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DNK - DANAKALI LIMITED


nipper
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Danakali Limited (ASX: DNK) is focused on the development of the Colluli Potash Project. The Project is located in the Danakil Depression region of Eritrea, East Africa and is 100% owned by the Colluli Mining Share Company. CMSC is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Company (ENAMCO).

Since drilling commenced at Colluli in early 2010, over 1 billion tonnes of high grade potassium bearing salts suitable for the production of potash have been identified. The potassium bearing salts of the Danakil Depression have the unique capability of producing a diverse range of potash types including muriate of potash (MOP or potassium chloride), sulphate of potash (SOP or potassium sulphate), and sulphate of potash magnesia (SOP-M or potassium magnesium sulphate).

 

Sulphate of potash is a highly valued, chloride free, premium potash fertiliser that has limited primary production facilities globally. SOP contains both potassium and sulphur, which are essential crop nutrients.

 

Following the positive outcomes of a prefeasibility study (PFS) for the production of sulphate of potash (SOP) in February 2015 and a definitive feasibility study (DFS) that was completed in November 2015, a front end engineering design (FEED) study was completed in January 2018 for a modular SOP development.

Since then .... listed on LSE late 2018. Eritrea and Ethiopia signed peace treaty. African Export-Import Bank and Africa Finance Corporation talking about US$200M financing. New CEO mid 2019. Binding offtake. Power plant commissioned. Mine development advanced. UK adviser inked in. Construction phase for mine infrastructure started.... oh and renewed civil war in Eritrea, and financing not emerging as quickly as promised.
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nip, there is a fascinating story over at hc regarding Danakali. A poster popped up a few months ago claiming to be a member of a group of investors that call themselves the tenbagger club. He claimed that they include independent wealthy semi-retired investors - he claims to live in Thailand - that identify seriously undervalued stocks with viable projects and force through changes to how the chosen companies operate with the intention of hitting ten baggers or better. The poster claimed that a large holder of DNK was flooding the market with shares as it attempted to sell out but only resulted in the share price sinking. He claimed that the big seller had to be taken out, that management of Danakali needed to be cleaned up, that the company had to start moving towards production so as it re-interest the financiers to lend money and a couple of other things.

 

 

At that early stage I thought what this poster was saying had all the markings of either someone deluded or someone attempting a classic pump and dump. Not sure what it proves but the investment club even has its own website: https://10baggerclub.com.

 

 

But guess what? Since that poster appeared on hc the big seller was taken out and the share price jumped from about 30 cents and sinking to about 50 cents, the CEO and CFO were axed with the chairman - who has a large holding of shares - converted into a executive, the company trimmed its admin costs by about $1m a year, the company appointed a broker to revitalise its dormant presence in the UK and now it was able to have an over-subscription from sophisticated investors of $20m to get the initial project workings underway. Pretty much everything the poster predicted had to happen actually happened. He is now saying that the final debt and equity raise is all but in the bag, so to speak and Danakali will move ahead to develop the project.

 

To me, as it currently stands, either the poster has access to inside info so he can post what he knows the company is about to do OR he is conveying some form of the truth. From initially being highly skeptical of the veracity of the poster's claims I have reached the point of not having an opinion. I told myself early on that the real test of what the poster was claiming wass if the company was able to raise funds, which it has now done though only raising a fraction of what is required to get the project commissioned and running.

 

 

There used to be a prolific poster on ss, I think before your time, called King Baz who was always super-enthusiastic and grandiose in his claims. Fantastic entertainment, as he not only mounted well argued plausible arguments he sprinkled it with anecdotes of his flamboyant lifestyle, but ultimately he floundered. This phuketguy and his 10 bagger club is a step up even from our King Baz.

 

Wolvie used to post on ss about Danakali, not any more though. He occasionally posts on the DNK threads on hc, but mainly to complain about people complaining about the lack of progress by the company. He has the sh!ts with me for that reason, though what the 10baggerclub has apparently managed to achieve in only a few months shows fairly conclusively that the previous management actually were the blockage (I think wolvie's point is that having a whinge achieves nothing but I am not as stoic as he is).

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  • 5 months later...

Danakali receives updated Sulphate of Potash Price Forecast Analysis from CRU

Highlights

• Muriate of Potash (MOP) prices surged higher across multiple global markets from January 2021

• Medium term Sulphate of Potash (SOP) price is forecast to increase and long-term outlook predicts SOP prices increasing further

• Colluli FEED sensitivity analysis indicates that for every 10% increase in SOP price Colluli Project NPV increases by US$250M

• Colluli is fully permitted, all studies complete, process flow design finalised and derisked

 

The global potash market has come alive in 2021 as rising demand, poor international crop yields, surging crop prices and margins and supply-side risks in Belarus have combined to drive regional potash prices up 200%-300% to above US$700/t (CFR Brazil Spot) and USD$520/t (CFR SE Asia Spot)

 

. Prompt availability remains very limited with China and India running down stockpiles and global crop prices are largely persisting at historically high levels. According to Green Markets, Bloomberg, North America's nutrient gauge (fertiliser prices) surged past the 2008 peak to hit a new record of US$996.32. Historically, the ten year average premium of SOP to MOP is US$221 with current MOP prices FOB Vancouver at over US$550/t .

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