The premier potash and multiagri-commodity opportunity
Colluli project update
Paul Donaldson, Managing Director
December 2016

Slide 1

“Danakali, which is developing a project in Eritrea, has
perhaps made the most progress of all greenfield SOP
projects over the last 12 months.”- CRU Consulting, October 2016, Potash Update

Paul Donaldson, Managing Director and CEO, December 2016

Slide 2

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 toensure that the information enclosed is accurate at the time of release, and that it accurately reflects the Company’s intentions. All statements in thispresentation, 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 theCompany 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 andexploration successes, capital and operating costs, changes in project parameters as plans continue to be evaluated, continued availability of capital andfinancing 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 reported according to the JORC Code, 2012 Edition. 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 thispresentation. Recipients should make their own enquiries in relation to any investment decisions.

Mineral Resource, Ore Reserve 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, 19 May 2015, 23 September 2015, 30 November 2015 and 15 August 2016 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.

Paul Donaldson, Managing Director and CEO, December 2016

Slide 3

Corporate Snapshot
Financial information

Share price performance (YTD)(As of 30 Nov. 2016)

Share Price ($A)

Volume Traded (m)Share price

A$0.390.50

2.0

Number of shares

224.2m

0.40

1.6

Market capitalisation

A$87.4m

0.30

1.2

Cash (30-Nov-16)

A$11.0m

0.20

0.8

Debt (30-Nov-16)

Nil

0.10

0.4

Enterprise value

A$76.4m

0.00
Jan-160.0
Mar-16May-16

Jul-16Vol.

Top shareholders

Paul Donaldson, Managing Director and CEO, December 2016

Sep-16

Nov-16

Share Price

Source: IRESS

Well Efficient Hong Kong private investor

13.4%

JP Morgan (UK)9.0%

Danakali Board members

12.2%

Slide 4

Overview of the World’s Premier Potash Opportunity
Colluli is a world class sulphate of potash (SOP) project withunrivalled resource, economics and diversification potential

1
2

World class resource1

1.3 billion tonne resource
1.1 billion tonne ore reserve> 200 year mine life

Positively unique

Right combination of potassium salts for low energy input, high yield conversion to
SOP
Salts extracted in solid form – eliminating capital intensive evaporation ponds, andproviding consistent, predicable, reliable, non weather dependent production

Unrivalled access to coast andglobal markets

Located at the epicentre of booming population growth
Closest SOP deposit to a coastline and established export infrastructure globally

Exceptional feed grade

25 times more potassium in ore feed than brines2 and vastly superior waste to ore
ratiosExceptional economics

Industry leading capital intensity
Bottom quartile operating cost curve position
The most attractive advanced stage pre-production SOP project globally

Unrivalled growth anddiversification potential

Unique capability to produce diverse range of potash types
Appreciable amounts of kieserite, gypsum, magnesium chloride and sodium chloride

Right teamHighly experienced team with an excellent track record of project delivery, technicalexpertise and operational excellence

Danakali DFS 30 November 2015
Calculated from Colluli resource data and published brine compositions

Paul Donaldson, Managing Director and CEO, December 2016

Slide 5

The most advanced greenfield SOP project globally
Milestone

Outcome

DFS complete Simple, commercially proven process Independent technical review of process design,
mass balances, evaporation trials and metallurgicaltest program completed
 Low development capital Industry leading capital intensity
 Bottom quartile operating cost curve position
 World class resource with over 1bt ore reserve

Offtake MOUs
signed MOU’s signed for 800kt per annum of SOP
 Offtake discussions progressing towards Heads ofAgreement

Front end
engineering anddesign bidding
complete Site visits completed
 FEED bidding process complete Kick off expected January 2017

Mining agreement
and license
approvals process
well advanced

 Ministry of Energy and Mines review complete Independent social and environmental review
committee review complete
Social and Environmental Impact Assessment (SEIA)
approved
 Mining agreement well advanced

Paul Donaldson, Managing Director and CEO, December 2016

Slide 6

Industry Overview
Paul Donaldson, Managing Director and CEO, December 2016

Slide 7

Fertiliser demand growth will continue
POTASSIUM IS AN ESSENTIAL, NON-SUBSTITUTABLE NUTRIENT,
WHICH IS PROVIDED BY THE ADDITION OF POTASH FERTILISER
Growth fundamentals are excellent• 30% increase in global population by 20501• 70% increase in agricultural yield required by20502• 12% increase in average daily calorie intake2• 33% increase in agri-demand of fruit andvegetables2• SOP ideal for high value, chloride intolerant
crops including fruits, nuts and vegetables3• SOP is the preferred potash type in areas of low
rainfall to prevent accumulation of chloride insoils 3
• SOP demand forecast to grow by at least 4% perannum 41
2
3
4
5

GlobalPopulation
Growth1

7B

9B

2016

2050

Agricultural
Productionneeds toincrease2

70%

2050

Water
demandexpected toincrease5

55%

2050

United Nations – Department of Economic and Social Affairs
FAO
International Fertiliser Institute
CRU, IFA, FAO, Company Research
FAO

Paul Donaldson, Managing Director and CEO, December 2016

Slide 8SOP is the PREMIUM POTASHSOP IS A HIGH VALUE, CHLORIDE FREE SOURCE OF POTASSIUM
Premium Price

Essential Macro-nutrient

•

•

•

Sustained price premium ofover 100% relative to MOP1
Secondary production provides
high margins for primary
producers••

Limited supply••

Limited economically
exploitable primary resources
Over 50% of world’s supply
from expensive secondary
processing of MOP (KCl)2

Potassium is an essential,
non-substitutable nutrient
SOP critical for high value,
chloride intolerant crops suchas fruits, nuts and vegetables
SOP also provides sulphur

Increasing Importance•••

Demographic shift to highvalue specialty crops
Environmentally friendly – nochlorine, low salinity index
Highly suited to increased
focus on improved water
efficiency in agricultural sector

Source: Greenmarkets
1
MOP prices based on FOB Vancouver prices, SOP prices based on FOB Utah prices
2
CRU
Paul Donaldson, Managing Director and CEO, December 2016

Slide 9

SOP demand will increase by over 30%
SOP IS A MULTI-NUTRIENT FERTILISER ESSENTIAL FOR HIGH
VALUE, CHLORIDE INTOLERANT CROPS•• 33% increase in demand for high value fruit and vegetables till 2050
• Colluli is well positioned as an advanced stage project to takeadvantage of global growth
A significant increase in global SOP consumption is forecast 1

Million tonnes SOP demand1
9.0

8.5

8.0

7.5

30%
increase indemandforecast

7.0

6.5

6.0

5.5

Orange without SOP2

Orange with SOP2
5.0
2015

2023

1. CRU
2. IC Potash

Paul Donaldson, Managing Director and CEO, December 2016

Slide 10

Over 60% of SOP supply will come from high costsecondary production by 2020
LACK OF ATTRACTIVE PRIMARY PRODUCTION PROJECTSREQUIRES INCREASED HIGH COST SUPPLY TO MEET DEMAND•••

Lack of attractive primary SOP projects requires additional
secondary production to meet growing demand - high costsecondary production requires thermal conversion of sulphuricacid and potassium chloride to produce sulphate of potash (SOP)
Acid management, storage and disposal cause ongoing challenges
for secondary producers, adding to conversion costs
Secondary producers create a high price floor for primary
producers who will continue to enjoy high margins% SOP from secondary production1
61

60

59

58

Increasing SOP
supply from highcost, secondary
production
creates ongoing
price support

57

56

55

54
Source: Greenmarkets, CRU
1
MOP prices based on FOB Vancouver prices, SOP prices based on FOB Utah prices
Paul Donaldson, Managing Director and CEO, December 2016

2014

2020

Slide 11

Colluli – positioned where fertiliser and food security
is needed most
BY 2050 25% OF THE WORLDS POPULATION WILL BE AFRICAN1
Year
1950

2015

2050

2100

1

UnicefPaul Donaldson, Managing Director and CEO, December 2016

Slide 12

SOP has demonstrated price resilience
LACK OF NEW SOP SUPPLY HAS PROVIDED SIGNIFICANTLYHIGHER PREMIUMS – DESPITE OVERSUPPLY OF MOP
Historic MOP and SOP prices (US$/t)1•••

Continued growth demand, coupled with lackof new supply has resulted in significantly
higher premiums over potassium chloride(MOP)
There are only four projects in the world at
DFS level (including Colluli)
Colluli demonstrates:

1000
900
800
700
600

•

lowest development capital of all advanced
projects•

bottom quartile operating cost curve position•

low incremental growth capital300•

unrivalled project upside and substantial mine
life

200

SOP prices continue to be
traded at a significant andsustained premium

500

400

100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
SOP Price (US$/t)

MOP Price (US$/t)

Source: Greenmarkets, CRU
1
MOP prices based on FOB Vancouver prices, SOP prices based on FOB Utah prices
Paul Donaldson, Managing Director and CEO, December 2016

Slide 13

Colluli – A world class project with no peer
Photo of Colluli site
Paul Donaldson, Managing Director and CEO, December 2016

Slide 14

Colluli – a positively unique resource• There is only one Colluli !
• Shallow mineralisation allows open cut mining and extractionof salts in solid form.
•

A proven, safer method than underground mining•

Massive conversion of resource to reserve (over 85%)•

Significant footprint size, grade and production reliability benefits overbrines•Lower complexity than brine chemistry management•

Low incremental growth capital•

Monetisation of other salts extracted as waste

Colluli sits in the world’s
largest unexploited potashbasin• Massive 1.1 billion tonne ore reserve• The most favourable combination of potassium bearing salts
suitable for production of SOP, SOP-M and MOP• Unrivalled diversification potential – appreciable amounts ofgypsum, kieserite, rock salt and magnesium chloride• Access to export infrastructure

Paul Donaldson, Managing Director and CEO, December 2016

Slide 15

Large, low cost, long life resource close to establishedinfrastructure123Large, long life resource 1> 1.3 Bt resource> 1.1 Bt ore reserve

Easily accessible

No vegetation
No communities within tenements
Mineralisation starts at 16m

Close proximity toestablishedinfrastructure2

Bitumised and all weather road runs towithin 40km of Colluli site

Well established export
facility3

Port of Massawa
6 berths
Bulk and container shipping capability
Storage area allocated for Colluli productPhoto of Colluli site
Road from Massawa towards Colluli
Massawa PortPaul Donaldson, Managing Director and CEO, December 2016

Slide 16

Simple, commercially proven technology
PRODUCTION OF SOP FROM COLLULI SALTS OCCURS WITH SIMPLEPROCESSES INCLUDING FLOTATION, MIXING AND DRYING
Colluli process design

Colluli plant images

Simple processing – Crush – Float – Mix – Dry - Truck
Colluli contains the right combination of potassium salts for ambient
temperature conversion to SOP• The combination of sylvite and kainite is ideal for low temperature, highyield conversion to SOP• No thermal decomposition required (kainite only brine operations requirebrine to be heated to 55oC to produce SOP)
• Heated brines typically achieve potassium yield 10% to 15% lower thanambient conversion
Paul Donaldson, Managing Director and CEO, December 2016

Slide 17

Significant advantages over potassium brines
EXTRACTION OF SALTS IN SOLID FORM PROVIDES A SIMPLE,
HIGH YIELD PRODUCTION PATH TO SOP• Simplicity••

Brine chemistry management is complex
Colluli processing plant utilises simple, proven,mineral processing units• Lower energy input•

Sulphate rich brines typically require heating to
55oC for thermal decomposition• Consistent, predictable feedgrade• Production rates not weather dependent•

Production rates from brines directly
proportional to weather conditions• Smaller footprint• No pre-production ponds• Higher potassium yields
Paul Donaldson, Managing Director and CEO, December 2016

Slide 18

Outstanding DFS economics
COLLULI DOMINATES OTHER PROJECTS WITH RESPECT TO
VALUATION OUTCOMESKey DFS results

Post-tax IRR (%)

MetricPhase I

Phase I and II

35

425kt

850kt

Strip ratio

1.91

1.93

20

US$439m

US$860m

15

25.4%

29.0%

10

Capital
Post
tax NPV (10% real)DNK

US$206m
US$298m

US$397m

Incremental
Post
tax IRRDNK
Phase II capital

22.3%1,2

US$175m
25.9%1,2

Capital/ capex (x)NPV
10

US$298m

Post tax IRRCMSC

Modelled at US$649 per tonne SOP

30

Production

Post tax NPV (10% real) CMSC

Modelled at US$575 per tonne SOP

Modelled at US$700 per tonne SOP

25

5

Incremental Phase II capital

US$175m

ColluliPhase I + II

ColluliPhase I

Blawn
Mountain

Sevier Lake

Ochoa

Annual production (ktpa)
1,000Supportive laws for mining investment in Eritrea3‒

Accelerated depreciation (straight line, 4 years)‒

10 year carrying forward of losses‒

Generous reinvestment deduction (5% gross income)‒Stable corporate tax

1 In accordance with CMSC Shareholders Agreement
2 Third party debt estimated at 60% of project funding
3. Eritrea Mining Proclamation
Source: DNK Company announcements, Company websites
Paul Donaldson, Managing Director and CEO, December 2016

800
600
400
200
ColluliPhase I + II

Ochoa

Blawn
Mountain

Yara(Ethiopia)

ColluliPhase I

Sevier Lake

Slide 19

Industry leading capital intensity
INDUSTRY LEADING CAPITAL INTENSITY AND LOW
DEVELOPMENT CAPITAL RENDERS COLLULI HIGHLY FUNDABLE
Capital intensity (US$/t)

Development capital (US$m)

2,000

1,200
1,000

1,600

800
1,200
600
800

400

400

200
-

ColluliPhase II

ColluliPhase I

Yara
Sevier Lake Blawn(Ethiopia)
Mountain

Ochoa

ColluliPhase II

ColluliPhase I

SevierColluliYara
Lake Phase I + II (Ethiopia)

Ochoa

Blawn
Mountain

The Colluli resource is positively unique:• Colluli has the right combination of potassium salts for low cost, high yield SOP production•

It is the shallowest evaporite deposit in the world – making it amenable to open cut mining•

Extraction of salts in solid form negates the need for large evaporation ponds – reducing capital intensity•

Mining and processing salts in solid form will result in stable, consistent, and reliable production

Source: DNK Company announcements, Company websites
Paul Donaldson, Managing Director and CEO, December 2016

Slide 20

Low payback period
EXCEPTIONAL FREE CASH FLOW PROFILE•

Financing of the initial development capital is expected to be a combination of third party debt (up to 70%) raised by CMSC
and a shareholder contribution from Danakali (30%)•

Annual average free cash flows over A$100 million (US$81 million) 1 per annum for Phase I and over A$220 million(US$166 million)2 per annum for Phase II•

Capital payback period 3.5 years. Majority of Phase II development capital expected to be funded by operating cash flows
Colluli Phase I and II undiscounted cash flows (US$ millions)

1. US$81 million as per DFS (ASX
Announcement 30 Nov 2015)
2. US$166 million as per DFS (ASX
Announcement 30 Nov 2015)
Source: DNK Company
announcements, Company
websitesPaul Donaldson, Managing Director and CEO, December 2016

Slide 21

Monetisation potential beyond SOP

Unrivalled multi agri-commodity potential
MOP

SOP

• Improves yield forwide range of crops• Danakali’s key focus• Most concentrated
form of granularpotassium• Demand is elastic(easy to substitute)• Market is well
supplied by global
potash majors• Generally higher
development costs• Improves yield ofhigh value crops• Suitable for chloride
intolerant crops• Demand is inelastic(not as easy to
substitute, premium
product leads tosticky demand)• Global supply
shortage of primaryresources• Sulphur is a key
nutrient• Fewer natural
sources

SOP-M• Demonstrated
production from
Colluli• Limited supply andcarries a pricepremium• High grade, chloride
free premium fertiliser• Multi-nutrient
fertiliser suitable forcrops where threemajor nutrients are
required• SOP-M production
ability confirms
Colluli’s multi agricommodity businesspotential

Kieserite

Gypsum• An effective source ofboth magnesium andsulphur (magnesium
sulphate)• Source of calcium andsulphur• Suitable for all typesof crops and use inany soil type
• Identified inpotassium salt seams• Volumes currently
being evaluated• Improves acid soils
and treats aluminium
toxicity• Improves soil
structure and water
infiltration• Reduces run off
erosion• Detected within the
Colluli tenements

Additional agri-product potential• Higher margin~85% of potash supply~10% of potash supply~3% of potash supply

Major potassium products 1
1. CRUPaul Donaldson, Managing Director and CEO, December 2016

Slide 22

Eritrea“We were very impressed with the country itself, and with the Colluli project.
Management has a very good relationship with the Government.”
Hartleys Research Report: “Site visit to Eritrea confirms world class SOP project”
Paul Donaldson, Managing Director and CEO, December 2016

1 Nov. 2016
Slide 23

Eritrea – Safe, stable and progressive
DANAKALI HAS BEEN OPERATING IN ERITREA SINCE 2009 AND HAS
FOUND IT TO BE SAFE, STABLE AND DEVELOPMENT FOCUSED
Positive Eritrean outlook••

Tour of Eritrea cycling race (April 2016)

The Danakali experience in Eritrea:•

Safe and friendly•

High degree of focus on health and education•

Development focussed with an emphasis on the agricultural,industrial and mining sectors•

Stable government•

Building up a track record of success in a maturing mining industry•

No evidence of corruption•

Gender equality

Development at the Massawa port

CMSC (ENAMCO and Danakali) are progressing a sustainable
development framework that addresses the policy,
management plans and compliance monitoring in key areas
including:•

Human rights•

Anti-corruption•

Communities•

Health and safety

Paul Donaldson, Managing Director and CEO, December 2016

Slide 24

Multiple Mining Success Stories in Eritrea
THERE ARE MULTIPLE HIGH PROFILE EXAMPLE OF MININGINVESTMENT IN ERITREA
Eritrean mining background

Major Eritrean mining developments

•

Bisha

•
•

Nevsun Resources (TSX:NSU) is a major
Eritrean-focused mining company

Undergoing third
expansion•

JV company formed with ENACMO and now
operates Bisha copper mine•

Successful modular JV development with
ENAMCO paves the way for Colluli JVCommissioned
and producing•

Significant shareholders in Nevsun are globally
recognised investors who have demonstrated
comfort with investment in Eritrea

AsmaraRecent purchase of 60% of Asmara (copper,
zinc, gold) by Chinese investor for C$85m
Joint venture agreement and relationshipwith ENAMCO is a key enabler of projectsuccess

Source: Nevsun Resources August 2015 corporate presentation, Bloomberg, company websites

Paul Donaldson, Managing Director and CEO, December 2016{

Shareholders
Blackrock
Vanguard
Franklin Templeton

Zara

60% recently
acquired by aChinese investor

Supportive laws for mining investment
•
•
•
•
•
•

A stable tax regime, with corporate tax rate of 38%
Accelerated depreciation – straight line over 4 years
Generous reinvestment deduction (5% gross income)10 year carrying forward of losses
0.5% import duty on mining inputs
Simple “one stop” licensing system…and there have been no changes to mining legislation in Eritrea
Slide 25

Nevsun Resources – Case study
Cumulative Capex Spend > US$600m
Shareholder dividend> US$100m
Nevsun market capitalisation compared to commodities performances
US$m

NevsunGold

SilverCapitalisation table
Share price (CAD)
Share outstanding (m)Market cap (USD)
Net Cash (USDm)
Minority (USDm)
EV (USDm)

Copper

1,600.0
1,400.0
1,200.0
1,000.0

Nevsun Resources
4.35
300.5
972.8
217.6
180.6
935.8

188.6%

800.0
600.0
10.5%
(1.3%)(24.0%)

400.0
200.0
-

Capex invested by Nevsun into Bisha mine and dividend paid to shareholders
US$m

Total: US$638m

200.0

US$m
650.0

160.0

520.0

120.0

390.0

80.0

260.0

136.9
83.7

40.0

90.7

68.1

41.8

7.1

0.0
2008
Nevsun capex on Bisha

2009

2010

2011

Dividend paid to shareholders

Souce: Company filings and S&P Capital IQ as of 23 November 2016
Note: All prices rebased to Nevsun market cap
Development of the Bisha mine commenced in 2008 and commissioning commenced in Q4 2010
Paul Donaldson, Managing Director and CEO, December 2016

Total: US$118m

79.3
20.0

2012

23.9
2013

Accumulated Nevsun capex on Bisha

52.2 34.8

85.5 32.0

2014

2015

130.0
0.0

Accumulated dividend paid to shareholders

Slide 26

Working in partnership with ENAMCODNK AND ENAMCO ARE
ADVANCING A WORLD CLASS POTASH PROJECT
Government support and strategic alliance• Eritrea is a stable jurisdiction with a rapidly
emerging mining industry.
• Danakali has a strong, effective working relationshipwith the Government through its joint venture.
• Agreement with the Eritrean National Mining
Corporation (ENAMCO).
•
•
•

•

ENAMCO and Danakali each hold a 50% ownershipin the Colluli Mining Share Company.
Project Development Costs for initial development
will be funded by up to 70% debt and 30% equity.
The CMSC board was established following theincorporation of CMSC in March 2014. The board isoverseeing the project development.
CMSC has a board of 5, with 3 members from
Danakali and 2 from ENAMCO.

3 board seats

50%

50%
2 board seats
Eritrean National Mining
Company

The structure allows Government direct insight into the mining
industry, which is an important part of Eritrea’s development.
Paul Donaldson, Managing Director and CEO, December 2016

Slide 27

Long-term economic, social and community dividends
ENGAGEMENT WITH COMMUNITY AND KEY STAKEHOLDERS HAS
GENERATED STRONG SUPPORT FOR COLLULI DEVELOPMENT
Expectations for Eritrean employee
numbers at Colluli
500
450
400
350
300
250
200
150
100
50
0
2019
Regional employees

2025
National employees

Colluli will create over 300 permanent jobs for locals andEritrean nationals by 2019, and over 450 by 2025
Paul Donaldson, Managing Director and CEO, December 2016

Slide 28

Highly experienced board
STRONG OPERATIONAL AND LEADERSHIP TEAM ASSEMBLED
WITH A TRACK RECORD OF SUCCESSPaul Donaldson
CEO and MDMining senior management

Liam Cornelius
Non-Executive Director
Geology and exploration

•

•

•

25+ years experience spanning large scale open cut
mine management, project management, supply chain
logistics, mineral processing, business improvement
and marketing
Formally held a series of senior management positions
with BHP Billiton

Founding Director providing guidance on projectgeneration, fund raising and strategic direction
20 years experience in commodity exploration within
Australia, Asia and Africa•

Seamus Cornelius
Non-Executive Chairman
Corporate law and negotiations

John Fitzgerald
Non-Executive Director
Corporate finance and banking

•

•

•

21+ years experience in legal and commercial
negotiations
Current Chairman of Buxton Resources, Duketon
Mining & Montezuma Mining•

Managing Director of Optimum Capital, specialising in
corporate debt and advice in the mining sector
Chairman of Atherton Resources (previously Mungana
Goldmines) and Director of Northern Star Resources

Tony Kiernan
Non-Executive Director
Commercial law and mining

Zhang Jing
Non-Executive Director
Strategy and Investment

•

•

•

25+ years experience in the commercial law,
corporate advisory and government relations within
the mining industry
Chairman of Pilbara Minerals, Venturex Resources andChalice Gold Mines with previous operations in Eritrea

Paul Donaldson, Managing Director and CEO, December 2016•

Extensive experience in International trading,
procurement, and business development
Qualifications in Economics, International
Consultancy and accounting

Slide 29

Colluli – a standout project• SOP is a high quality, chloride free potash with limited
economically exploitable primary resources• Colluli is an advanced stage project and is the mostfundable, scalable, long life, low operating cost SOP
project with access to global markets and is in close
proximity to established infrastructure• Colluli has standout economics relative to peers• Colluli has unrivalled product diversification potential• Colluli has significant upside on top of superior
economic returns

Paul Donaldson, Managing Director and CEO, December 2016

Danakali is an
emerging multi agricommodity company
developing a worldclass potash project
Slide 30

Competent persons statement
Resource statement
The 2015 Colluli Potash Mineral Resource is reported according to the JORC Code and estimated at 1,289Mt @11% K2O Equiv. The Mineral Resource isclassed as 303Mt @ 11% K2O Equiv Measured, 951Mt @ 11% K2O Equiv Indicated and 35Mt @ 10% K2O Equiv Inferred. The Competent Person forthis estimate is Mr. Stephen Halabura, M. Sc., P. Geo., Fellow of Engineers Canada (Hon), Fellow of Geoscientists Canada, and a geologist with over 25
years’ experience in the potash mining industry. 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 mineralisationand type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code.
The 2015 Colluli Rock Salt Mineral Resource is reported according to the JORC Code and estimated at 347Mt @96.9% NaCl. The Mineral Resource isclassed as 28Mt @ 97.2% NaCl Measured, 180Mt @ 96.6% NaCl Indicated and 139Mt @ 97.2% NaCl Inferred. The Competent Person for this estimate
is Mr. John Tyrrell, a geologist with more than 25 years’ experience in the field of Mineral Resource estimation. Mr Tyrrell is a member of the AusIMM, is afull time employee of AMC Consultants Pty Ltd and has sufficient experience relevant to the style of mineralisation and type of deposit under considerationand to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code.
Mr. Tyrell & Mr. Halabura consent to the inclusion of information relating to the Mineral Resource Statements in the form and context in which they appear.

Ore Reserve statement
The November 2015 Colluli Ore Reserve is reported according to the JORC Code and estimated at 1,113Mt @10% K2O Equiv. The Ore Reserve isclassed as 286Mt @ 11% K2O Equiv Proved and 827Mt @ 10% K2O Equiv Probable. The Competent Person for the estimate is Mr Mark Chesher, amining engineer with more than 30 years’ experience in the mining industry. Mr. Chesher is a Fellow of the AusIMM, a Chartered Professional, a full-time
employee of AMC Consultants Pty Ltd, and 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. Mr Chesher consents to the inclusion of information relating to the
Ore Reserve in the form and context in which it appears.
In reporting the Mineral Resources and Ore Reserves referred to in this public release, AMC Consultants Pty Ltd acted as an independent party, has nointerest in the outcome of the Colluli Project and has no business relationship with Danakali Ltd other than undertaking those individual technicalconsulting 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 Persons believe that there is no conflict of interest in undertaking the assignments which are the subject of
the statements.

Paul Donaldson, Managing Director and CEO, December 2016

Slide 31

Colluli - Positively Unique