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- Danakali (DNK) is selling its 50 per cent interest in Colluli Mining Share Company (CMSC) to pursue new opportunities
- DNK plans to sell its stake in the sulphate of potash company to Sichuan Road and Bridge Group for US$166 million (A$258.8 million)
- The company says the sale provides shareholders with an “attractive” post-tax value outcome in the absence of a full equity-funded solution for the Colluli project in Eritrea
- Following the completion of the sale, Danakali plans to distribute 90 per cent of the net proceeds to its shareholders while it continues to identify new growth opportunities
- DNK shares are up 30.77 per cent to trade at 34 cents at 12:47 pm AEDT
Danakali (DNK) has agreed to sell its 50 per cent shareholding in Colluli Mining Share Company (CMSC) to Sichuan Road and Bridge Group for US$166 million (A$258.8 million).
CMSC is a joint venture between Danakali and Eritrean National Mining Corporation (ENAMCO) established to develop the Colluli potash project in Eritrea, East Africa.
Danakali has now signed a term sheet to sell its interest in CMSC, which is held through its subsidiary, STB Eritrea.
The US$166 million price tag comprises US$135 million for the CMSC equity and US$31 million (subject to adjustment for deferred payment) for the STB-ENAMCO shareholder loan.
The STB loan payment will be split into an upfront cash payment of US$15.5 million and a deferred payment for the other half, which will be paid six months after a definitive share purchase agreement is complete.
Danakali said the sale of its 50 per cent shareholding in CMSC provided shareholders with an “attractive” post-tax value outcome in the absence of a full equity-funded solution for the project.
The transaction is subject to shareholder approval, ENAMCO and Eritrean Government Ministry approval, and the purchaser receiving Chinese regulatory approvals. At this stage, Danakali expects it will be completed between March 31 and May 31, 2023.
Following the completion of the sale, Danakali plans to distribute 90 per cent of the net proceeds to its shareholders while it continues to identify new growth opportunities.
DNK shares were up 30.77 per cent to trade at 34 cents at 12:47 pm AEDT.
