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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Danakali Limited | LSE:DNK | London | Ordinary Share | AU000000DNK9 | ORDS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 20.00 | 19.00 | 21.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Nov 2019 to Nov 2024
TIDMDNK
RNS Number : 3199K
Danakali Limited
01 September 2021
DANAKALI LIMITED
ABN 56 097 904 302
FINANCIAL REPORT FOR THE HALF YEARED
30 JUNE 2021
The following sections of the Financial Report are available on our website at www.danakali.com :
Auditor's Independence Declaration
Independent Auditor's Review 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 2020 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 (Executive Chairman) Zhang Jing (Non-Executive Director) John Fitzgerald (Non-Executive Director) Robert Connochie (Non-Executive Director) Taiwo Adeniji (Non-Executive Director) Samaila Zubairu (Non-Executive Director) Neil Gregson (Non-Executive Director) Joint Company Secretaries Catherine Grant-Edwards Melissa Chapman Registered Office & Principal Place of Business Level 1, 2A/300 Fitzgerald Street NORTH PERTH WA 6006 Telephone: +61 (0)8 6266 8368 Bank Auditors National Australia Bank Ernst & Young Level 12, 100 St Georges Terrace 11 Mounts Bay Road PERTH WA 6000 PERTH WA 6000 Share Register (Australia) Share Register (United Kingdom) Computershare Investor Services Computershare Investor Services Pty 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 Telephone: +44 (0) 370 702 0003 Australia) Telephone: +61 (0)3 9415 4000 www.computershare.com (Outside Australia) Facsimile: +61 (0)3 9473 2500 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 it 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: DNK's ADR information can also http://www.adrbnymellon.com//?cusip=23585T101 be viewed here: ADR Holders seeking information on their shareholding should contact: shrrelations@bnymellon.com OR LONDON NEW YORK Mark Lewis Rick Maehr mark.lewis@bnymellon.com richard.maehr @bnymellon.com Telephone +44 207 163 7407 Telephone +1 212 815 2275
DIRECTORS' REPORT
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 2021.
Directors
The names of the directors who held office during or since the end of the half year are:
Hot Features
Premium
(Executive Chairman)
* Seamus Cornelius
(Non-Executive Director)
* John Fitzgerald
(Non-Executive Director)
* Zhang Jing
(Non-Executive Director)
* Robert Connochie
(Non-Executive Director)
* Taiwo Adeniji
(Non-Executive Director)
* Samaila Zubairu
(Non-Executive Director)
* Neil Gregson
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 2021 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 2021.
REVIEW AND RESULTS OF OPERATIONS
The net loss after tax of the Group for the half-year ended 30 June 2021 amounted to $ 477,897 (30 June 2020: $ 1,677,355 ). Total consolidated cash on hand at the end of the period was $25,730,181 (31 December 2020: $9,738,794).
REVIEW OF OPERATIONS
Project Overview
The Colluli Potash Project (Colluli, or the Project) 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 Corporation (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.
The FEED for Colluli was undertaken to provide offtakers and funders with a high level of study detail and accuracy and was the final study stage before project execution. Subsequent to the release of FEED, Colluli secured Offtake ( ASX announcement 12 June 2018) and begun the search for senior debt which culminated in the execution of documentation for $200M Senior Debt facilities with African Finance Corporation (AFC) and African Export Import Bank (Afreximbank) (ASX announcement 23 December 2019) and issued US$21.5M of Danakali equity to AFC (ASX announcement 3 December 2019).
FEED firmly established Colluli as an economically attractive greenfield SOP development project (ASX announcement 29 January 2018). The FEED results reaffirm the outstanding project economics of Colluli with industry leading capital intensity. 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 economic outcomes were an NPV(10) of US$439M and IRR of 31.3%.
Project Execution
EPCM Phase 1 and 2 of project execution, which relates to the process plant and associated infrastructure work has been completed. The project now benefits from a more defined scope and de-risked design and the robustness of the FEED results have been confirmed. The capital estimate has been revised and remains within the FEED cost estimate (ASX announcement 2 September 2020).
Early procurement commenced during 2020 with the order of the Reverse Osmosis (RO) Plant. This equipment will be used to provide potable and construction water prior to the commissioning of the main Anfile Bay Water Intake Treatment Area (WITA) which will be developed to provide higher volumes of water to support SOP production. The Group has considered whether COVID-19 had an impact for the Group for the period ended 30 June 2021. As the Project is still in early-stage development and has not commenced operations, the impact is limited, however, there is an uncertainty in the impact of COVID-19 in the future as it relates to the extractive activities.
Key Operational Contracts
The following operational contracts are key to advancing the project.
Mining - undergoing final negotiations with preferred mining services provider
Earth Moving Worldwide (EMW) is the Company's preferred contractor for Colluli's mining services scope, which covers the pre-production period (development) plus the first 5 years of production. The scope includes the provision, operation and maintenance of excavation, haulage and dewatering equipment. EMW has extensive global experience in mining services, earthworks and water management and will provide the Project with strong commercial and technical support.
The Mining Services Contract is complete for all material matters. Execution of the contract will follow successful completion of the project financing.
Power - Finalising documentation
Aggreko have been appointed as preferred power supply contractor for a 12MW HFO power plant at Colluli. Under 5-year Built, Own, Operate Transfer (BOOT) contract, Aggreko will supply, commission, operate and maintain the power plant, then transfer the equipment to CMSC. Aggreko will provide the funding for the power solution which provides certainty over delivery of this preferred solution (ASX announcement 8 October 2020).
The Power Contract is complete for all material matters. Execution of the contract is expected during 2021.
Camp -Contracts near completion
A contract with RA International (RAI) to provide the camp is well advanced and early shipment of the accommodation camp and infrastructure building to Eritrea has been negotiated with RAI. Execution of the contract is expected during 2021.
EPCM
The Company has engaged DRA Global (DRA) to support Project Execution through the provision of Engineering, Procurement, Construction and Management (EPCM) services. DRA is a high quality, multi-disciplinary global project management and engineering group with strong African experience and EPCM delivery capability. The scope of DRA's contract includes:
-- all aspects of design, project management, procurement, construction management and supervision;
-- commissioning of the complete process plant and associated infrastructure; and
-- awarding and overseeing major contracts such as early works, earthworks, structural, mechanical, piping, electrical and instrumentation works, laboratory and permanent camp.
In addition, multinational professional services company Turner & Townsend has been engaged to support the Owner's Team.
Mining Agreement and Mining Licenses
CMSC is fully permitted, having 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 (ASX 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 follows the completion of a series of pre-requisites including the completion and submission of the 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.
In accordance with the Mining Agreement, CMSC is obliged to spend US$200 million on infrastructure and mine development within the area of the Colluli project mining licences, and commence Commercial Production in the 36 months following the provision of formal Notice of Commencement of Mine Development (the Notice) to the Ministry of Energy and Mines (MoEM). The Notice, dated 16 December 2019, was accepted by MoEM on 21 July 2020 (ASX announcement 22 July 2020). The granted time by the MoEM to commence Commercial Production and spend US$200M on infrastructure and mine development is 36 months from submission of the Notice (15 December 2022).
The ability for CMSC to spend US$200 million on infrastructure and mine development and commence Commercial Production before 15 December 2022 is determined by two factors; available funding and the development schedule. With regard to the availability of funding, as described above, the Group is engaged in sourcing necessary funding to close the project funding. With regard to the development schedule, work is being undertaken by DRA Global to compress the development timeline. The combination of the timing of funding and schedule compression may not be sufficient to satisfy the 15 December 2022 date. Should this be the case, CMSC would, in the normal course of business, apply to the MoEM for an extension of the date. Based on informal discussions with the MoEM and our partners, and previous experience in Eritrea, the directors are satisfied that there are reasonable grounds to believe that an extension will be granted if requested.
A Social and Environmental Impact Assessment (SEIA) and associated Social and Environmental Management Plans (SEMPs) have been completed, consistent 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 were signed off by the Ministry in August 2018. The SEMPs are a cornerstone of the environmental, social and safety management system being developed by CMSC and provide the foundation for compliance.
The senior lenders have reviewed the SEIA and SEMPs and determined that the foundation of Social and Environmental compliance was robust which allowed execution of formal documentation for the US$200M facilities. The review also identified some outstanding documents, captured as an Environmental and Social Action Plan (ESAP), that required completion as a requisite to drawdown of the facilities. These specific outstanding documents are required in CMSC's SEMPs, procedures, forms and guidelines and once completed ensure alignment with the Equator Principles and the IFC Performance Standards. The Company had completed 85% of the ESAP requirements with plans to have the process finalised in advance of project construction.
Carbon Neutral SOP
Early assessment work on the solar and wind energy potential of Colluli has been completed and this has confirmed that both of these renewable energy sources can be incorporated into the future generation of power for the Project. Our initial goal is to create a responsible, environmentally friendly, zero carbon, premium fertilizer business that clearly links Colluli SOP with the production of nutritious crops, bolsters global food and nutrition security, and improves millions of lives.
MARKETING AND PROJECT FINANCE UPDATE
Offtake
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.
Project Financing
Development finance institutions, Africa Finance Corporation (AFC) and African Export Import Bank (Afreximbank, together the Mandated Lead Arrangers), have executed documentation for the provision of US$200M in senior debt finance to CMSC (each Mandated Lead Arranger providing US$100M). The facility allows drawdown of CMSC senior debt on satisfaction of customary conditions precedent (ASX announcement 23 December 2019) for a project financing facility of this kind and includes all project approvals required to develop the project, and the balance of the equity contribution having been raised. There is no deadline for the completion of such conditions precedent however the project is required to be completed by the Longstop Date which is 31 March 2023. In addition to CMSC senior debt, AFC made a strategic equity investment in Danakali for A$31.8M (US$21.5M), which was completed on 10 December 2019. The Company continues to work with AFC as part of a total funding solution for the Project.
Furthermore, earlier this year the company successfully raised A$20.3M in a heavily oversubscribed offer to institutions and sophisticated investors and senior Danakali executives (ASX announcement 29 April 2021) (Placement) in order to commence the early works programme.
The Company has engaged a range of advisers and brokers to support our funding requirements and we are pursuing multiple options in partnership with ENAMCO, including debt, equity and quasi-equity instruments.
RESERVE AND RESOURCE OVERVIEW
Colluli has a JORC-2012 compliant resource of 1.289 billion tonnes as shown in Table 1 as at 30 June 2021. Apart from the inclusion of Kieserite (announced 15 August 2016), there have been no changes to the Mineral Resource since 25 February 2015.
The Colluli JORC-2012 compliant mineral resource estimate as at 30 June 2021 is as follows:
Table 1: Colluli Mineral Resource Estimate announced on 25 February 2015 with Kieserite added (announced on 15 August 2016)
Tonnes Density K(2) O Equiv. Kieserite
Rock Unit Mt t/m(3) % %
------- -------- -------------- ----------
Sylvinite 265 2.2 12% 0.03%
------- -------- -------------- ----------
Upper Carnallitite 51 2.1 12% 3%
------- -------- -------------- ----------
Lower Carnallitite 347 2.1 7% 22%
------- -------- -------------- ----------
Kainitite 626 2.1 12% 1%
------- -------- -------------- ----------
Total 1,289 2.1 11% 7%
------- -------- -------------- ----------
Within the JORC-2012 compliant, 1.289 billion tonnes, Mineral Resource Estimate, the JORC-2012 compliant Ore Reserve Estimate for Colluli's potassium sulphate potash fertiliser is approximately 1.1 billion tonnes comprising 285 million tonnes of Proved and 815 million tonnes of Probable Ore Reserve and is shown below in Table 2. The Ore Reserve was updated in line with FEED and this update is included below (ASX announcement 19 February 2018).
The Colluli JORC-2012 compliant Ore Reserve estimate by potash mineral as at 30 June 2021 is as follows:
Table 2: JORC-2012 Colluli Potassium Sulphate Ore Reserve announced on 29 January 2018 and 19 February 2018
Proved Probable Total
K(2) K(2)
K(2) K(2) K(2) SO(4) SO(4)
O Equiv O Equiv O Equiv Equiv Equiv
Occurrence Mt % Mt % Mt % % Mt(1)
---- --------- ---- --------- ------ --------- ------- -------
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 11.2% 815 10.4% 1,100 10.7% 18.5 203
---- --------- ---- --------- ------ --------- ------- -------
(1) Equivalent K(2) SO(4) (SOP) calculated by multiplying %K(2) O by 1.85
In addition to potassium sulphate, substantial quantities of rock salt exist. A JORC-2012 compliant Rock Salt Mineral Resource Estimate of over 300 million tonnes has been completed for the area considered for mining in the DFS as shown in Table 3. There have been no changes to the Mineral Resource estimate since 23 September 2015.
As at 30 June 2021, the JORC-2012 compliant Rock Salt Mineral Resource is as follows:
Table 3: JORC 2012 Colluli Rock Salt Mineral Resource announced on 23 September 2015
Classification Tonnes NaCl K Mg CaSO(4) Insolubles
(Mt)
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 96.7 % 0.06 % 0.05 % 2.1 % 0.24 %
------- ------- ------- ------- -------- -----------
CORPORATE
Board and Management Changes
On 26 February 2021, the Company announced that the role of Chief Executive Officer, held by Mr Niels Wage, had been made redundant as part of a reallocation of responsibilities. As part of his redundancy package, he was paid severance allowance of $372,679.
Mr Seamus Cornelius was appointed as Executive Chairman on 26 February 2021.
On 13 April 2021, the Company announced that Mr Stuart Tarrant had resigned as Chief Financial Officer to pursue another career opportunity. The CFO responsibilities have been assumed by the Company's Head of Finance, Mr Greg MacPherson and the Executive Chairman.
Refer to events occurring after 30 June 2021 for details of further board changes made in 31 August 2021.
Shares
The following shares were issued during the period:
-- 47,565,999 shares issued pursuant to the Placement
-- 947,041 shares issued upon exercise of $0.00 unlisted options expiring 31 December 2021
At 30 June 2021, there were a total of 367,254,346 fully paid ordinary shares on issue.
Options
The following unlisted options were issued during the period:
-- 500,000 unlisted options exercisable at $0.527 expiring 29 January 2023
-- 250,000 unlisted options exercisable at $0.501 expiring 3 December 2023
-- 250,000 unlisted options exercisable at $0.780 expiring 24 March 2023
The following unlisted options were exercised during the period:
-- 947,041 unlisted options exercisable at $0.00 expiring 31 December 2021
There were no unlisted options that expired or lapsed during the period.
At 30 June 2021, there were a total of 5,264,112 unlisted options on issue at various exercise prices and expiry dates.
Performance Rights
There were no performance rights issued during the period.
The following performance rights were forfeited during the period:
-- 900,000 Class 9 performance rights
There were no performance rights vested and converted into shares during the period.
At 30 June 2021, there were a total of 360,000 performance rights on issue in the following classes:
-- 280,000 Class 1 performance rights
-- 80,000 Class 5 performance rights
INTEREST 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.
RISK MANAGEMENT
The Company has established a Risk Management Policy which outlines the Board's expectations in relation to risk management, responsibilities, risk management objectives, and the principles of its risk management framework.
The Board, through the Audit and Risk Committee, is responsible for overseeing the establishment and implementation of effective risk management and internal control systems to manage the Company's material business risks and for reviewing and monitoring the Company's application of those systems.
The Audit and Risk Committee continues to work closely with management to assess, monitor and review business risks and to carry out assessments of internal controls and processes for improvement opportunities. In support of this, the Committee receives reports from management on new and emerging risks and related controls and mitigation measures that management have implemented.
A summary of the material business risks of the Company is set out in the below table.
RISK MITIGATION / CONTROL
Strategic Risks
-------------------------------------------
The Group is reliant on the success The Group has implemented a comprehensive
of a single asset located in a risk management framework to early
remote region in Eritrea. Any detect and manage adverse events
adverse event affecting the Colluli that would affect the Project.
Potash Project (Project), either The Group maintains a strong relationship
during its development or following with a broad base of government
the commencement of production, and community stakeholders to monitor
would have a material adverse the political environment in Eritrea
effect on the value of the business and to stay ahead of any legislative
Changes to government, existing and regulatory changes.
applicable laws and regulations, The Group's public relations and
more stringent interpretations investment strategies promote the
of existing laws or inconsistent international awareness of the
interpretation or application benefits of doing business in Eritrea.
of existing laws by relevant authorities As further investment is made into
have the potential to adversely the country further infrastructure
impact business activities. can be developed.
Eritrea has limited local resources, The commencement of training programmes
infrastructure and skills, has in conjunction with Government
a less tested legislative and and other mining companies is planned
regulatory framework compared to increase the number of skilled
to more established mining jurisdictions and semi-skilled persons in Eritrea.
and is generally perceived as Whilst the Group has not experienced
a jurisdiction where there is any corruption in Eritrea, the
a high risk of corruption. Anti-Bribery & Corruption Policy
provides the framework for the
appropriate conduct when dealing
with government officials. The
Group's values further promote
the proper behaviour of its employees
and contractors.
-------------------------------------------
Financial Risks
-------------------------------------------
The Group is yet to commence production The Group has adopted robust financial
and is in its development phase, management practices to ensure
therefore the company has no cash that cashflows are closely governed
generating assets which could and that future requirements remain
put a strain on long -term cash adequate to continue as a going
flows. concern.
The Group continues to execute
its fund raising strategies to
obtain the required capital to
fully fund the Project and working
capital of the business.
-------------------------------------------
The Group is aware that the economics The Group continuously monitors
for the development of the Project the SOP market and forecast demand
is strongly linked to the market to ensure that the economics of
price of SOP and its ability to the project remain favourable.
sell the product. A natural hedge exists against
lower SOP prices in the form of
an industry cost curve, of which
Colluli is expected to be in the
bottom quartile.
An offtake agreement with Eurochem
has been concluded for up to 100%
of the production for the first
10 years of the project. There
is an ongoing engagement with Eurochem
to continue to build the future
partnership.
-------------------------------------------
RISK MITIGATION / CONTROL
Financial Risks
--------------------------------------------
The Group is aware of the requirement The Group has established a funding
to raise additional funding to finance strategy to fund the project through
the Project. Without the required debt and equity sources.
raise, the business will not be A US$200m debt facility has been
able to develop the Project and secured with African Finance Corporation
long-term cashflow will become a (AFC) and African Export-Import
concern. The effect of COVID-19 Bank (Afreximbank).
on international travel and capital Various strategies have been put
markets has increased funding risk. in place to raise the balance of
the funding for the project.
--------------------------------------------
The Group is aware that foreign The Group implements appropriate
exchange movements and interest treasury management processes and
rate changes could affect the financial procedures to monitor and manage
performance of the company. its foreign exchange exposures.
The Group seeks to pursue natural
foreign exchange hedges through
the negotiation, where appropriate,
of USD denominated commercial contracts.
The senior debt funding facility
is linked to the Libor rate which
is relatively stable and does not
fluctuate significantly.
--------------------------------------------
Compliance Risks
--------------------------------------------
The Group is aware that the mining The Group has regular and effective
industry is subject to a number engagement with the Eritrean Ministry
of laws and governmental regulations of Energy and Mines to ensure that
which need to be complied with. it remains compliant with regulatory
Non-compliance could result to the requirements and that the government
loss of the Group's mining licence. is made aware of the company's commitments
to develop the project.
--------------------------------------------
The Group is aware of its Environmental The Group has appointed sustainability
& Social responsibilities and the professionals to develop the management
impact it would have on the company systems to ensure that the environment
if regulatory compliance requirements and social compliance requirements
have not been met. are achieved.
--------------------------------------------
Operation/ Project Risks
--------------------------------------------
The Group is reliant on a number The Group has developed succession
of key personnel. The loss of one and retention plans to reduce the
or more of its key personnel could exposure to the loss of any key
have an adverse impact on the business personnel.
of the Group
--------------------------------------------
The Group is in the early stages The Group has identified a number
of development and therefore is of controls to reduce its exposure
exposed to various development risks. to development risks.
As part of the initial phase of
development, risk reviews are undertaken
and collated in a project risk register.
--------------------------------------------
The Group is reliant on third parties The Group has awarded contracts
to develop and operate the Project, or preferential status to reputable
including mining, EPCM and power third-party contractors to develop
contracts. and operate the project. The company
continues to engage these parties
as the Project develops.
--------------------------------------------
The Project is reliant on developing The Group has detailed plans to
its own infrastructure including, develop these infrastructures and
processing plant, water and roads. continue to engage with reputable
contractors.
--------------------------------------------
Project delay due to restriction Management continues to monitor
on international travel due to global and update the project schedule
pandemic (COVID-19). based on changing international
travel restrictions. As part of
the COVID-19 response, a continuity
plan was developed and put into
action. These actions are incorporated
into the overall Business Continuity
Plan.
Where appropriate, EPCM and other
project activities are undertaken
where these are not impacted by
travel restrictions.
--------------------------------------------
Reputational Risks
--------------------------------------------
The Group is aware of the risk that The Group continues to employ an
community and government support in-country manager to regularly
could deteriorate if the Colluli engage with the government and community
project does not commence in the to provide regular feedback on the
near term. development of the project.
Completing the funding package to
develop the project is key to maintaining
the Group's reputation.
--------------------------------------------
Reputational Risks
The Group is aware of the external The Group intends to comply with
perception of Eritrea with respect IFC Performance Standards and Equator
to political or economic instability. Principles.
Specifically, allegations of Human The business is undertaking an independent
Rights violations. human rights impact assessment and
will be implementing a number of
policies, procedures and safeguards
to ensure national and international
compliance with fair work and human
rights practices.
--------------------------------------------
Health & Safety
--------------------------------------------
Physical development of the Project In recognition of the physical remoteness
has not yet commenced however the of the Project, a well-equipped
Group is aware of the activities medical clinic is planned for on-site.
and the environments in which the The business has engaged with an
project is located presents inherent internationally recognised health
hazards, including the risk of serious and safety consultant to assist
injury or fatality while working in further developing these plans.
on site.
--------------------------------------------
The physical remoteness of Project Emergency response plans and travel
increases the risk of commuting safety strategies have been implemented.
to site and the availability of
medical assistance in the event
of an incident.
--------------------------------------------
EVENTS OCCURRING AFTER THE STATEMENT OF FINANCIAL POSITION DATE
Board Change
Robert Connochie resigned as a Non-Executive Director on 31 August 2021.
Movements in Securities
On 6 August 2021, the Company issued 1,080,000 shares at $0.43 to Directors (or nominees) raising $0.5m. Shareholder approval for the issue of these shares was obtained at the Company's Annual General Meeting held on 30 July 2021 (AGM).
On 6 August 2021, the Company issued 2,000,000 unlisted options exercisable at $0.64 expiring 30 July 2025 to Executive Chairman, Mr Seamus Cornelius as part of his remuneration package. Shareholder approval for the issue of these options was obtained at the AGM.
The Company proposes to issue 8,000,000 unlisted options exercisable at $0.64 expiring 30 July 2025 to employees of the Company as part of their remuneration package.
Other Events
There are no other events subsequent to 30 June 2021 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
EXECUTIVE CHAIRMAN
Perth, 31 August 2021
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 2021
Half Year Ended
------------------------------------------------
30 June 2021 30 June 2020
------------------------------------------------
Notes $ $
------------------------------------------------ ----- ------------ ------------
REVENUE
Interest revenue calculated using the effective
interest rate method 9,424 63,091
Net gain on financial assets at fair value
through profit or loss 5 1,048,069 159,654
Foreign exchange gain 1,002,462 1,205,348
Sundry - 50,000
EXPENSES
Depreciation expense (2,049) (2,337)
Loss on disposal of assets - (231)
Administration expenses 4 (1,582,270) (1,730,452)
Share based payment expense 11 (135,423) (654,710)
Share of net loss of joint venture 6 (818,110) (767,718)
LOSS BEFORE INCOME TAX (477,897) (1,677,355)
Income tax expense - -
------------ ------------
NET LOSS FOR THE PERIOD (477,897) (1,677,355)
OTHER COMPREHENSIVE INCOME / (LOSS)
Items that may be reclassified to profit
and loss
Share of foreign currency translation reserve 6,
relating to equity accounted investment 9 248,314 153,665
TOTAL OTHER COMPREHENSIVE INCOME FOR THE
PERIOD 248,314 153,665
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (229,583) (1,523,690)
============ ============
Earnings per share for loss attributable
to the ordinary equity holders of the Company:
Basic loss per share (cents per share) (0.13) (0.53)
Diluted loss per share (cents per share) (0.13) (0.53)
------------ ------------
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 2021
30 June 2021 31 December
2020
Notes $ $
------------------------------ ----- ------------ ------------
CURRENT ASSETS
Cash and cash equivalents 25,730,181 9,738,794
Receivables 5 197,041 103,045
Prepayments 253,066 411,808
------------ ------------
TOTAL CURRENT ASSETS 26,180,288 10,253,647
------------ ------------
NON--CURRENT ASSETS
Receivables 5 14,163,902 12,504,442
Investment in joint venture 6 35,336,482 34,194,212
Plant and equipment 24,534 12,401
TOTAL NON--CURRENT ASSETS 49,524,918 46,711,055
------------ ------------
TOTAL ASSETS 75,705,206 56,964,702
------------ ------------
CURRENT LIABILITIES
Trade and other payables 7 495,488 726,271
Provisions 92,699 73,002
TOTAL CURRENT LIABILITIES 588,187 799,273
------------ ------------
NON-CURRENT LIABILITIES
Provisions 39,886 65,684
------------ ------------
TOTAL NON-CURRENT LIABILITIES 39,886 65,684
------------ ------------
TOTAL LIABILITIES 628,073 864,957
------------ ------------
NET ASSETS 75,077,133 56,099,745
============ ============
EQUITY
Issued capital 8 128,129,923 109,058,372
Reserves 9 13,176,974 12,793,237
Accumulated losses 10 (66,229,762) (65,751,864)
------------ ------------
TOTAL EQUITY 75,077,133 56,099,745
============ ============
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 2021
Reserves
Share Based Foreign Currency Accumulated
Issued Capital Payments Translation Losses Total Equity
------------------ -----
Notes $ $ $ $ $
------------------ ----- -------------- -------------------------- ---------------- ------------ -----------------
BALANCE AT 1
JANUARY 2021 109,058,372 12,382,082 411,155 (65,751,864) 56,099,745
Loss for the
period 10 - - - (477,897) (477,897)
Other
comprehensive
income 6 - - 248,314 - 248,314
Total
comprehensive
income/(loss)
for the period - - 248,314 (477,897) (229,583)
Transactions with
owners in their
capacity as
owners:
Shares issued 20,455,218 - - - 20,455,218
Capital raising
costs (1,383,667) - - - (1,383,667)
Share based
payments expense 11 - 135,423 - - 135,423
BALANCE AT 30 JUNE
2021 128,129,923 12,517,505 659,469 (66,229,761) 75,077,133
============== ========================== ================ ============ =================
BALANCE AT 1
JANUARY 2020 109,194,951 11,962,019 1,961,252 (57,492,494) 65,625,728
Loss for the
period - - - (1,677,355) (1,677,355)
Other
comprehensive
income - - 153,665 - 153,665
Total
comprehensive
income/(loss)
for the period - - 153,665 (1,677,355) (1,523,690)
Transactions with
owners in their
capacity as
owners:
Capital raising
costs (136,579) - - - (136,579)
Share based
payments expense - 654,710 - - 654,710
BALANCE AT 30 JUNE
2020 109,058,372 12,616,729 2,114,917 (59,169,849) 64,620,169
============== ========================== ================ ============ =================
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 2021
Half Year Ended
30 June 2021 30 June 2020
Notes $ $
-------------------------------------------- ------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 9,233 62,762
Payments to suppliers and employees (1,754,219) (1,752,608)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,744,986) (1,689,846)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of joint venture (1,969,415) (14,007,357)
Payments for plant and equipment (14,182) (5,840)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (1,983,597) (14,013,197)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares 20,455,218 -
Payment of capital raising costs (1,383,667) (3,302,478)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES 19,071,551 (3,302,478)
------------ ------------
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 15,342,967 (19,005,321)
Cash and cash equivalents at the beginning
of the financial period 9,738,794 33,800,104
Realised foreign exchange gain/(loss) on
cash 648,420 976,335
CASH AND CASH EQUIVALENTS AT THE OF THE
PERIOD 25,730,181 15,771,118
============ ============
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 2021 comprises the Company and its subsidiaries (together referred to as the Group).
The financial report of Danakali for the half year ended 30 June 2021 was authorised for issue by the Directors on 31 August 2021.
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 2021 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 2020 and considered together with any public announcements made by the Company during the half year ended 30 June 2021 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 2020, except for the adoption of the new standards and interpretations effective as of 1 January 2021. 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 a year ending 31 December 2021:
Reference Title Summary
AASB 2020-8 Amendments to Australian Accounting Standards - This Standard amends the Standards listed to help
Interest Rate Benchmark Reform - Phase entities to provide financial statement
users with useful information about the effects of
the interest rate benchmark reform on those
entities' financial statements. As a result of
these amendments, an entity: a) will not have
to derecognise or adjust the carrying amount of
financial instruments for changes required
by the reform, but will instead update the
effective interest rate to reflect the change to
the alternative benchmark rate; b) will not have to
discontinue its hedge accounting solely
because it makes changes required by the reform, if
the hedge meets other hedge accounting
criteria; and c) will be required to disclose
information about new risks arising from the
reform and how it manages the transition to
alternative benchmark rates.
---------------------------------------------------- ---------------------------------------------------
AASB 2021-3 Amendment to AASB 16 Leases - COVID-19 rent Extends the practical expedient contained in AASB
concessions 2020-4 and permits lessees not to assess
whether rent concessions as a direct consequence of
the COVID-19 pandemic that reduce lease
payments originally due on or before 30 June 2022
are lease modifications and, instead, to
account for those rent concessions as if they were
not lease modifications. Early application
is permitted.
---------------------------------------------------- ---------------------------------------------------
(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 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.
At balance date, the Group had cash and cash equivalents of $25,730,181 (31 December 2020: $9,738,794) and a net working capital surplus of $25,592,102 (31 December 2020: $9,454,374). Whilst the existing cash reserves are sufficient to cover the working capital requirements of the Group for the next 12 months, the Group has commenced execution of the project development and as such, additional funding will be necessary to carry out these planned activities. The directors are confident that the Group will be able to obtain the additional funding requirement to continue with the development of the project as evidenced by the execution of documentation for a conditional US$200M debt facility.
The balance of the funding is being pursued through a mix of debt, equity and quasi-equity instruments for Danakali and CMSC. Where such financing was likely to be delayed, as was experienced during 2020 in part due to the COVID-19 pandemic, the directors seek to defer its planned capital expenditure on the project.
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 and commence Commercial Production in the 36 months following the provision of formal Notice of Commencement of Mine Development (the Notice) to the Ministry of Energy and Mines (MoEM). The Notice, dated 16 December 2019, was accepted by MoEM on 21 July 2020 (ASX announcement 22 July 2020). The granted time by the MoEM to commence Commercial Production and spend US$200M on infrastructure and mine development is 36 months from submission of the Notice (15 December 2022).
The ability for CMSC to spend US$200 million on infrastructure and mine development and commence Commercial Production before 15 December 2022 will be determined by two factors; available funding and the development schedule. With regard to the availability of funding, as described above, the Group is engaged in sourcing necessary funding to close the project funding. With regard to the development schedule, work is being undertaken by DRA Global to compress the development timeline. The combination of the timing of funding and schedule compression may not be sufficient to satisfy the 15 December 2022 date. Should this be the case, CMSC would, in the normal course of business, apply to the MoEM for an extension of the date. Based on informal discussions with the MoEM and our partners, and previous experience in Eritrea, the directors are satisfied that there are reasonable grounds to believe that an extension will be granted if requested.
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 adjustments 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 2021 30 June 2020
$ $
------------------------------------------------ ------------ ------------
Employee benefits (net of recharges) 545,059 270,226
Director fees 248,302 245,694
Low value asset leases 28,941 55,584
Compliance, regulatory and other administration
expenses 759,968 1,158,948
------------ ------------
1,582,270 1,730,452
------------ ------------
5. TRADE AND OTHER RECEIVABLES
31 December
30 June 2021 2020
$ $
------------------------------------------ ------------ -----------
Current
Net GST receivable 123,947 47,962
Accrued interest 248 57
Other receivables at amortised cost 17,846 26
Security bonds at amortised cost 55,000 55,000
------------ -----------
197,041 103,045
------------ -----------
Non-Current
Loan to Colluli Mining Share Company - at
fair value 14,163,902 12,504,442
------------ -----------
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, is 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 21% (31 December 2020: effective interest rate of 21%).
During the period ended 30 June 2021 and the year ended 31 December 2020, the expected repayment profile of the receivable was reviewed to consider the timing of the completion of construction, timing of project financing and alignment to the indicative debt financing terms. It was assessed that there was no requirement to amend the expected repayment profile during the period.
The undiscounted underlying loan balance at 30 June 2021 is $40,716,117 (USD 31,388,430) (31 December 2020: $40,506,332 (USD 31,226,502)).
Financial Year
Half Year to to
31 December
30 June 2021 2020
$ $
----------------------------------------------- ------------- --------------
Reconciliation of movement in loan to Colluli
Mining Share Company:
Carrying amount at the beginning of the period 12,504,442 15,204,815
Additional loans during the period 259,535 1,537,805
Foreign exchange gain/(loss) 351,856 (1,568,370)
Net gain/(loss) on financial assets at fair
value through profit or loss 1,048,069 (2,669,808)
Carrying amount at the end of the period 14,163,902 12,504,442
------------- --------------
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 2021 2020 30 June 2021 2020
Project Activities % % $ $
-------- -------------------- ------------ ----------- ------------ -----------
Colluli
Potash Mineral Exploration 50 50 35,336,482 34,194,212
-------- -------------------- ------------ ----------- ------------ -----------
The Group acquired an interest in 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.
Under 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 2021.
Financial Year
Half Year to to
31 December
30 June 2021 2020
$ $
----------------------------------------------- ------------- --------------
Reconciliation of movement in investments
accounted for using the equity method:
Carrying amount at the beginning of the period 34,194,212 27,975,738
Additional investment during the period 1,712,067 7,753,329
Share of net profit / (loss) for the period (818,110) 15,242
Other comprehensive income / (loss) for the
period 248,314 (1,550,097)
------------- --------------
Carrying amount at the end of the period 35,336,482 34,194,212
------------- --------------
Summarised financial information of joint venture:
31 December
30 June 2021 2020
$ $
----------------------------------------------------- ------------- ------------
Financial position (Aligned to Danakali accounting
policies)
Current assets:
Cash and cash equivalents 85,629 36,043
Other current assets 325,852 110,132
------------- ------------
411,481 146,175
Non-current assets:
Fixed assets 87,589 86,186
Development costs capitalised 6,353,064 5,189,033
Prepaid finance costs 11,250,718 11,070,564
Mineral property 28,862,941 28,404,193
------------- ------------
46,554,312 44,749,976
------------- ------------
Current liabilities:
Trade & other payables and accruals (3,647,699) (3,622,125)
------------- ------------
(3,647,699) (3,622,125)
------------- ------------
Non-current liabilities:
Loan from Danakali Limited - at amortised
cost (12,182,687) (10,706,959)
------------- ------------
(12,182,687) (10,706,959)
------------- ------------
NET ASSETS 31,135,407 30,567,067
============= ============
Group's share of net assets 15,567,704 15,283,534
============= ============
Reconciliation of Equity Investment:
Group's share of net assets 15,567,704 15,283,534
Share of initial contribution on establishment ( 4,305,107
of the Joint Venture not recognised by Danakali (4,305,107) )
Outside shareholder interest in equity contributions
by Danakali 24,073,885 23,215,782
------------- ------------
Carrying amount at the end of the period 35,336,482 34,194,211
------------- ------------
Half Year to Half Year to
30 June 2021 30 June 2020
$ $
------------------------------------------------ ------------- -------------
Financial performance
Interest expense relating to the unwinding
of discount on joint venture loan (1,212,002) (1,476,974)
Gain on re-measurement of loan to joint venture
carried at amortised cost 194,845 1,654,755
Expenses recorded through profit and loss (619,063) (1,713,217)
------------- -------------
LOSS FOR THE PERIOD (1,636,220) (1,535,436)
------------- -------------
Group's share of total loss for the period (818,110) (767,718)
============= =============
During the period ended 30 June 2021 no dividends were paid or declared (31 December 2020: Nil).
Colluli Mining Share Company has the following commitments or contingencies at 30 June 2021:
COMMITMENTS
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 (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 of Commencement of Mine Development (the Notice) to the Ministry of Energy and Mines (MoEM). The Notice, lodged on 17 December 2019, was accepted by MoEM in July 2020 (ASX announcement 22 July 2020). The granted time to commence commercial production by the MoEM is 36 months from submission of the Notice (mid-December 2022).
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 (Debt). 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, including termination by CMSC.
At 30 June 2021, CMSC has commitments of $0.4M in annual agent fees (2020: $0.4M).
In addition, CMSC has commitments of $3.5M (2020: $3.4M) to the financial advisor upon the successful drawdown of the facility.
CONTINGENCIES
CMSC will be liable for facility fees of $2.7M (2020: $2.6M) to the MLAs on the drawdown of the facility. This commitment is subject to the performance of additional services by the MLAs in connection with the facility.
7. TRADE AND OTHER PAYABLES
31 December
30 June 2021 2020
$ $
----------------- ------------ -----------
Trade payables 328,629 483,282
Accrued expenses 130,038 149,500
Other payables 36,820 93,489
------------ -----------
495,488 726,271
------------ -----------
8. ISSUED CAPITAL
Half Year to Financial Year to
30 June 2021 31 December 2020
---------------------------------------------------------------
Number Number
(a ) Share capital of shares $ of shares $
Ordinary shares fully paid 367,254,346 128,129,923 318,741,306 109,058,372
=========== =========== =========== ===========
(b) Movements in ordinary share
capital
Beginning of the period 318,741,306 109,058,372 318,546,306 109,194,951
Issued during the period:
* Issued at $0.43 per share pursuant to placement (i) 47,565,999 20,455,218 - -
* Issued at $0.00 per share on option exercise 947,041 - - -
* Issued on vesting of performance rights (ii) - - 195,000 -
* Cost of capital raised (iii) - (1,383,667) - (136,579)
End of the period 367,254,346 128,129,923 318,741,306 109,058,372
=========== =========== =========== ===========
(i) On 6 May 2021, the Company issued a total of 47,565,999 shares at an issue price of $0.43 per share pursuant to a placement to institutional and sophisticated investors and senior Danakali executives ( Placement ).
(ii) Includes 175,000 shares issued upon conversion of performance rights during the period in respect of which the performance hurdle had been met during the year ended 31 December 2019. The balance of 20,000 shares relates the issue of shares upon conversion of performance rights in respect of which the performance hurdle was met in the year ended 31 December 2020.
(iii) Includes fees paid or payable to financial advisers in relation to funds raised pursuant to the Placement.
9. RESERVES
Financial Year
to
Half Year to 31 December
30 June 2021 2020
$ $
------------------------------------------ ------------- --------------
(a) Reserves
Share-based payments reserve
Balance at beginning of the period 12,382,082 11,962,019
Employee and contractor share options
& performance rights 135,423 420,063
Balance at end of the period 12,517,505 12,382,082
------------- --------------
Foreign currency translation reserve
Balance at beginning of the period 411,155 1,961,252
Currency translation differences arising
during the period 248,314 (1,550,097)
------------- --------------
Balance at end of the period 659,469 411,155
------------- --------------
Total reserves 13,176,974 12,793,237
============= ==============
(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 venture.
10. ACCUMULATED LOSSES
Financial Year
to
Half Year to 31 December
30 June 2021 2020
-----------------------------------
$ $
----------------------------------- ------------- --------------
Balance at beginning of the period (65,751,864) (57,492,494)
Loss for the period (477,897) (8,259,370)
Balance at end of the period (66,229,761) (65,751,864)
------------- --------------
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 2021 30 June 2020
--------------------------------------------------
$ $
-------------------------------------------------- ------------- -------------
Options issued to directors and employees 195,175 583,804
Performance rights issued to directors, employees
and consultants (59,752) 70,906
Expense 135,423 654,710
------------- -------------
(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
1 Jan 2021 30 Jun 2021
----------------------------- ----------- --------- --------- ---------- ------------
Exercise price $1.031 expiry 1,168,272
date 24/01/2022 1,168,272 - - - (a)
Exercise price $1.031 expiry 301,040
date 24/01/2022 301,040 - - - (a)
Exercise price $1.108 expiry 583,000
date 13/03/2022 583,000 - - - (a)
Exercise price $1.119 expiry 561,800
date 28/03/2022 561,800 - - - (a)
Exercise price $1.114 expiry 1,450,000
date 30/05/2022 1,450,000 - - - (a)
Exercise price $0.000 expiry
date 31/12/2021 947,041 - (947,041) - -
Exercise price $0.664 expiry 200,000
date 08/07/2023 200,000 - - - (b)
Exercise price $0.501 expiry 250,000 250,000
date 03/12/2023 (c) - - - (b)
Exercise price $0.527 expiry 500,000
date 29/01/2023 - 500,000 - - (a)
Exercise price $0.780 expiry 250,000
date 24/03/2023 - 250,000 - - (a)
Exercise price $0.640 expiry 2,000,000 2,000,000
date 20/07/2025 - (d) - - (b)
5,461,153 2,750,000 (947,041) - 7,264,112
----------- --------- --------- ---------- ------------
(a) Vested options.
(b) Unvested options.
(c) Refers to unlisted options granted on 3 December 2020, which were formally issued on 12 February 2021.
(d) Refers to unlisted options granted on 24 June 2021, approved for issue by shareholders on 30 July 2021, and formally issued on 6 August 2021.
(c) Performance Rights
Movements in the number of performance rights on issue during the period is as follows:
Performance Rights Opening balance Granted Vested Forfeited Closing
- Class 1 Jan 2021 balance
30 Jun 2021
------------------- --------------- ------- ------ --------- ------------
Class 1 (a) 280,000 - - - 280,000
Class 5 (a) 80,000 - - - 80,000
Class 9 900,000 - - (900,000) -
1,260,000 - - (900,000) 360,000
--------------- ------- ------ --------- ------------
(a) Issued under the Performance Rights Plan which was re-approved at the annual general meeting of the Company held 17 November 2014.
The 360,000 Performance Rights on issue at 30 June 2021 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 5:
-- 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).
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 2021:
Fair value
through through other
At amortised profit and comprehensive
cost loss income
$ $ $
----------------------------- ------------- ------------ ---------------
Financial Assets:
Trade and other receivables 197,041 - -
------------- ------------ ---------------
Total current 197,041 - -
------------- ------------ ---------------
Receivable - 14,163,902 -
------------- ------------ ---------------
Total non-current - 14,163,902 -
------------- ------------ ---------------
Total Assets 197,041 14,163,902 -
============= ============ ===============
Financial liabilities:
Trade and other payables 495,488 - -
------------- ------------ ---------------
Total current 495,488 - -
------------- ------------ ---------------
Total Liabilities 495,488 - -
============= ============ ===============
Fair values:
Set out below is a comparison of the carrying amount and fair values of financial instruments as at 30 June 2021:
Carrying amount Fair value
$ $
----------------------------- ---------------- -----------
Financial Assets:
Trade and other receivables 197,041 197,041
---------------- -----------
Total current 197,041 197,041
---------------- -----------
Receivable 14,163,902 14,163,902
---------------- -----------
Total non-current 14,163,902 14,163,902
---------------- -----------
Total Assets 14,360,943 14,360,943
================ ===========
Financial liabilities:
Trade and other payables 495,488 495,488
---------------- -----------
Total current 495,488 495,488
---------------- -----------
Total Liabilities 495,488 495,488
================ ===========
The current receivables carrying values and payables carrying values approximates fair values due to the short-term maturities of these instruments.
The fair value of the long-term receivable was determined by discounting future cashflows using a current market interest
rate of 21% which incorporates an appropriate adjustment for credit risk. The timing of cash receipts has been updated to consider the timing of the completion of construction, timing of project financing and alignment to the indicative debt financing terms . The fair value measurement for the long-term receivable is categorised as Level 3 in the fair value hierarchy as the estimated market interest rate is an unobserved input in the valuation. The fair value of the loan is sensitive to the discount rate applied.
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 2021 31 December
2020
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)
With respect to new key management personnel (KMP) appointments during the half-year ended 30 June 2021, the Company has entered into arrangements regarding remuneration for services provided, the key terms of which are summarised below.
The Company has entered into revised arrangements with the following KMP during the half-year ended 30 June 2021:
Mr Seamus Cornelius, Executive Director:
Effective from date of transition to the role of Executive Chairman on 26 February 2021, Mr Cornelius is entitled to received fixed remuneration of $225,000 per annum plus superannuation at the statutory rate.
Mr Mr John Fitzgerald, Mr Robert Connochie, Ms Zhang Jing, Mr Samaila Zubairu, Mr Taiwo Adeniji:
Effective from 1 March 2021, the base fees of Non-Executive Directors were reduced from $60,000 to $40,000 per annum.
Offer of Unlisted Options
On 24 June 2021, Mr Seamus Cornelius was granted 2,000,000 unlisted options with an exercise price to be determined at 143% of the share price at the date shareholder approval being received and expiring 4 years from this date. These options were approved for issued by shareholders at the Company's AGM held 30 July 2021 and were formally issued on 6 August 2021.
Transactions with directors, director related entities and other related parties
AFC is deemed to be a related party of the Company on the basis of significant influence. The related party status applies due to AFC interest of 14.4% (2020: 16.6%) in the issued capital of the Company and AFC's President and CEO, Samaila D. Zubairu, and AFC Senior Director for Investment Operations & Execution, Taiwo Adeniji, are Non-Executive Directors on the Danakali Board.
AFC and Afreximbank (together the Mandated Lead Arrangers), have executed documentation for the provision of US$200M in senior debt finance to CMSC (each Mandated Lead Arranger providing US$100M). The facility allows drawdown of CMSC senior debt on satisfaction of customary conditions precedent (refer ASX announcement 23 December 2019) for a project financing facility of this kind and includes all project approvals required to develop the project, and the balance of the equity contribution having been raised.
15. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the Group at balance date (2020:Nil).
16. COMMITMENTS
Financial Year
to
Half Year to 31 December
30 June 2021 2020
$ $
Lease commitments (Group as lessee):
Low value Leases
Minimum lease payments
* Within one year 30,507 -
- -
* Later than one year but not later than five years
------------- --------------
Total Commitments 30,507 -
------------- --------------
Low values Leases:
The minimum future payments above relate to non-cancellable leases for offices.
17. EVENTS OCCURRING AFTER THE STATEMENT OF FINANCIAL POSITION DATE
Board Change
Robert Connochie resigned as a Non-Executive Director on 31 August 2021.
Movements in Securities
On 6 August 2021, the Company issued 1,080,000 shares at $0.43 to Directors (or nominees) raising $0.5m. Shareholder approval for the issue of these shares was obtained at the Company's Annual General Meeting held 30 July 2021 (AGM).
On 6 August 2021, the Company issued 2,000,000 unlisted options exercisable at $0.64 expiring 30 July 2025 to Executive Chairman, Mr Seamus Cornelius as part of his remuneration package. Shareholder approval for the issue of these options was obtained at the AGM.
The Company proposes to issue 8,000,000 unlisted options exercisable at $0.64 expiring 30 July 2025 to employees of the Company as part of their remuneration package.
Other Events
There are no other events subsequent to 30 June 2021 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 2021 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 Group's financial position as at 30 June 2021 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
EXECUTIVE CHAIRMAN
Perth, 31 August 2021
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