Danakali Limited selling stake in Colluli SOP project in east Africa to SRBG

HOUSTON (ICIS)–Australian fertilizer developer Danakali Limited has announced it is selling its stake in the Colluli sulphate of potash (SOP) project in Eritrea, east Africa.

The company said it has executed a term sheet with Sichuan Road and Bridge Group (SRBG) for $166m in upfront cash and deferred payments for its 50% of the potash project, which has been in development for a number of years.

The other partner in the project is Eritrean National Mining Corporation (ENAMCO), who must give their consent to SRBG purchasing the other half.

After all considerations and government taxes, Danakali said it expects to receive approximately $121m. It then plans to distribute 90% of the net proceeds to shareholders and will continue as a listed company to identify new projects and potential new alternative growth opportunities.

The transaction is expected to be completed between 31 March and 31 May 2023 and is subject to the purchaser’s satisfactory completion of due diligence and the parties entering into definitive agreements.

It will also need Danakali shareholder and Eritrean government approval, as well as clearance from the purchaser by Chinese regulatory authorities.

SRBG is owned by parent company Shudao Investment Group, which is active in transportation infrastructure design and construction markets, but its diversified business covers other areas like minerals and new materials and clean energy investments.

In commenting on its decision to move on from the project, Danakali said their board was of the view that the sale provides their shareholders with an attractive post-tax value outcome in the absence of a full equity funded solution for the project.