http://www.proactiveinvestors.com.au/companies/news/65895/asx-edged-lower-but-this-potash-play-added-value-65895.html
ASX edged lower, but this potash play added value
Monday, November 30, 2015 by Proactive Investors
The Australian All Ordinaries closed slightly lower at 5,218 points today as the big miners led a 2.4% fall for the material sector after a mostly negative turn for commodity prices, including a 4.6% overnight fall Friday for spot nickel on the London Metal Exchange to US$8,742 per tonne.
Fortunately, it wasn’t all doom and gloom on the resources front ….
MARKET ACTION
Shares in potash developer Danakali (ASX:DNK) bounced as much as 10.7% today before finishing 7.1% stronger at A$0.30 on the release of some outstanding Definitive Feasibility Study (DFS) results at its Colluli project in Eritrea.
The DFS marked a 30% reduction in initial development capital requirements to US$298 million, while phase 2 development capital decreased by 38% to US$175 million, with the majority expected to be funded by operating cashflows.
This more economic footing allowed for a market-leading capital intensity of US$702 per tonne of sulphate of potash (SOP) and supported other outstanding study results including establishment of a US$860 million net present value, a 29% internal rate of return and a payback period of only 3.5 years.
SOP is a high-quality potash fertiliser which represents Colluli’s primary output stream and carries a price premium due to its practicality in low-rainfall regions.
The DFS has projected annualised SOP production at Colluli to total 425,000 tonnes during phase 1 and 850,000 tonnes thereafter.
Other key study outcomes included average mine gate costs of US$141 per tonne of SOP and average total cash costs US$227 per tonne of SOP during phases 1 and 2 of the operation.
These figures establish Colluli as being in the bottom quartile of the mine gate costs curve.
Received on Mon Nov 30 2015 - 06:29:32 EST