Colluli Ownership Structure
All Eritrean mines require a Joint Venture structure with the Eritrean National Mining Company (ENAMCO). Danakali and ENAMCO each own 50% of the Colluli Mining Share Company (CMSC) and CMSC owns 100% of the project. CMSC has a Board of 5 being 3 members from DNK and 2 from ENAMCO.
Funding of Colluli
CMSC will seek to fund the initial project development costs with a mixture of third party secured debt (up to 70%) and shareholder contribution. The shareholder contribution is Danakali’s obligation where 50% is contributed as equity in CMSC and 50% through an Interest Free Loan receivable from CMSC. Any shortfall in the 70% third party debt component will be underwritten by Danakali on market terms with repayment and security consistent with third-party debt.
After CMSC’s third-party debt is serviced, 50% of the funds available for distribution will be preferentially repaid to Danakali to settle the Interest Free Loan. This preferential payment to Danakali occurs until such time as the Loan is repaid. The remaining 50% of CMSC’s funds available will be distributed evenly across the JV ownership.
The funding described above is only applicable until construction of the first Module is complete. On commencement of production at Colluli, subsequent shareholder contributions follow JV ownership.