The Unparalleled Opportunity of Colluli the Colluli Potash Project presented by Danakali James Durrant Colluli Project Manager September 2015 Formerly South Boulder Mines ASX:DNK
The growing world needs our Potassium Sulphate Global Population (1970, 2015, 2050) Billions 10 9 8 7 6 5 4 3 2 1 0 3.69 7.32 9.55 1970 2015 2050 Source: United Nations, Basic Materials Observer, 2014 Slide 2
Potassium Sulphate - A premium potash product Potassium Sulphate: K 2 SO 4 Chlorine free (unlike MOP) Macro and micro nutrients Water retention Assists in uptake of additional nutrients Slide 3
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 $US/tonne SOP has fundamentally sound price dynamics 1200 1000 MOP and SOP Price vs time US$ per tonne MOP FOB Vancouver SOP FOB Utah 800 600 400 200 0 Source: CRU, Infomine, Greenmarkets Slide 4
Measured Proved Indicated Probable Colluli s resource is enormous and perfect for SOP 1.40 1.20 Colluli Mineral Resource and Ore Reserve estimate Billion tonnes Resource (Measured and Indicated) 1.3 Billion Tonnes 1.00 0.80 0.60 Reserve (Proved and Probable) 1.1 Billion Tonnes 0.40 0.20 0.00 SOP contained 1 205 Million Tonnes Mineral Resource Ore Reserve 1. Equivalent K2SO4 (SOP) calculated by multiplying %K2O by 1.85 Slide 5
Resource Depth For personal use only Colluli is in the best position; locally and globally Global Population (1970, 2015, 2050) Billions Colluli, Eritrea 16 150m -0 Danakil, Ethiopia 150-950m Urals, Russia 0.6-2km Saskatchewan, Canada 1-3km 1-500 -1000-1500 -2000-2500 3 2.5 2 1.5 1 0.5 0 Africa 0.37 1.17 2.39 3 2.5 2 1.5 1 0.5 0 India 0.56 1.28 1.62 3 2.5 2 1.5 1 0.5 0 South East Asia 0.76 1.70 2.16-3000 1. Saskatchewan Mining Association Source: United Nations, Basic Materials Observer, 2014 Slide 6
Danakali are leading the development of this project Paul Donaldson CEO and Managing Director 25 years senior leadership within BHP Billiton covering: Mining Operations Port Operations Technical Marketing Business Improvement Technical Development Steel Making James Durrant Colluli Project Manager 7 Years senior technical and operational leadership in BHP Billiton covering: Operational management of large scale open cut mines Project management, Organisational design Operation development Mechanical and mining engineering Stuart Tarrant Head Of Finance 15 years in the accounting profession most recently in leadership positions within BHP Billiton. Experience in managing finance in companies experiencing accelerated growth or change Gordon Tainton Head Of Market Development 24 years in senior executive and leadership positions: Project development, operational restructuring, board level company management, acquisitions, marketing, supply chain operations, forecasting future supply/demand and price trends. B2B product sales. Slide 7
Assisted by our Joint Venture 50% 50% Slide 8
In a stable country with a growing mining industry Bisha commissioned in 2010; undergoing 3 rd expansion 10 9 8 Gross domestic Product % year on year change Sub-Sahara Africa Eritrea Zara commissioning 7 6 Asmara awaiting mining approval 5 4 3 2 1 0 2009 2010 2011 2012 2013 2014 6% CAGR Source: Economic Intelligence Unit; Economist Slide 9
Colluli Anfile Colluli Massawa Salar de Atacama Lake Disappointment Ethiopian Projects Servier Lake Carlsbad Utah Lop Nur Colluli has the clear advantage 2500 Distance to coast for selected SOP projects km 2000 Colluli Established or developing SOP projects 1500 1000 500 0 Source: Company announcements; Allana Potash, Circum, Danakali analysis Slide 10
Colluli is Positively Unique Commodity of the future: excellent fundamentals Strong government support; stable and growing mining industry Large resource; shallow; in solid form; long life; expandable and diversifiable Close proximity to key growth markets Unmatched proximity to the coast Lowest expected capital intensity and operating costs Highest purity product; already produced and available Slide 11
Mining is simple, proven and low risk Salt Mining, Western Australia Open Pit Salt Mining, Salar Grande Salt mining, Botash, Botswana Salt Lake Surface Mining, Turkey Wirtgen Surface Miner Cutting Salt Salt extraction using surface miners Slide 12
Processing is simple and well understood This is the lowest energy input, highest potassium yield route to Potassium Sulphate Slide 13
SOP has been produced and is the highest of purity 53.5 53.0 52.5 52.0 51.5 51.0 50.5 50.0 49.5 The SOP Quality Spectrum %K 2 O versus SOP product Industry Average 51% K 2 O (94% pure) Colluli Pilot Plant 52.9% K 2 O (98% pure) Source: Company websites, Danakali Colluli salt pilot plant tests Slide 14
Colluli s highly attractive position is demonstrated and comparable Colluli Phase II Colluli Phase I Yara EPM Mining IC Potash Potash Ridge Sustainable production volumes Modular, phased, approach Demonstrated by PFS Validated by industry leading consultants and potash experts Mine gate expected operating costs for SOP production US$ per tonne 1 1800 1600 1400 1200 1000 Capital intensity of advanced SOP projects US$ per tonne 800 600 400 200 0 1. CRU Research, EPM Mining presentation 2014, Company websites, Integer Research, Other sources: Danakali analysis, Danakali pre-feasibility Study Slide 15 Slide 15
Positively Unique Slide 16
Forward Looking Statements and Disclaimer The information in this presentation is published to inform you about Danakali Limited (the Company or DNK ) and its activities. DNK has endeavoured to ensure that the information in this presentation is accurate at the time of release, and that it accurately reflects the Company s intentions. All statements in this presentation, other than statements of historical facts, that address future production, project development, reserve or resource potential, exploration drilling, exploitation activities, corporate transactions and events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices of potash and, exploitation and exploration successes, capital and operating costs, changes in project parameters as plans continue to be evaluated, continued availability of capital and financing and general economic, market or business conditions, as well as those factors disclosed in the Company's filed documents. There can be no assurance that the development of the Colluli Project will proceed as planned. Accordingly, readers should not place undue reliance on forward looking information. Mineral Resources and Ore Reserves have been estimated using the Australian JORC (2012) Code ( JORC 2012 ). To the extent permitted by law, the Company accepts no responsibility or liability for any losses or damages of any kind arising out of the use of any information contained in this presentation. Recipients should make their own enquiries in relation to any investment decisions. Material resource and financial assumptions made in this presentation are consistent with assumptions detailed in the Company s ASX announcements dated 25 February 2015, 4 March 2015 and 19 May 2015 which continue to apply and have not materially changed. The Company is not aware of any new information or data that materially affects assumptions made. Slide 17
Competent Persons Reports & Responsibility Statements Resource Statement Colluli has a JORC 2012 compliant Measured, Indicated and Inferred Mineral Resource estimate of 1,289Mt @11% K20. The resource contains 303Mt @ 10.98% K20 of Measured Resources, 951Mt @ 10.89% K20 of Indicated Resources and 35Mt @ 10.28% K20 of Inferred Resources. The information in this report relating to the Colluli Mineral Resource was compiled by Mr. John Tyrell, under the supervision of Mr. Stephen Halabura M. Sc. P. Geo. Fellow of Engineers Canada (Hon), Fellow of Geoscientists Canada, and as a geologist with over 25 years experience in the potash mining industry. Mr. Tyrell is a member of the Australian Institute of Mining and Metallurgy and a full time employee of AMC. Mr. Tyrell has more than 25 years experience in the field of Mineral Resource estimation. Mr. Halabura is a member of the Association of Professional Engineers and Geoscientists of Saskatchewan, a Recognised Professional Organisation (RPO) under the JORC Code and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mr. Tyrell & Mr. Halabura consent to the inclusion of information relating to the Resource Statement in the form and context in which it appears. Reserve Statement The JORC 2012 compliant Ore Reserve estimate for Colluli is 1,107 Mt @10% K20 comprising 287Mt Proved and 820Mt Probable Ore Reserve. Mark Chesher is the Competent Person for the 2015 Colluli Ore Reserve estimate, and supervised preparation of the Ore Reserve estimate with assistance from specialists in each area of the study. Mr. Chesher is a Fellow of the Australasian Institute of Mining and Metallurgy, a Chartered Professional, and is a full-time employee of AMC Consultants Pty Ltd. He has sufficient open pit mining activity experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code 2012. Mr Chesher consents to the inclusion of information relating to the Ore Reserve in the form and context in which it appears. In undertaking the assignments referred to in this report, AMC Consultants Pty Ltd acted as an independent party, has no interest in the outcome of the Colluli Project and has no business relationship with Danakali Ltd other than undertaking those individual technical consulting assignments as engaged, and being paid according to standard per diem rates with reimbursement for out-of-pocket expenses. Therefore, AMC Consultants Pty Ltd and the Competent Person believe that there is no conflict of interest in undertaking the assignments which are the subject of this statement. Slide 18