various exercise prices and expiry dates.
Performance Rights
The following performance rights were issued during the
period:
-- 1,000,000 Class 9 performance rights
The following performance rights were cancelled during the
period:
-- 15,000 Class 7 performance rights
The were no performance rights vested and converted into shares
during the period.
At 30 June 2019, there were a total of 2,300,000 performance
rights on issue in the following classes:
-- 280,000 Class 1 performance rights
-- 800,000 Class 4 performance rights
-- 100,000 Class 5 performance rights
-- 40,000 Class 6 performance rights
-- 15,000 Class 7 performance rights
-- 65,000 Class 8 performance rights
-- 1,000,000 Class 9 performance rights
Interests in Mining Tenements
The exploration license for the Colluli Potash Project covers
approximately 30.4km(2) and the seven mining licenses awarded to
CMCS span over 63km(2) of the 99km(2) Agreement area. Further
details are provided below. There was no change in tenement holding
during the period.
Tenement: Colluli, Eritrea License Type: Mining License
Nature of Interest: Owned Current Equity: 50%
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no other significant changes in the Company's state
of affairs other than that referred to in the financial statements
or notes thereto.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties facing Danakali are
unchanged from those set out in Danakali's 2018 Annual Report and
Accounts and Danakali's Corporate Governance Statement, copies of
which are available on the Danakali website at
https://www.danakali.com.au/, and will remain unchanged in the
opinion of the directors for the remaining six months of the
year.
EVENTS OCCURRING AFTER THE STATEMENT OF FINANCIAL POSITION
DATE
On 5 August 2019 Danakali announced that Africa Finance
Corporation (AFC) and African Export Import Bank (Afreximbank,
together the Mandated Lead Arrangers), obtained formal credit
approval to provide the CMSC with US$200M in senior debt finance
(the Facility). The facility was underwritten by Afreximbank and
AFC with export credit support from Export Credit Insurance
Corporation of South Africa SOC Limited (ECIC). Approval marked the
conclusion of an extensive due diligence process by the Mandated
Lead Arrangers and ECIC.
On 8 August 2019 Danakali announced Afreximbank had granted
credit approval to provide preferred power contractor, Inglett
& Stubbs International (ISI) with a US$42M guarantee which will
facilitate senior debt funding for the Colluli power plant (the
Guarantee). The Guarantee allows ISI's project financing to advance
towards completion.
On 9 August 2019 Danakali issued 900,000 ordinary shares upon
the exercise of unlisted options, raising $502,200.
There are no other events subsequent to 30 June 2019 and up to
the date of this report that would materially affect the operations
of the Group or its state of affairs which have not otherwise been
disclosed in this financial report.
AUDITOR'S INDEPENCE DECLARATION
A copy of the auditor's independence declaration as required
under section 307C of the Corporations Act 2001 is set out
separately in this report.
RESPONSIBILITY STATEMENT
The Directors (as listed under Corporate Information) confirm to
the best of their knowledge:
-- the Directors' Report, the financial statements and notes,
includes a fair review of the information required by:
a) DTR4.2.7 of the Disclosure and Transparency Rules in the
United Kingdom, being an indication of important events during the
first six months of the current financial year and their impact on
the half-year financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DRT4.2.8 of the Disclosure and Transparency Rules in the
United Kingdom, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the Group during that period, and any changes in the related
party transactions described in the last annual report that could
have such a material effect.
This report is made in accordance with a resolution of
directors.
Seamus Cornelius
CHAIRMAN
Perth, 13 September 2019
COMPETENT PERSONS AND RESPONSIBILITY STATEMENT
Competent Persons Statement (Sulphate of Potash and Kieserite
Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 1,289Mt @11% K(2) 0 Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) 0
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) 0
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) 0
Equiv. and 9% Kieserite of Inferred Resource.
The information relating to the Colluli Mineral Resource
estimate is extracted from the report entitled "Colluli Review
Delivers Mineral Resource Estimate of 1.289Bt" disclosed on 25
February 2015 and the report entitled "In excess of 85 million
tonnes of Kieserite defined within Colluli Project Resource adds to
multi agri-commodity potential" disclosed on 15 August 2016, which
are available to view at www.danakali.com.au. The Company confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or
Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified
from the original market announcement.
Competent Persons Statement (Sulphate of Potash Ore Reserve)
Colluli Proved and Probable Ore Reserve is reported according to
the JORC Code and estimated at 1,100Mt @ 10.5% K(2) O Equiv. The
Ore Reserve is classified as 285Mt @ 11.3% K(2) O Equiv. Proved and
815Mt @ 10.3% K(2) O Equiv. Probable. The Colluli SOP Mineral
Resource includes those Mineral Resources modified to produce the
Colluli SOP Ore Reserves.
The information relating to the January 2018 Colluli Ore Reserve
is extracted from the report entitled "Colluli Ore Reserve update"
disclosed on 19 February 2018 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
Competent Persons Statement (Rock Salt Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 347Mt @ 96.9% NaCl. The
Mineral Resource estimate contains 28Mt @ 97.2% NaCl of Measured
Resource, 180Mt @ 96.6% NaCl of Indicated Resource and 139Mt @
97.2% NaCl of Inferred Resource.
The information relating to the Colluli Rock Salt Mineral
Resource estimate is extracted from the report entitled "+300M
Tonne Rock Salt Mineral Resource Estimate Completed for Colluli"
disclosed on 23 September 2015 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
AMC Consultants Pty Ltd (AMC) independence
In reporting the Mineral Resources and Ore Reserves referred to
in this public release, AMC acted as an independent party, has no
interest in the outcomes of Colluli and has no business
relationship with Danakali other than undertaking those individual
technical consulting assignments as engaged, and being paid
according to standard per diem rates with reimbursement for
out-of-pocket expenses. Therefore, AMC and the Competent Persons
believe that there is no conflict of interest in undertaking the
assignments which are the subject of the statements.
Quality control and quality assurance
Danakali exploration programs follow standard operating and
quality assurance procedures to ensure that all sampling techniques
and sample results meet international reporting standards. Drill
holes are located using GPS coordinates using WGS84 Datum, all
mineralisation intervals are downhole and are true width
intervals.
The samples are derived from HQ diamond drill core, which in the
case of carnallite ores, are sealed in heat-sealed plastic tubing
immediately as it is drilled to preserve the sample. Significant
sample intervals are dry quarter cut using a diamond saw and then
resealed and double bagged for transport to the laboratory.
Halite blanks and duplicate samples are submitted with each
hole. Chemical analyses were conducted by Kali-Umwelttechnik GmBH,
Sondershausen, Germany, utilising flame emission spectrometry,
atomic absorption spectroscopy and ion chromatography.
Kali-Umwelttechnik (KUTEC) has extensive experience in analysis of
salt rock and brine samples and is certified according by DIN EN
ISO/IEC 17025 by the Deutsche Akkreditierungsstelle GmbH (DAR). The
laboratory follows standard procedures for the analysis of potash
salt rocks chemical analysis (K(+) , Na(+) , Mg(2+) , Ca(2+) ,
Cl(-) , SO(4) (2-) , H(2) O) and X-ray diffraction (XRD) analysis
of the same samples as for chemical analysis to determine a
qualitative mineral composition, which combined with the chemical
analysis gives a quantitative mineral composition.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company's intentions.
All statements in this document, other than statements of
historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company's filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company's ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
FOR THE HALF YEARED 30 JUNE 2019
-----------------------------------------------------------------------------------
Half Year Ended
------------------------------------------------
30 June 2019 30 June 2018
------------------------------------------------
Notes $ $
------------------------------------------------ ----- ------------ ------------
REVENUE
Interest revenue calculated using the effective
interest rate method 53,675 90,863
Net profit on financial assets at fair value
through profit or loss 5 521,661 1,198,376
Foreign exchange gain 63,117 263,384
Sundry 1,897 1,438
EXPENSES
Depreciation expense (3,290) (3,979)
Loss on disposal of assets (3,074) -
Administration expenses 4 (1,268,649) (929,668)
Share based payment (expense)/ reversal (197,473) 226,946
Share of net loss of joint venture 6 (707,947) (1,955,768)
LOSS BEFORE INCOME TAX (1,540,083) (1,108,408)
Income tax expense - -
------------ ------------
NET LOSS FOR THE PERIOD (1,540,083) (1,108,408)
OTHER COMPREHENSIVE (LOSS) / INCOME
Items that may be reclassified to profit
and loss
Share of foreign currency translation reserve
relating to equity accounted investment (7,061) 464,969
------------ ------------
TOTAL OTHER COMPREHENSIVE (LOSS) / INCOME
FOR THE PERIOD (7,061) 464,969
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (1,547,144) (643,439)
============ ============
Earnings per share for loss attributable
to the ordinary equity holders of the Company:
Basic loss per share (cents per share) (0.58) (0.44)
Diluted loss per share (cents per share) (0.58) (0.44)
------------ ------------
The consolidated statement of profit or loss and other
comprehensive income is to be read in conjunction with the notes to
the financial statements.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2019
-----------------------------------------------------------------
30 June 2019 31 December
2018
Notes $ $
------------------------------ ----- ------------ ------------
CURRENT ASSETS
Cash and cash equivalents 6,279,862 9,550,585
Receivables 5 108,367 108,477
Prepayments 101,165 17,474
------------ ------------
TOTAL CURRENT ASSETS 6,489,394 9,676,536
------------ ------------
NON--CURRENT ASSETS
Receivables 5 10,099,101 9,283,670
Investment in joint venture 6 20,948,038 19,829,489
Plant and equipment 16,588 22,952
TOTAL NON--CURRENT ASSETS 31,063,727 29,136,111
------------ ------------
TOTAL ASSETS 37,553,121 38,812,647
------------ ------------
CURRENT LIABILITIES
Trade and other payables 7 331,840 223,854
Provisions 60,691 86,180
TOTAL CURRENT LIABILITIES 392,531 310,034
------------ ------------
NON-CURRENT LIABILITIES
Provisions 66,551 58,903
------------ ------------
TOTAL NON-CURRENT LIABILITIES 66,551 58,903
------------ ------------
TOTAL LIABILITIES 459,082 368,937
------------ ------------
NET ASSETS 37,094,039 38,443,710
============ ============
EQUITY
Issued capital 8 79,576,117 79,576,117
Reserves 9 13,401,765 13,211,353
Accumulated losses 10 (55,883,843) (54,343,760)
------------ ------------
TOTAL EQUITY 37,094,039 38,443,710
============ ============
The consolidated statement of financial position is to be read
in conjunction with the notes to the financial statements.
Consolidated Statement of Changes in Equity
FOR THE HALF YEARED 30 JUNE 2019
----------------------------------------------------------------------------------------------------------------
Reserves
Share Based Foreign Currency Accumulated
Issued Capital Payments Translation Losses Total Equity
------------------------------ -----
Notes $ $ $ $ $
------------------------------ ----- -------------- ----------- ---------------- ------------ ------------
BALANCE AT 1 JANUARY 2019 79,576,117 11,231,923 1,979,430 (54,343,760) 38,443,710
Loss for the period - - - (1,540,083) (1,540,083)
Other comprehensive income - - (7,061) - (7,061)
Total comprehensive
income/(loss)
for the period - - (7,061) (1,540,083) (1,547,144)
Transactions with owners in
their
capacity as owners:
Share based payments expense - 197,473 - - 197,473
BALANCE AT 30 JUNE 2019 79,576,117 11,429,396 1,972,369 (55,883,843) 37,094,039
============== =========== ================ ============ ============
BALANCE AT 1 JANUARY 2018 75,415,034 11,416,109 1,105,490 (47,399,347) 40,537,286
Loss for the period - - - (1,108,408) (1,108,408)
Other comprehensive income - - 464,969 - 464,969
Total comprehensive
income/(loss)
for the period - - 464,969 (1,108,408) (643,439)
Transactions with owners in
their
capacity as owners:
Shares issued during the
period 8 3,885,640 - - - 3,885,640
Costs of capital raised 8 - - - - -
Share based payments reversal - (226,946) - - (226,946)
BALANCE AT 30 JUNE 2018 79,300,674 11,189,163 1,570,459 (48,507,755) 43,552,541
============== =========== ================ ============ ============
The consolidated statement of changes in equity is to be read in
conjunction with the notes to the financial statements.
Consolidated Statement of Cash Flows
FOR THE HALF YEARED 30 JUNE 2019
-------------------------------------------------------------------------------
Half Year Ended
30 June 2019 30 June 2018
Notes $ $
-------------------------------------------- ----- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 53,020 89,875
Payments to suppliers and employees (1,324,295) (1,613,080)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,271,275) (1,523,205)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of joint venture (1,996,645) (3,499,160)
Payments for plant and equipment - (9,412)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (1,996,645) (3,508,572)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares 8 - 3,885,640
Costs of capital raised 8 - -
NET CASH INFLOW FROM FINANCING ACTIVITIES - 3,885,640
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,267,920) (1,146,137)
Cash and cash equivalents at the beginning
of the financial period 9,550,585 15,559,980
Realised foreign exchange (loss)/gain on
cash (2,803) 41,866
CASH AND CASH EQUIVALENTS AT THE OF THE
PERIOD 6,279,862 14,455,709
============ ============
The consolidated statement of cash flows is to be read in
conjunction with the notes to the financial statements.
Notes to the Consolidated Financial Statements
1. REPORTING ENTITY
Danakali Limited (Danakali or the Company) is a company limited
by shares, incorporated and domiciled in Australia, and whose
shares are publicly traded on the Australian Securities Exchange
(ASX) and the London Stock Exchange (LSE). The consolidated half
year financial report of the consolidated group as at, and for the
six months ended 30 June 2019 comprises the Company and its
subsidiaries (together referred to as the Group).
The financial report of Danakali for the half year ended 30 June
2019 was authorised for issue by the Directors on 13 September
2019.
The nature of the operations and principal activities of the
consolidated entity are described in the Directors' Report.
2. BASIS OF PREPARATION
(a) Basis of preparation
This condensed general purpose financial report for the half
year ended 30 June 2019 has been prepared in accordance with AASB
134 Interim Financial Reporting and the Corporations Act 2001.
The half year financial report does not include all notes of the
type normally included within the annual financial report and
therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing and
investing activities of the consolidated entity as the full
financial report. It is recommended that the half year financial
report be read in conjunction with the annual financial report for
the financial year ended 31 December 2018 and considered together
with any public announcements made by the Company during the half
year ended 30 June 2019 in accordance with the continuous
disclosure obligations of the ASX Listing Rules.
The half year financial report has been prepared on a historical
cost basis and is presented in Australian dollars.
(b) New standards, interpretations and amendments adopted by the
Group
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2018, except for the adoption of the new standards and
interpretations effective as of 1 January 2019. Adoption of these
standards and interpretations did not have any effect on the
statements of financial position or performance of the Group. The
Group has not elected to early adopt any new standards or
amendments.
The following standards and interpretations apply for the first
time for entities with year ending 31 December 2019:
Reference Title Summary
AASB 16 Leases The key features of AASB 16 are as follows:
Lessee accounting
* Lessees are required to recognise right-of-use assets
and lease liabilities for all leases with a term of
more than 12 months, unless the underlying asset is
of low value.
* Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease payments
(including inflation-linked payments), and also
includes payments to be made in optional periods if
the lessee is reasonably certain to exercise an
option to extend the lease, or not to exercise an
option to terminate the lease.
* AASB 16 contains disclosure requirements for lessees.
Lessor accounting
* AASB 16 substantially carries forward the lessor
accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating
leases or finance leases, and to account for those
two types of leases differently.
* AASB 16 also requires enhanced disclosures to be
provided by lessors that will improve information
disclosed about a lessor's risk exposure,
particularly to residual value risk.
AASB 16 supersedes:
a) AASB 117 Leases
b) Interpretation 4 Determining whether an Arrangement
contains a Lease
c) SIC-15 Operating Leases-Incentives
d) SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease
The Group has adopted AASB 16 with the initial date of
initial application being 1 January
2019. At 1 January 2019 it was determined that the adoption
of AASB 16 had no impact on the
Group as the Groups lease is treated as a short-term lease
under practical expedient AASB
16.C10.
--------------------------- ------------------------------------------------------------
AASB Interpretation 23, and Uncertainty over Income Tax The Interpretation clarifies the application of the
relevant amending standards Treatments recognition and measurement criteria in
AASB 112 Income Taxes when there is uncertainty over income
tax treatments. The Interpretation
specifically addresses the following:
* Whether an entity considers uncertain tax treatments
separately
* The assumptions an entity makes about the examination
of tax treatments by taxation authorities
* How an entity determines taxable profit (tax loss),
tax bases, unused tax losses, unused tax credits and
tax rates
How an entity considers changes in facts and circumstances.
The Group has adopted AASB Interpretation 23 and relevant
amending standards at 1 January
2019. The new standard does not have a material impact on
the financial statements.
--------------------------- ------------------------------------------------------------
AASB 2017-7 Amendments to Australian This Standard amends AASB 128 Investments in Associates and
Accounting Standards - Joint Ventures to clarify that
Long-term Interests in an entity is required to account for long-term interests in
Associates and Joint an associate or joint venture,
Ventures which in substance form part of the net investment in the
associate or joint venture but to
which the equity method is not applied, using AASB 9
Financial Instruments before applying
the loss allocation and impairment requirements in AASB 128.
The Group has adopted AASB 2017-7 at 1 January 2019. The new
standard does not have a material
impact on the financial statements.
--------------------------- ------------------------------------------------------------
AASB 2018-1 Australian Amendments to The amendments clarify certain requirements in:
Australian Accounting * AASB 3 Business Combinations and AASB 11 Joint
Standards - Annual Arrangements - previously held interest in a joint
Improvements 2015-2017 operation
Cycle
* AASB 112 Income Taxes - income tax consequences of
payments on financial instruments classified as
equity
AASB 123 Borrowing Costs - borrowing costs eligible for
capitalisation.
The Group has adopted AASB 2018-1 at 1 January 2019. The
new standard does not have a material
impact on the financial statements.
--------------------------- ------------------------------------------------------------
(c) Going concern
The financial statements have been prepared on a going concern
basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
At balance date, the Group had cash and cash equivalents of
$6,279,862 (31 December 2018: $9,550,585) and a net working capital
surplus of $6,096,863 (31 December 2018: $9,366,502). The Group's
cashflow forecasts through to 30 September 2020 reflect that the
Group will need to raise additional working capital during this
period. It is anticipated that the Group will commence execution of
the project development during this period and as such, additional
funding will be necessary to carry out these planned
activities.
Under the mining agreement entered into between the Government
of the State of Eritrea and Colluli Mining Share Company (CMSC)
dated 31 January 2017 (Mining Agreement), CMSC is obliged to spend
US$200 million on infrastructure and mine development within the
area of the Colluli project mining licences in the 36 months
following the provision of formal notice to the Ministry of Energy
and Mines that development has commenced. The notice, not a primary
obligation under the mining agreement, was scheduled to be
submitted by 30 October 2018 and then 31 December 2018. CMSC will
now submit the notice once sufficient funding has been raised to
allow the advancement of infrastructure and mine development.
At the date of this report, the directors are satisfied there
are reasonable grounds to believe that the Group will be able to
continue its planned activities and the Group will be able to meet
its obligations as and when they fall due. On 5 August 2019, the
the Company announced that African Finance Corporation (AFC) and
African Export Import Bank (Afreximbank, together the Mandated Lead
Arrangers), obtained formal credit approval to provide CMSC with
US$200m in senior debt finance (the Facility). 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. If it appeared that the Facility is likely
to be delayed, the directors are confident that the Group will be
able to obtain the additional funding requirements via an equity
raise otherwise it would seek to defer its planned capital
expenditure on the project and, if necessary, seek an extension of
the deadline to meet its expenditure obligations pursuant to the
Colluli Mining Agreement.
Should the Group not achieve the matters set out above, there is
uncertainty whether the Group would continue as a going concern and
therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts
stated in the financial report. The financial statements do not
include any adjustment relating to the recoverability or
classification of recorded asset amounts or to the amounts or
classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
3. SEGMENT INFORMATION
The Group operates in the mining industry in Eritrea. For
management purposes, the Group is organised into one main operating
segment which involves the exploration of minerals in Eritrea. All
of the Group's activities are interrelated and discrete financial
information is reported to the Board (Chief Operating Decision
Maker) as a single segment.
Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. The financial results from
this segment are equivalent to the financial statements of the
Group as a whole.
With the exception of fixed assets which are located in
Australia, the Group's non-current assets are geographically
located in Eritrea.
4. EXPENSES
30 June 2019 30 June 2018
$ $
-------------------------------------------- ------------ ------------
Employee benefits (net of recharges) 194,842 114,591
Director fees 271,015 185,929
Compliance and regulatory expenses (a) 527,510 399,992
Lease payments relating to operating leases 71,081 56,771
Other administration expenses 204,201 172,385
------------ ------------
1,268,649 929,668
------------ ------------
(a) Expenditure in the areas of legal, consultants and other
compliance and regulatory expenses (including ASX and LSE listing
fees, audit expenses and share registry fees).
5. TRADE AND OTHER RECEIVABLES
31 December
30 June 2019 2018
$ $
------------------------------------------ ------------ -----------
Current
Net GST receivable 31,703 31,863
Accrued interest 1,124 469
Other receivables 1,290 1,895
Security bonds 74,250 74,250
------------ -----------
108,367 108,477
------------ -----------
Non-Current
Loan to Colluli Mining Share Company - at
fair value 10,099,101 9,283,670
------------ -----------
Danakali's wholly owned subsidiary, STB Eritrea Pty Ltd, is
presently funding the Colluli Mining Share Company (CMSC) for the
development of the Colluli Potash Project and 50% of the funding is
represented in the form of a shareholder loan.
Repayment of this loan, as defined in the CMSC Shareholders
Agreement, will be made preferentially from future operating cash
flows. The shareholder loan is denominated in USD, non-interest
bearing, unsecured and subordinate to any loans from third party
secured lenders, under which CMSC may enter into in order to fund
the Project Development Capital. For accounting purposes, the value
of the loan has been discounted by applying a market effective
interest rate of 25% (31 December 2018: effective interest rate of
25%).
The loan is categorised as Level 3 in the fair value hierarchy
as the estimated market interest rate is an unobserved input in the
valuation.
During the period ended 30 June 2019 and the year ended 31
December 2018, the repayment profile of the receivable was updated
to consider the timing of the completion of construction, timing of
project financing and alignment to the indicative debt financing
terms. The resulted in a loss on financial assets at fair value
through profit or loss of $574,965 (31 December 2018: $4,862,775)
(see note 6).
The undiscounted underlying loan balance at 30 June 2019 is
$34,790,081 (USD 24,406,216) (31 December 2018: $33,571,559 (USD
23,676,610)).
Financial Year
Half Year to to
31 December
30 June 2019 2018
$ $
----------------------------------------------- ------------- --------------
Reconciliation of movement in loan to Colluli
Mining Share Company:
Carrying amount at the beginning of the period 9,283,670 12,216,952
Additional loans during the period 227,854 987,356
Foreign exchange gain 65,916 942,137
Net gain/(loss) on financial assets at fair
value through profit or loss 521,661 (4,862,775)
Carrying amount at the end of the period 10,099,101 9,283,670
------------- --------------
6. INVESTMENT IN JOINT VENTURE
The Group has an interest in the following joint
arrangement:
Equity Interest Carrying Value
31 December 31 December
30 June 2019 2018 30 June 2019 2018
Project Activities % % $ $
-------- -------------------- ------------ ----------- ------------ -----------
Colluli
Potash Mineral Exploration 50 50 20,948,038 19,829,489
-------- -------------------- ------------ ----------- ------------ -----------
The Group acquired an interest in Colluli Mining Share Company
(CMSC) at the date of its incorporation on 5 March 2014. This
acquisition was in accordance with a shareholders agreement entered
into with the Eritrean National Mining Corporation (ENAMCO) and
executed in November 2013 (Shareholders Agreement). CMSC was
incorporated in Eritrea, in accordance with the Shareholders
Agreement, to hold the Colluli project with Danakali (through its
wholly owned subsidiary STB Eritrea Pty Ltd) and ENAMCO holding 50%
of the equity each.
Pursuant to the terms of the Shareholders Agreement, at the date
of incorporation of CMSC, consideration for the acquisition of
shares in CMSC equates to half of the allowable historical
exploration costs transferred to CMSC by STB Eritrea Pty Ltd, a
wholly owned subsidiary of Danakali. The balance of the allowable
historic exploration costs transferred to CMSC are recoverable via
a shareholder loan account (see note 5).
The Group's 50% interest in CMSC is accounted for as a joint
venture using the equity method. The following tables summarise the
financial information of the Group's investment in CMSC at 30 June
2019.
Financial Year
Half Year to to
31 December
30 June 2019 2018
$ $
----------------------------------------------- ------------- --------------
Reconciliation of movement in investments
accounted for using the equity method:
Carrying amount at the beginning of the period 19,829,489 13,811,946
Additional investment during the period 1,833,557 5,532,842
Share of net losses for the period (707,947) (389,239)
Other comprehensive (loss)/income for the
period (7,061) 873,940
------------- --------------
Carrying amount at the end of the period 20,948,038 19,829,489
------------- --------------
Summarised financial information of joint venture:
31 December
30 June 2019 2018
$ $
----------------------------------------------------- ------------ -----------
Financial position (Aligned to Danakali accounting
policies)
Current assets:
Cash and cash equivalents 54,595 110,666
Other current assets 142,591 104,928
------------ -----------
197,186 215,594
Non-current assets:
Fixed assets 137,346 135,013
Mineral property 31,291,380 31,125,894
------------ -----------
31,428,726 31,260,907
------------ -----------
Current liabilities:
Trade & other payables and accruals (122,891) (311,850)
------------ -----------
(122,891) (311,850)
------------ -----------
Non-current liabilities:
Loan from Danakali Limited (10,099,101) (9,283,670)
------------ -----------
(10,099,101) (9,283,670)
------------ -----------
NET ASSETS 21,403,920 21,880,981
============ ===========
Group's share of net assets 10,701,960 10,940,491
============ ===========
Reconciliation of Equity Investment:
Group's share of net assets 10,701,960 10,940,491
Share of initial contribution on establishment
of the Joint Venture not recognised by Danakali (4,305,107) (4,305,107)
Outside shareholder interest in equity contributions
by Danakali 14,551,185 13,194,105
------------ -----------
Carrying amount at the end of the period 20,948,038 19,829,489
------------ -----------
Half Year to Half Year to
30 June 2019 30 June 2018
$ $
------------------------------------------------ ------------- -------------
Financial performance
Interest expense relating to the unwinding
of discount on joint venture loan (1,096,626) (1,198,376)
Gain on re-measurement of loan to joint venture
carried at amortised cost 574,965 -
Exploration and evaluation expenditure (894,233) (2,713,160)
------------- -------------
LOSS FOR THE PERIOD (1,415,894) (3,911,536)
------------- -------------
Group's share of total loss for the period (707,947) (1,955,768)
============= =============
During the period ended 30 June 2019 no dividends were paid or
declared (31 December 2018: Nil).
Colluli Mining Share Company has the following commitments or
contingencies at 30 June 2019:
Government
Under the mining agreement entered into between the Government
of the State of Eritrea and Colluli Mining Share Company (CMSC)
dated 31 January 2017, CMSC is obliged to spend US$200 million on
infrastructure and mine development within the area of the Colluli
project mining licences in the 36 months following the provision of
formal notice to the Ministry of Energy and Mines that development
has commenced.
Funding
CMSC successfully executed a mandate to provide fully
underwritten debt finance facilities of US$200M to fund the
construction and development of the Project. African development
financial institutions African Export-Import Bank (Afreximbank) and
Africa Finance Corporation (AFC) are acting as Mandated Lead
Arrangers (MLAs).
Under the terms of the mandate, CMSC is responsible to pay all
reasonable costs and expenses related to external technical,
financial, insurance, tax and legal consultants required by the
MLAs to assist in the due diligence. The mandate letter includes
various fees, payable by CMSC to the MLAs, based on various future
outcomes.
7. TRADE AND OTHER PAYABLES
31 December
30 June 2019 2018
$ $
----------------- ------------ -----------
Trade payables 161,741 122,362
Accrued expenses 120,163 65,868
Other payables 49,936 35,624
------------ -----------
331,840 223,854
------------ -----------
8. ISSUED CAPITAL
Half Year to Financial Year to
30 June 2019 31 December 2018
Number Number
of shares $ of shares $
---------------------------------------------------------------
(a) Share capital
Ordinary shares fully paid 264,422,398 79,576,117 264,422,398 79,576,117
=========== ========== =========== ==========
(b) Movements in ordinary share
capital
Beginning of the period 264,422,398 79,576,117 251,697,687 75,415,034
Issued during the period:
* Issued at $0.350 per share on option exercise - - 10,381,821 3,633,640
* Issued at $0.405 per share on option exercise - - 400,000 162,000
* Issued at $0.450 per share on option exercise - - 200,000 90,000
* Issued at $0.652 per share via cashless exercise of
1,949,000 options with an exercise price of $0.405 - - 738,346 -
* Issued at $0.624 per share via cashless exercise of
750,000 options with an exercise price of $0.527 - - 116,586 -
* Issued at $0.648 per share via cashless exercise of
1,600,000 options with an exercise price of $0.550 - - 241,974 -
* Issued at $0.773 per share via cashless exercise of
750,000 options with an exercise price of $0.550 216,364 -
* Issued on vesting of performance rights - - 65,000 -
* Issued at $0.755 per share in lieu of advisor fees - - 356,049 268,817
* Issued at $0.773 per share in lieu of advisor fees - - 8,571 6,626
End of the period 264,422,398 79,576,117 264,422,398 79,576,117
=========== ========== =========== ==========
9. RESERVES
Financial Year
to
Half Year to 31 December
30 June 2019 2018
$ $
------------------------------------------ ------------- --------------
(a) Reserves
Share-based payments reserve
Balance at beginning of the period 11,231,923 11,416,109
Employee and contractor share options
& performance rights 197,473 (184,186)
Balance at end of the period 11,429,396 11,231,923
------------- --------------
Foreign currency translation reserve
Balance at beginning of the period 1,979,430 1,105,490
Currency translation differences arising
during the period (7,061) 873,940
------------- --------------
Balance at end of the period 1,972,369 1,979,430
------------- --------------
Total reserves 13,401,765 13,211,353
============= ==============
(b) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair
value of share options and performance rights issued.
Foreign currency translation reserve
The foreign currency translation reserve records the exchange
differences arising on translation of a foreign joint
arrangement.
10. ACCUMULATED LOSSES
Financial Year
to
Half Year to 31 December
30 June 2019 2018
-----------------------------------
$ $
----------------------------------- ------------- --------------
Balance at beginning of the period (54,343,760) (47,399,347)
Loss for the period (1,540,083) (6,944,413)
Balance at end of the period (55,883,843) (54,343,760)
------------- --------------
11. SHARE BASED PAYMENTS
(a) Expenses arising from share-based payment transactions
Total expenses from share-based payment transactions recognised
during the period were as follows:
Half Year to Half Year to
30 June 2019 30 June 2018
--------------------------------------------------
$ $
-------------------------------------------------- ------------- -------------
Options issued to directors and employees 173,584 11,104
Performance rights issued to directors, employees
and consultants 23,889 (238,050)
Expense / (reversal) 197,473 (226,946)
------------- -------------
(b) Option movement summary
Movements in the number of unlisted options (being those the
subject of share based payments) on issue during the period is as
follows:
Unlisted Option Opening Issued Exercised Lapsed Closing
balance / Expired balance
----------------------------- --------- --------- --------- ---------- ---------
Exercise price $0.558 expiry 900,000
date 08/08/2019 900,000 - - - (a)
Exercise price $0.543 expiry 250,000
date 07/10/2019 250,000 - - - (a)
Exercise price $0.940 expiry 1,440,000
date 19/05/2020 1,440,000 - - - (a)
Exercise price $0.960 expiry
date 20/06/2019 400,000 - - (400,000) -
Exercise price $0.912 expiry 500,000 500,000
date 11/05/2020 - (c) - - (a)
Exercise price $1.031 expiry 1,569,255
date 24/01/2022 - 2,025,055 - (455,800) (b)
Exercise price $1.108 expiry 583,000
date 13/03/2022 - 583,000 - - (b)
Exercise price $1.119 expiry 561,800
date 28/03/2022 - 561,800 - - (b)
Exercise price $1.114 expiry 1,450,000
date 30/05/2022 - 1,450,000 - - (b)
--------- --------- --------- ---------- ---------
2,990,000 5,119,855 - (855,800) 7,254,055
--------- --------- --------- ---------- ---------
(a) Vested options.
(b) Unvested options.
(c) Refers to options granted to a director in the year ended 31
December 2018 which were subject to shareholder approval. The
options were issued in the current period following receipt of
shareholder approval at the 27 May 2019 Annual General Meeting.
(c) Options issued during the period
A summary of options granted to directors and employees during
the period is included in the following table. The value was
calculated by using the Black & Scholes Option Pricing Model
applying the following inputs, to produce the fair value per
option:
Number Exercise Expiry Date Grant Date Share Price Risk Free Volatility Fair Value
of Options Price at Grant Interest per Option
Date Rate
----------- -------- ----------- ----------- ----------- --------- ---------- -----------
500,000 $0.912 11-May-2020 27-May-2019 $0.730 1.23% 42.71% $0.066
1,724,015 $1.031 24-Jan-2022 24-Jan-2019 $0.735 1.78% 44.49% $0.152
301,040 $1.031 24-Jan-2022 27-May-2019 $0.730 1.21% 42.71% $0.124
583,000 $1.108 13-Mar-2022 13-Mar-2019 $0.795 1.53% 43.92% $0.161
561,800 $1.119 28-Mar-2022 28-Mar-2019 $0.780 1.53% 43.94% $0.152
1,450,000 $1.114 30-May-2022 30-May-2019 $0.750 1.21% 42.76% $0.130
(d) Performance Rights
Movements in the number of performance rights on issue during
the period is as follows:
Performance Rights Opening balance Granted Vested Cancelled Closing
- Class balance
------------------- --------------- --------- ------ --------- ---------
Class 1 (a) 280,000 - - - 280,000
Class 4 (a) 800,000 - - - 800,000
Class 5 (a) 100,000 - - - 100,000
Class 6 (a) 40,000 - - - 40,000
Class 7 (a) 30,000 - - (15,000) 15,000
Class 8 (a) 65,000 - - - 65,000
Class 9 - 1,000,000 - - 1,000,000
1,315,000 1,000,000 - (15,000) 2,300,000
--------------- --------- ------ --------- ---------
(a) Issued under the Performance Rights Plan which was
re-approved at the annual general meeting of the Company held 17
November 2014.
The 2,300,000 Performance Rights on issue at 30 June 2019 are
subject to the following performance conditions:
Class 1:
-- 280,000 upon completion of securing finance for the
development of the Colluli Potash Project.
Class 4:
-- 800,000 upon commencement of construction of the production facility.
Class 5:
-- 20,000 upon commencement of the first development work on the
ground at the Colluli site within 1 week of the scheduled
development time;
-- 60,000 upon 6-month construction mark if safety, costs and schedule are all on target; and
-- 20,000 upon completion of commissioning and completion of
performance testing (performance testing to meet contractual
requirements).
Class 6:
-- 15,000 upon Endeavour Financial being paid its first
milestone success fee which is linked to a letter of finance
support from a lending institution; and
-- 25,000 upon term sheets being signed for the project financing of the Colluli project.
Class 7:
-- 15,000 upon completion of a strategic investment at greater than 30-day VWAP plus 10%.
Class 8:
-- 5,000 on completion of an approval and issued CSR report befitting an ASX200 company;
-- 50,000 on securing a strategic equity partner; and
-- 10,000 on finalising broker mandates which support the equity capital market strategy.
Class 9:
-- 100,000 when CMSC commences early works at Colluli provided this occurs in 2019;
-- 300,000 when construction at Colluli is considered to be 50%
complete provided construction is materially on time and on budget
and Danakali are meeting safety standards;
-- 500,000 when CMSC commences commercial production at Colluli
provided this is materially on time and on budget, meeting safety
and product quality standards; and
-- 100,000 when CMSC have shipped and been paid for 100,000t of
SOP provided this occurs materially on time, meeting safety and
product quality standards.
12. FINANCIAL INSTRUMENTS
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the group as at 30 June
2019:
Fair value
through through other
At amortised profit and comprehensive
cost loss income
$ $ $
----------------------------- ------------- ------------ ---------------
Financial Assets:
Trade and other receivables 108,367 - -
------------- ------------ ---------------
Total current 108,367 - -
------------- ------------ ---------------
Receivable - 10,099,101 -
------------- ------------ ---------------
Total non-current - 10,099,101 -
------------- ------------ ---------------
Total Assets 108,367 10,099,101 -
============= ============ ===============
Financial liabilities:
Trade and other payables 331,840 - -
------------- ------------ ---------------
Total current 331,840 - -
------------- ------------ ---------------
Total Liabilities 331,840 - -
============= ============ ===============
Fair values:
Set out below is a comparison of the carrying amount and fair
values of financial instruments as at 30 June 2019:
Carrying Fair value
amount
$ $
----------------------------- ----------- -----------
Financial Assets:
Trade and other receivables 108,367 108,367
----------- -----------
Total current 108,367 108,367
----------- -----------
Receivable 10,099,101 10,099,101
----------- -----------
Total non-current 10,099,101 10,099,101
----------- -----------
Total Assets 10,207,468 10,207,468
=========== ===========
Financial liabilities:
Trade and other payables 331,840 331,840
----------- -----------
Total current 331,840 331,840
----------- -----------
Total Liabilities 331,840 331,840
=========== ===========
13. SUBSIDARY
Interest in subsidiary
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiary in accordance
with the accounting policy:
Equity Holding
------------ -------------------- --------------- ----------------
30 June 2019 31 December
2018
Principal Country of
Name Activities Incorporation Class of Shares % %
------------ -------------------- --------------- ---------------- ------------ -----------
Investment
STB Eritrea in
Pty Ltd Potash Exploration Australia Ordinary 100 100
------------ -------------------- --------------- ---------------- ------------ -----------
The proportion of ownership interest is equal to the proportion
of voting power held.
14. RELATED PARTY INFORMATION
Key Management Personnel (KMP)
The Company has entered into revised arrangements with the
following key management personnel (KMP) during the half-year ended
30 June 2019:
Mr Seamus Cornelius, Non-Executive Chairman (Transitioned from
Executive Chairman to Non-Executive Chairman 25 June 2019):
-- Under an executive services agreement for the provision of
executive duties, Mr Cornelius received:
o For the period 1 January 2019 to 24 June 2019: $69,028
-- In addition, Mr Cornelius received the following director fees:
o For the period 1 January 2019 to 26 May 2019: $32,917
o For the period 27 May 2019 to 30 June 2019: $9,581 (reflecting
an increase of $20,000 per annum, in line with the Revised Director
Fees as referred below)
Mr Niels Wage, Chief Executive Officer:
Effective from 25 March 2019:
-- Engaged as a permanent full time employee
-- Remuneration of EUR250,000 per annum plus superannuation at
the Australian statutory rate and health insurance for Mr Wage and
his dependents
-- Notice period of 6 months, required to be given by either party for termination
-- Mr Wage is eligible to participate in the Company's incentive
plans, the terms and operations of which are at the discretion of
the Board. During the period, 1,000,000 performance rights (Class
9) were issued to Chief Executive Officer, Niels Wage, as part of
his remuneration package.
Mr Paul Donaldson, Mr John Fitzgerald, Mr Robert Connochie, Ms
Zhang Jing, Mr Andre Liebenberg:
At the 27 May 2019 annual general meeting, shareholder approval
was received to increase the aggregate non-executive directors' fee
pool limit from $400,000 to $500,000 per annum. Effective from 27
May 2019, the base fee paid to each Non-Executive Director was
increased from $40,000 to $60,000 per annum (Revised Director
Fees).
Transactions with directors, director related entities and other
related parties
During the half year to 30 June 2019 the following transactions
with related parties took place:
Options:
-- 500,000 unlisted options with an exercise price of $0.912
each expiring 11 May 2020 were issued to the nominee of Director,
Andre Liebenberg;
-- 301,040 unlisted options with an exercise price of $1.031
each expiring 24 January 2022 (subject to vesting conditions) were
issued to the nominee of Chairman, Seamus Cornelius;
-- 583,000 unlisted options with an exercise price of $1.108
each expiring 13 March 2022 (subject to vesting conditions) were
issued to the nominee of Chief Financial Officer, Stuart Tarrant;
and
-- 1,450,000 unlisted options with an exercise price of $1.114
each expiring 30 May 2022 (subject to vesting conditions) were
issued to Chief Executive Officer, Niels Wage.
15. CONTINGENCIES
There are no material contingent liabilities or contingent
assets for the Group at the balance date.
16. COMMITMENTS
Financial Year
to
Half Year to 31 December
30 June 2019 2018
$ $
Lease commitments (Group as lessee):
Operating leases (non-cancellable)
Minimum lease payments
* Within one year 54,560 11,667
- -
* Later than one year but not later than five years
------------- --------------
54,560 11,667
------------- --------------
17. EVENTS OCCURRING AFTER THE STATEMENT OF FINANCIAL POSITION DATE
On 5 August 2019 Danakali announced that Africa Finance
Corporation (AFC) and African Export Import Bank (Afreximbank,
together the Mandated Lead Arrangers), obtained formal credit
approval to provide the CMSC with US$200M in senior debt finance
(the Facility). The facility was underwritten by Afreximbank and
AFC with export credit support from Export Credit Insurance
Corporation of South Africa SOC Limited (ECIC). Approval marked the
conclusion of an extensive due diligence process by the Mandated
Lead Arrangers and ECIC.
On 8 August 2019 Danakali announced Afreximbank had granted
credit approval to provide preferred power contractor, Inglett
& Stubbs International (ISI) with a US$42M guarantee which will
facilitate senior debt funding for the Colluli power plant (the
Guarantee). The Guarantee allows ISI's project financing to advance
towards completion.
On 9 August 2019 Danakali issued 900,000 ordinary shares upon
the exercise of unlisted options, raising $502,200.
There are no other events subsequent to 30 June 2019 and up to
the date of this report that would materially affect the operations
of the Group or its state of affairs which have not otherwise been
disclosed in this financial report.
Directors' Declaration
In the directors' opinion:
1. the financial statements and notes of Danakali Limited for
the half-year ended 30 June 2019 are in accordance with the
Corporations Act 2001, including:
a) complying with Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting
requirements; and
b) giving a true and fair view of the entity's financial
position as at 30 June 2019 and of its performance for the half
year ended on that date; and
2. there are reasonable grounds to believe that Danakali Limited
will be able to pay its debts as and when they become due and
payable subject to achieving the matters set out in note 2(c).
This declaration is made in accordance with a resolution of the
directors.
Seamus Ian Cornelius
CHAIRMAN
Perth, 13 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LJMATMBABMIL
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