Danakali Limited Quarterly Update - 31 July 2024
DANAKALI LIMITED (DNK) Share Update July 2024 Wednesday 31st
Danakali Limited Announces Quarterly Update and New Exploration Projects
Danakali Limited (ASX: DNK) has released its quarterly report for the period ending 30 June 2024, highlighting significant shareholder returns and new exploration initiatives in Eritrea and Saudi Arabia.
Instant Summary:
- Further cash distribution to shareholders, totaling $162 million.
- New exploration projects in Eritrea and Saudi Arabia.
- Assessment of ASX re-listing issues and other liquidity options.
- Focus on capital preservation and base cost reduction.
Shareholder Distribution
During the June 2024 quarter, Danakali confirmed a further return to shareholders of $7.4 million, bringing the total distribution from the sale of its share in the Colluli Potash project to $162 million. This recent distribution included a special dividend of 0.924 cents per share and a capital return of 1.076 cents per share. Shareholder approval for the capital return was received at the Company’s Annual General Meeting on 31 May 2024, and payments were made on 8 July 2024.
New Exploration Projects
Danakali is advancing its corporate development activities with new project opportunities in Eritrea and Saudi Arabia. The company has applied for the Ela Gadel exploration license in Eritrea, an area highly prospective for copper and gold. Meetings with the Eritrean Ministry of Energy and Mines in June indicated that the application is progressing through the standard process. Additionally, Danakali is exploring opportunities in Saudi Arabia, focusing on the Arabian-Nubian Shield, a geological system rich in gold, copper, and battery metals.
ASX Suspension and Re-listing
Danakali’s securities have been suspended from the ASX since 3 April 2023 following the sale of the Colluli project. The ASX determined that the company’s operations were no longer adequate to warrant continued quotation. To be re-listed, Danakali needs to comply with Listing Rule 12.1, which includes a commitment to spend at least 50% of its cash reserves on exploration activities over the next two years. With current cash reserves of $32 million, this would require a commitment of at least $16 million. The company is also exploring other liquidity options, including listing on another stock exchange.
Corporate Developments
Danakali announced the appointment of Jon Coates as an Independent Non-Executive Director, effective 24 April 2024. Mr. Coates brings extensive experience in the global resources sector, having held senior roles in major and junior companies, including Shell/Billiton and Ma’aden in Saudi Arabia.
Financial Position
As of 30 June 2024, Danakali reported consolidated cash on hand of A$39.3 million. The company has 368,334,346 fully paid ordinary shares on issue and 10,000,000 options expiring on 30 July 2025. Payments to related parties during the quarter totaled $134,762, primarily for director fees and remuneration.
The continued cash distribution to shareholders is a positive signal, reflecting the company’s strong financial position. However, the suspension from the ASX and the stringent re-listing requirements pose challenges. The new exploration projects in Eritrea and Saudi Arabia could provide significant growth opportunities, but they also come with risks associated with new ventures.
Investor Reaction:
Analysts are likely to view the continued shareholder returns favorably, but concerns may arise regarding the ASX suspension and the need for substantial exploration commitments. The new projects in Eritrea and Saudi Arabia could attract interest, given the regions' potential for valuable mineral resources.
Conclusion:
Investors should closely monitor Danakali’s progress on its new exploration projects and its efforts to address the ASX re-listing requirements. The company’s strategic decisions in the coming months will be crucial in determining its future growth and stability.