Danakali’s Colluli project could have its already robust economics improved further after analysis indicated it could produce magnesium chloride as a by-product.

While the company’s focus at Colluli is to produce premium sulphate of potash (SOP) to target markets, test results have demonstrated that high-purity MgCl2 is produced as a direct by-product of Colluli’s SOP production

Danakali’s (ASX:DNK) noted that the project could produce 55.8 million tonnes of MgCl2 in the first 60 years from primary Bischofite brine sourced from the process plant and secondary Bischofite ore from its mine.

Besides being used in the agriculture, chemical, steel, automotive and construction industries, MgCl2 is also used in the production of magnesium oxide, which is a feedstock for producing magnesium metal.

Chairman Seamus Cornelius noted that while the company is focused on funding the development of the project for SOP production, it recognised that Colluli is a tremendously large, rich and versatile ore body with the potential to produce many other valuable products.

“If an economic analysis of the beneficiation of our MgCl2 from the bischofite brine stacks up, our current mass balance equations suggests we could potentially produce up to 115,000 tonnes per annum of Mg from the MgCl2 produced from SOP modules 1 and 2,” he added.

“Beneficiation to magnesium will require substantial energy input which may be satisfied from the geothermal potential in the area.”

Colluli SOP project

The Colluli project in Eritrea has a giant reserve of 1.1 billion tonnes of SOP along with a JORC resource of 85Mt of kieserite and 347Mt of rock salt.

FEED work has estimated at the Project level, Phase I post-tax NPV and internal rate of return (IRR) at US$505m and 28.1% respectively and Phase II NPV and IRR at US$902m and 29.9% respectively.

Recent test work has resulted in the optimisation of the process plant design and mass balance using filtered sea water that will reduce costs across the board while maintaining SOP production at the rate of 472,000 tonnes per annum.

 

 

 

This article was developed in collaboration with Danakali, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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