Danakali, an Australian potash company, has raised a $200m credit facility from African lenders. Proceeds of the syndicated facility will go towards funding the planned Colluli potash project in Eritrea.
Colluli Mining Share Company, in which Australia's Danakali and Eritrea's National Mining Corporation each own 50%, has raised a seven year $200m senior secured loan.
The loan was provided by Africa Export Import Bank (Afreximbank) and Africa Finance Corporation (AFC). The two mandated lead arrangers provided $100m each.
The loan follows the announcement earlier this month of AFC's $50m equity investment commitment to Danakali, bringing the total funding for the project to $250m.
The margin on the loan is 8.5% over Libor.
Proceeds will be used for the construction and development of the Colluli Sulphate of Potash in Eritrea. Earlier this year, a report funded by the UN Development Programme claimed the project would "significantly contribute to the advancement of Eritrea's sustainable development agenda including through exports, the emergence of adjacent industries, training and employment".
Production of the project is expected in 2022.
South Africa's Export Credit Insurance Corporation will be providing credit support to AFC for its part of the facility, South Africa SOC Limited (ECIC) will provide credit support for AFC’s portion of the Facility. ECIC is South Africa’s statutory export credit and foreign investment insurance provider.
Benedict Okey Oramah, president of Afreximbank, said in a statement: “The Colluli Project will bring significant positive impact to the Eritrean economy... We see the project as a continuation of the rapid and positive changes that are taking place in Eritrea and look forward to future opportunities to support the country and its people.”