By Mining Journal,
JP Morgan is no stranger to Eritrea and already has an interest in Canada’s Nevsun Resources which operates Bisha, one of the few producing mines (copper-zinc) in the hugely under-developed East Africa country.
Two years ago, there were rumours QKR Corp, a mining fund headed by former JP Morgan banker Lloyd Pengilly, was close to making a bid for Nevsun, headquartered in Vancouver.
ASX-listed Danakali’s shares were up close to 4% following its disclosure JP Morgan was on the shareholder roster. The stock price is 45% to the good in the year-to-date.
Colluli’s JORC 2012, 1.1 billion tonne ore reserve contains a unique suite of potassium salts that are in solid form and can be mined over 200 years starting with a shallow open pit, with payback of the US$300 million for Phase I expected within four years.
Investors have demonstrated their support to develop the project through a recent A$5.5 million (US$4.3 million) capital raising.
Broker Somers & Partners said JP Morgan had given Danakali “its seal of approval” and pointed out the American bank had “a successful track record in Eritrea through its investment in Nevsun”.
JP Morgan acquired its holding in Danakali through a A$6.7 million private placement earlier this month.
Somers said, “Danakali now has a strong supportive cornerstone investor to help grow the business as well as the funds to commence early-stage engineering works at Colluli.
“We expect the mining licence to be approved later this calendar year with funding and offtake to follow that.”
Danakali Ltd Notes New Substantial Holder JP Morgan Chase
Danakali Ltd (ASX:DNK) has received a notice of initial substantial holder from JPMorgan Chase & Co. and its affiliates.
JPMorgan holds a stake of 20.2 million shares, or 9.12%, in its capacity as investment manager for various clients and custodians.
Shares in Danakali have doubled since the August lows, with the company last trading at $0.41 per share.
The price rise rewards recent capital raisings, including a U.K. based Institutional Investor who invested A$6.7 million at A$0.33 per share, and also Professional and Sophisticated Investors who invested A$5.5 million at A$0.22 per share.
Danakali holds a 50% equity interest in the Tier 1 Colluli Potash Project, which is located in the East African country of Eritrea.
The Colluli Project Definitive Feasibility Study (DFS) was completed in November 2015 and outlined the production of sulphate of potash (SOP) using a two module development approach, and demonstrates expected industry leading capital intensity and expected bottom quartile operating cost curve position.
The expected mine life at the DFS production rates exceeds 200 years.
Baillieu Holst maintains a Buy recommendation on Danakali. Other broker support comes from Hartleys with a $0.66 price target, and Somers and Partners with a $1.03 price target.