Danakali: Framework for Sustainability Excellence: The Colluli Project

0:05 Hi, my name is Bianca Peschola. I'm the CEO of 6 and welcome to Dan and Kelly's live investor summit where we'll be discussing the framework for sustainability excellence in the Quilley project. We'll be starting today with a pre-recorded presentation and then we'll be moving on to a live Q&A session. You can access the presentation in the handouts tab and you can submit questions in the Q&A panel on the right hand side of your screen. Now without further ado, let's start the presentation.

0:40 I'm Niels Wagen, I'm the CEO of Danakali, and today we'll talk about the Kululi project and our framework for sustainability excellence. Today I'm joined by a couple of our senior consultants, Lloyd Lipset, Jamie White, and also We're joined by John Wickham from the VITA organization from Ireland. So before we get into the project and give you a little bit more details about our sustainability program, I'll switch to a couple of the slides, hope you can read this one, the forward-looking statements, as always I want you to be aware that there will be some future looking statements in here.

1:34 Please read this carefully. And on top of that, I'd like to make you aware that all the dollars that are mentioned in the presentation are US dollars. So the reference is on the US dollar. So what we will do today, the presentation will outline a little bit about Danakali, a little bit about the project, the Kululi project that we're developing in Eritrea. Then we'll talk about our sustainability program and our commitment and how we're going to work and develop our project. Then we'll talk about the IFC principles, the Ecuador principles, the performance standards from the IFC.

2:23 And then we'll, we have one of our other consultants Lloyd, talk about the independent human rights due diligence that we're performing. We talk about the UN Sustainable Development Goals, and then we'll have John talk about the good work that he's doing with his program in Eritrea, LiberLabor. And we close off by giving you the opportunity to ask some questions and talk about the program that we all put together today for you. Hope you join me in the presentation and let me get started with the first, who is Nanakali?

3:12 Nanakali is listed in Australia on the Australian Stock Exchange, the London Stock Exchange, and we're developing a significant size sulfate of cottage project fertilizer development in Eritrea. It's a great opportunity for the country, great opportunity for a big resource to be developed. And we have started the development of that and we're on track to have construction in 2021 and an actual production in 2022. So we have an offtake agreement for 10 years with Eurocamp which really gives us the assurance of cash flows.

4:06 And the way that we want to develop this is really, we have a commitment to a world-class sustainability program. And we have a couple of our consultants and people who are supporting us, who have experience from the country, who have experience in the country and across the world, and helping us putting this program together.

4:35 Now let's talk about Danikali, and talk about the mission, the vision and our values and for us it's very important in developing a project like this that you do that in a sustainable way. We want to create a project which is successful economically, technically, but also the environment and the social impact that this project can make is very important in the development of the Kalluli project and the way that Danakali is operating. And we have a vision to bring Kalluli project into production by adopting principles of risk management, resource utilization and modularity.

5:23 And it's, we want to make sure that we have the biggest potential for all its stakeholders, for the environment, for our employees, for the industry in general. And by doing that, to be a high performing company, and as you can see, achieves the best outcomes for all our stakeholders. And it's the values, the long-term relationship with the business partners and our suppliers, supports the communities in which we operate, obviously Eritrea and the area, the Horn of Africa, and provides an enriching and fulfilling and a rewarding environment for employees and people that we're engaging with. And we have a set of values that we use in all the things that we do, where we central it around people, integrity, the way that we work, look at the planet, look at the performance and simplicity. We don't want to overcomplicate things, but those are key values in the way that we conduct our business.

6:40 Now let's look at the Kululi project. As I mentioned it before, It is in Eritrea. It's right there on the border between Ethiopia and Eritrea. And we're developing that together with INAMCO, the Eritrean National Mining Corporation. And we're a 50-50% shareholder in the operating company, which is called the Coluni Mining Share Company, CMSC. That's what Coloni is, that's what we're developing, a sulfate potash project, a fertilizer which is a premium fertilizer and as you can see very close to the sea, very close to infrastructure, and it's a very shallow deposit. So it gives us a very good way to have an economically viable project because of the low cost that is to bring the product to the final product.

7:41 So look at the Denand Akali investment case. As I mentioned, it's a very large deposit. It's actually 1.1 billion tons of ore, good for almost 200 years of mine life, which is unheard in the industry. It's really a great potential with a lot of scalability. And that's why we're so excited about this. We have advanced financing. We need about $302 million capex. And we have at this stage $250 million committed in form of senior debt and of every action and AFC to African banks who are supporting us for 200 million and then there's another 50 million of AFC equity investments that that is committed.

8:37 So we were well advanced in our financing, there's still a gap to go. But we're well on our way.

8:45 We have, as I mentioned before, very low cost in our mining. That's really because of the shallowness of our deposit. We can have start open cut mining as compared to solution mining or other ways of getting the products. And we have the ability to do open cut, which keeps the cost very low and, and very simple and efficient. So our really, our costs are low, which makes the economics attractive.

9:16 We have an offtake agreement, as I mentioned, with Eurocan, which is a great opportunity also for the cash flow security. And we have development underway. We have premium products. As I mentioned, the SOP is sylphate of potash, is the form of potash which doesn't have any chlorine and is therefore used on high value crops like fruit and vegetables. And that's really why it is an attractive product to mine and to produce. And then if you look at the returns, an NPV of $439 million and an IRR of low 30s makes it a very attractive overall investment case.

10:02 As I mentioned, the binding offtake agreement with Eurochem, which gives us security for our cash flow, and that's a great opportunity for us not to have to develop your own sales and marketing. We can use the EuroCam big network around the world. And also we're getting security of offtake for the first module, which is 472,000 tons, and then with an option for another 3 years. So great start for getting the project up. Now let's talk about the real topic for today which is the sustainability agenda and why we have an interesting project, we have a great attributes and But why is sustainability so important for us? Well, like any company, it's important that you get the support from the people around you for the host government, but also for the communities.

11:18 And that's for every company true, but especially for mining companies. And mining companies

11:27 have a profound impact on people's lives, both negative and positive. And I think it's important to realize the impact that we can have and that we manage that in the best way for all the stakeholders around us. And that's why at Danakali we're very, very committed to develop this project in a way that we both address positive and negative impacts as much as we can. And to that, we've used the UN Sustainable Development Goals as a framework. And we think it's a good way to address the UN Sustainable Goals in the way that we develop the project.

12:15 And to that extent, the UNDP published a report early last year in 2019 about the impact of the Kaluli project on Eritrea and the region and how much the project will actually help in achieving the sustainable goals for Eritrea. And we're really pleased that this independent report, which was conducted by independent economists who were hired by the UNDP, who made a real thorough assessment of the Köln project and the impact and was able to identify 13 of the 17 sustainable development goals that the project can address to.

13:07 And then on top of that, that's all the very positive things that we can contribute to. Then we want to make sure that we are also mitigating the risk, the impact on the environment, impact on people, impact on communities. And this is where the IFC principles of performing standards, IFC performing standards and the equity principles are a very important framework that we adopted and we'll talk about that a little bit later in the presentation. But those are standards that we adhere to and we're committed to make the right development and the right structures in place that we can develop our project in a real sustainable manner.

13:57 So as I mentioned, we have these IFC performance standards. We have the, the, the equity principles, but then for Danakali, what does it mean for us? And so we developed our own sustainable development framework, which enables us to do a couple of things. First of all, we have effective systems in place, so we can always look at the latest environment, latest developments, and have a sustainable development.

14:35 Secondly, target 0 harm to people and the environment. And that's having a framework in place which has these principles central is very important for us as well. Thirdly, protect the human rights and the respect the culture and conform the people and all the other stakeholders, making sure that people that we are impacting, both positively and negatively, are protected and that there are systems in place and that we can monitor, that we can have the right standards out there, And it's an important principle on how we're developing this framework.

15:26 Having a continuous improvement, looking at data, looking at and learn from the data. It's an important factor, an important way that we want to develop this. Having support of the communities that we operate in, not just the people that are working with us as employees, but also the people around us, the ports that we're using, the villages that we go through, the help that we can offer there, the development, the infrastructure potential that is there is all going to be very important and obviously having the communications and the transparent reporting system in place which will keep us very much aware of our impact and also be transparent around the developments and the systems that we put in place is an important area for us and developing this framework.

16:31 So there's 4 key areas and obviously there's more, but these are the 4 key areas that I want to highlight here of the sustainable development framework. It's the ethical work practices, making sure that we have policies in place on human rights, on the community, on diversity. And having that in place is an important key factor. 0 harm to, so we have a statement which is clearly protecting the 0 harm which is to our people but also for the to the environment and having the right policies and systems operating procedures in place to measure it and to manage it is another important statement.

17:22 Business performance statement, clearly we're there to perform, we're there to deliver technical outcomes to have business economical outcomes both for all our stakeholders, for our shareholders, for stakeholders in the country, but also for the people there. So it's important to have a set of principles, policies in place that will help us there. And then obviously, the sustainable development statement is a very important one, where we have our supply chain policies, we have the government engagement policies, and other policies in place to make sure that we can deliver on this framework.

18:14 I spoke about transparency already and obviously we are early in this stage. We haven't started construction yet, but what we wanted to make sure as Dana Kali is to have a system in place and that we understand the risks but also the opportunities to make an impact. And obviously we spoke about UNDP report,

18:38 but also we have engaged a set of very experienced consultants who will help us to go through the different setting up of different systems and we published on 16th of June our first sustainability report and there is not much data in there yet because obviously we're not operating, but we want to be ahead of the game. We want to make sure that we have a good understanding of the environment and the impact positively and negatively that we may have. And that's why it's great to have this engagement with you. And also it gives the opportunity to talk to some of the consultants who help us in putting this framework and the overall policies and strategy together.

19:32 So with that, let me hand over to Jamie, Jamie White, maybe a quick introduction about yourself, and then you can talk about the IFC performance standards and the equity principles. Thanks

19:47 Nils. I'm an environmental consultant working for Dada Kelly on this project. I've been working in the Mogadishu and oil gas field for over 20 years, but mainly international projects, Russia, Africa, Papua New Guinea. Very interesting projects and I'm looking forward to supporting Dana Kelly on this one. I've worked in Eritrea for the last 5 years on other mining projects, so I've also got a good understanding of the local environment and the local requirements. Just to put things in perspective where we, the Danekeli sits, the Equator Principles themselves, it's formally launched in 2003. We're currently on the fourth version of the equator principles which were approved in late 2019.

20:39 They're commonly referred to as EP4 which I will continue to refer to them as. They've been adopted by over 100 institutions across the world in 38 countries and they actually provide a very good strong framework for managing environmental and social risks on projects. So they are primarily intended as the minimum standard by which lenders apply environmental and social and safety standards to projects when they are evaluating them.

21:10 The key things that EPA EP4 require, The first one is the environmental and social impact assessment. This must also not be done to an international standard, but it must also be then independently reviewed after it's been finished. We then get to, they also require development of a management system. That must be not only maintained all the time, but it must also be updated on a continual basis, which comes back to continual improvement required throughout the management systems. We also have to be able to demonstrate effective stakeholder engagement. And the key one is compliance with the applicable IFC performance standards on environmental and social sustainability, as well as the related environmental and health and safety guidelines.

22:04 The IFC performance standards themselves are basically an international benchmark for identifying and managing our environmental safety and social performance and they are our go-to document in all cases where the Eritrean regulations do not have something specific on the environmental or social front. In terms of the application, we're basically taking it into 5 stages, 3 of which we've already completed and we're currently on stage 4. So the first one was in social and environmental impact assessment. This was completed by a consultancy called MBS Environmental in 2016. They then went on to create management plans for this and these were then approved in 2018 by the Government of Eritrea.

22:58 The purpose of the social environmental impact assessment is to identify the potential for adverse impacts and then to develop or identify and so we can develop the mitigation measures to address those potential adverse impacts. This is then all documented in the series of management plans that will be implemented by the project throughout its construction and operational period. The second stage is the environmental and social due diligence. This was undertaken by the independent consultants called Eco-Analysts.

23:38 They undertook this due diligence in 2018. The purpose was to assess the overall completeness of the work that Dana Kelly had undertaken to date, as well as to assess compliance with the Equator principles. What they found was whilst the gaps were present in the work that had been done to date, the Koolooly project is on a clear path to compliance with the GECODE principles and that importantly there were no fatal flaws identified in the work done to date or the work that had been planned going forward. The third stage is the Environmental and Social Action Plan. Now this was also completed by Eco-Analysts and this was completed in 2019 as the third stage in the process.

24:31 It clearly lists the identified actions we were identically and ourselves are required to fill the gaps that were identified in the due diligence. And there are clear target dates which we must fulfill these by. So it's not just a

24:46 wishy-washy plan, it's very clear-cut in outcomes and dates. The ESAP identified for clearly 27 different areas which we will be working on to improve the current system that's in place. Examples of these include things like updating discrete sections of the SEIA. In general, they found the SEIA to be a very good document, but as with all such documents, they believe there's room for improvement. And I'd like just a couple of small areas to be addressed by additional assessment work, such as modelling. And then we will update the management plans resulting from that additional work.

25:30 Other areas that they require are things like development of a management system. As is normal for a project at this stage, there is no management system in place, although there are key elements of it. Prior to construction, there will be a need for a full management system to be in place that covers environmental, social and safety aspects of the project. Other gaps that need to be clearly addressed by the project are things like the clear allocation of resources and capacity building of site personnel so that they could not only implement the plan, but they could maintain it in the longer term for the continual improvement. And that's a very important fact that they have to be able to not just take what we give them, but they also must be able to take it forward as they go along in the project.

26:23 The current stage that we're at is implementation of the ESAP. So this is where myself, Lloyd, and others in the project have been brought on board to actually identify more clearly what these gaps are, how to implement them for the project, and then do all the work that's required to address the gaps and fulfil the requirements of the ESAT. Work started on this in early 2020 and it will continue into next year. It will be an ongoing process for some time. Majority of the work we'll be able to complete by January 2021. Unfortunately, with COVID-19 has impeded our work somewhat with fieldwork. So there will be a couple of small areas that we'll probably have to wait until we can get onto the ground.

27:14 But In essence, the majority of the work will be finished by January 2021.

27:21 Stage 5 of the final stage is actually then putting this on the ground. We've got a management system in place. We then have to do the capacity building with the people on the ground so that they can take ownership of this work and that they can take it forward over the life of the boat. And it's very important that they implement, they take ownership so that they can get the continual improvement required So they can always look at what the project is doing and how to improve it going into the future. And that will start in 2021. Over to you, Nils. Thank you very much. So, Jamie, thanks for pointing that out. Lloyd, you've been involved and been engaged in the due diligence for an independent human rights assessment.

28:15 Maybe you can give the audience a little bit of background on what it entails and the status of that. Thank you very much, everyone. So my name is Lloyd Lipset. I'm a human rights lawyer based in Canada. I have a long experience doing human rights projects with extractive companies around the world, including in East Africa and in Eritrea. And the mandate that I have for the Kalluli project is to help set up a process of independent human rights due diligence. And this is a bit of a subset of the work, the broader work that's being done around sustainability and the environmental and social management systems that Jamie just spoke about.

29:03 For human rights and business, the benchmark internationally is the UN Guiding Principles on Business and Human Rights. These are incorporated into other standards that we've been talking about, such as the IFC performance standards, the equator principles. But the UN guiding principles are really the consensus global benchmark for what companies should do to respect human rights. And to start implementing that in more specific detail for the Kululi project, we're going to do a human rights impact assessment scoping exercise, which will proactively assess the full range of potential impacts of the project. And so the key point there is that we are going to look comprehensively across the social, environmental, economic issues that may give rise to both positive

29:59 and adverse human rights impacts. The guiding principles urge companies to focus their attention on the adverse impacts that have the risk of the highest severity of impact on people. So we will use that lens of salience to prioritize issues that have a potential for adverse impacts in order to put in place the mitigation measures that will help to mitigate or avoid those impacts. And the key vehicle for doing that is integrating these human rights principles and safeguards into the environmental and social management system that Jamie was just presenting a moment ago. So our team will be looking at those areas where gaps have been identified or from our experience in other projects where the project can take a very proactive approach to avoid potential impacts on human rights.

30:58 The output of our process of this human rights scoping process will be an action plan for ongoing human rights due diligence for the project. As Niels has described, the project is in pre-construction phase. So the first area of focus for this action plan will be mitigating and managing human rights aspects during construction. But there is also a very long

31:27 lifetime of the project ahead. So to put in place a framework for continuous improvement where human rights issues can be managed on an ongoing basis. Next slide, please. So the timeline for our work, we've been already working for the last couple of months, but as we move from now forward, we are doing desktop research about Eritrea, about various salient issues that we have identified on a preliminary basis. We are participating in the environmental and social management system review that Jamie spoke about, focusing again on the issues that have potential human rights impacts from either an environmental or social perspective.

32:15 And we are commencing preliminary engagement with stakeholders through forums such as this and other calls that we're doing. As Jamie mentioned, because of COVID-19, we're doing this in a remote mode and we will be planning for in-person engagement when that is possible. By September, we will prepare a consultation report with some of our preliminary findings and recommendations

32:45 around the scoping and the integration of various measures into the environmental social management system. And we'll use that as a basis for ongoing engagement with stakeholders over the fall. Again, we'll have to see what is possible to do remotely or in person, depending on how travel restrictions evolve. We will do additional research on salient issues. Again, those are the areas where there are concerns around a potential adverse impact. So we'll do sort of deeper dives on those issues to make sure that the project can have a very proactive approach to mitigating those areas. And then to develop this action plan framework, which would be the overall framework for integrating human rights within the environmental and social management system, and perhaps additional mitigation measures that are prudent from a human rights perspective.

33:44 And then in early 2021, some final engagement with stakeholders around the proposed action plan framework and preparation of a final report and action plan. Next slide, please, Nils. This is a point that Jamie made about capacity building and engagement, and I think it's one that we'd like to emphasize at this point. The Kululi project and Danakali's overall approach to human rights and environmental and social management is one that is very proactive. Much of my work in human rights has often been done after projects have been developed and then you come in to assess potential issues at that point. Here we're looking very proactively at human rights, and this allows an opportunity to really work with the different stakeholders, both Danakali and Kululi staff internally.

34:46 There will be some key contractors that will be involved in the construction stage and so to really work on building capacity and understanding so that they can effectively implement the Human Rights action plan and mitigate any potential impacts. And in addition, there will be engagement with stakeholders inside Eritrea, outside of Eritrea to understand potential concerns so that those can be proactively addressed. And of course, the most important thing from a human rights perspective will be to engage with potential workers, community members, and so on, so that they understand what the project is doing to address their rights and to build mechanisms for building long-term relationships for transparency and engagement around these issues.

35:42 So we see this as a real opportunity to have a proactive approach, a comprehensive approach, and to ensure that human rights are cooked into the management systems going forward. So thank you very much and back over to you. Thank you Lloyd, that's very useful. So we spoke about the UN Sustainable Development Goals and also about the Kululi project and the report that was done on the Kululi project by the UNDP. And John, you've been operating in Eritrea for many years and obviously have done a lot of good work there, especially in the agriculture area. Now, obviously this Potash project could be a big contributor.

36:33 So can I hand over to you maybe a quick introduction about yourself and you can explain a bit about the work that you're doing with VITA and also your involvement on this report? Thank you Niels. It's a great pleasure to have a chance to talk at this forum. Jamie and Lloyd before me have focused a lot on the risks, but I would say that I have the really enjoyable opportunity of talking about the tremendous opportunity that Kululi has to be a positive social impact mine in Africa. Your sustainable development framework talks about supporting communities in which Danakali and Kululi operates.

37:19 This mine can go far beyond that. I work with VITA. I've been with VITA for 20 years. I worked in Eritrea during the 1990s in the banking sector, providing banking training. I represented HSBC. I started VITA as a civil society organisation in the year 2000. I also set up a VITA in Ethiopia in 2005. So I have a very long extended experience of Eritrea. I have worked, and we work as VITA, to fight hunger and climate change in Africa, which means to say to advance the Sustainable Development Goals, 17 goals, 169 targets, and covering all aspects of what would be a global footprint for a better future for the people and planet. It covers poverty, hunger, health, better education, access to water, access to energy, decent jobs, industry and innovation, environment, partnership.

38:25 The UN SDGs are absolutely all-encompassing, signed up by all the countries of the world. And Eritrea is an enthusiastic supporter of the SDGs. And I would say also, unbelievably, every major company in the world has equally signed up for the SDGs, including of course, Dan Academy. The mining sector has a very difficult history in Africa and often has not been able to deliver for people tangible benefits. And the UN published a study called mapping mining for the SDGs in 2016, which pointed a better way forward so that the massive resources of the mining industry that you referred to, Niels, could bring more benefits to people, more social impact.

39:14 Kululi is something different of course, and as you mentioned earlier Niels, potash is one of the 3 critical global fertilizers. And the fact that Africa cannot access potash is a crisis for the continent. It's unaffordable. It's inaccessible. Here we have the 1st potash mine in Africa. Not only the first, but the very first. Not only that, the size of the Kaloudi deposit means that the capability of this project to have a tangible impact right across Eritrea, right across the SDGs and to take Eritrea towards middle-income status as a country. It's very, very tangible.

40:00 And when we approached the UN to do a study into the SDG credentials of Calhouni, they were delighted because they recognised the opportunity and they appointed a leading scholar and a leading industry expert who spent a year talking to stakeholders across Eritrea and internationally. And their report pointed out that, and I quote from the report, the Kalluli project has high potential for positive contribution on 13 of the 17 SPGs, an unparalleled opportunity. They suggested further that this project could be a blueprint for mining in Africa. And how can Kululi have such an extraordinary impact?

40:47 Well, the economic operation of the mine by itself will bring enormous value. The report points to up to 10,000 jobs, direct and indirect, including supply chains and procurement. The economic opportunity, of course, in terms of export, up to half of Eritrea is for hard currency, vital hard currency for the country. The opportunity to put up to 190 million euros into supply chains and procurement which will benefit people, companies and the country at large. And of course the social investment that Dannekelling can make through VITA which could be in relation to the environmental footprint, the carbon footprint, but especially to support the farmers in the country with affordable, available not only potash, but all the other fantastic minerals that Kululi has.

41:47 So, and just to talk a little bit, Niels, if you could move to the next slide, a little bit our own organization. So, we've worked for 20 years. We opened an office in 2000. VITA works also in Ethiopia and across Africa. But what we always highlight in VITA and what our partners also would acknowledge is Eritrea's culture of self-reliance, the fact that farmers and communities want work, they do not want to depend on aid, means that any investment into Eritrea brings tremendous value for money. There is no leakage of money. All the money reaches the farmers and reaches the communities. We've done about 30 projects, 32 projects in the last 20 years. We worked closely with the Ministry of Agriculture, the Ministry of Energy and Mines, the Ministry of Water, Land and Environment.

42:41 We were involved in a national seed programme, a national dairy project, a national today's project, were involved in the 6 regions and disseminating the improved cook stove, were involved in repairing with the with the Ministry of Water, all the broken water points in Eritrea by next year will be prepared. So there is a tremendous self-mobilisation capacity which as an international partner we're able to tap in working with the ministries and working with the regions. And what we see as a partner for the future with Danneke Ali, the potential of a triangular partnership that can bring the best resources of all sides.

43:27 VITA is part of the Eritrea Ireland Development Partnership, so we can bring financial resources, but we can also bring Ireland's best fertiliser expertise. Ireland needs Europe on soil science and already Ireland's best soil scientists are ready to come to Eritrea to engage with the Ministry of Agriculture with their fantastic young graduates and to be able to ensure that the farmers across the country are able to get top class soil research, top class soil fertility and improved productivity of those crops that Neil mentioned earlier on, the high value crops, the fruits, the vegetables, even the cereals.

44:14 We took a soil sample from Eritrea last year to Ireland. And what we found is that application of potash can increase productivity of potato as a sample crop by 20 to 40%. So if one can imagine that happening for Eritrea's 20,000 irrigation farmers, the 20,000 dairying farmers in Eritrea, the soil multiplication communities across Eritrea. So with a very modest amount of the tremendous resource of Kululi, 5 or 10,000 tons of potash, which is only a fraction of this fantastic resource, there can be a transformation of Eritrea's productivity.

45:02 And it's so encouraging that Niels, I see you have brought on board the President and CEO of African Finance Corporation, Mr. Samael El-Khairou. And his presence would indicate just how important Kaluu is not only for Eritrea, but for Africa as the 1st potash mine. I think that is a really significant indication. So we look forward to being a positive and active partner with Dana Kallio and with the Ministry of Agriculture and to be able to provide investors with evidence of the real tangible social impact of this mine, how it can support communities, and how it could be really the best positive social impact mine in Africa.

45:49 So thank you for your time. Neil, I'll go over to you. Thank you very much, John. I mean, that's, it's, it's really impressive what FITA has been able to do in Horn of Africa and we really look forward to work together and see how we can make that social impact. I think, I mean that really is our presentation today where obviously you've seen the impact of Kululi, we are very, very much aware of being a fertilizer development organization, we're a mining company, but we'd rather prefer ourselves as a fertilizer company for the next 200 years in Eritrea, where we are fully aware of our responsibility of developing this in a sustainable manner, in a manner that can create that impact that was identified by the UNDP report.

46:53 And with the help of Lloyd and Jamie and people like John and his VITA organization, We're really hopeful that we can make that impact. And right now we are in the development of that and we'll continue to report on that with our sustainability reports. We have our own team, Todd Romaine, who is driving our ESG agenda, was on the call, but not on the picture. But he and his team have been very good in getting us up to the standards where we are today and where we're endeavor to improve on a daily basis.

47:40 So thank you very much for your time. Thank you very much for your attention. We have now the opportunity to ask questions. So we'll leave that for you, Bianca, to manage. And yes, let us know if you have any particular questions that you wanna ask here, or we can also come back to you outside of this webinar. Thank you very much. All right. I'd like to take this opportunity to invite our speakers back for the live Q&A. I see we have Niels here. Hello, Niels. You're just going to want to unmute yourselves and we'll be...

48:29 Hello, Niels. Hello, James. John and Lloyd. John, you should be on your phone and then I think we are good to go. All right, y'all can hear me? Yes. Yes, I can hear you. Yep. Yep. Just, I mean, Zerai, our country manager, is also on the call, hopefully. I don't think he's got a video set up, but he's also our country manager from Asmara, and we'll also be able to answer questions if they may come up. Excellent. Okay, jumping into our first question from the audience here.

49:16 How is the NESAP being conducted without current physical access to Eritrea? Maybe this is a question for you, Jamie. Thanks Bianca. The work was done, The SEIA was done with baseline studies that started in 2012. So the baseline studies then continued on until about 2016, when the SEIA was completed and approved by the government of Eritrea. Then following from that, the environmental management plans were created and then the due diligence was done and the ESAP was done as desktop studies of that prior work. We are now implementing the ESAP.

50:04 Most of it is desktop-based. It is things like writing a management system, which can be done on a desktop basis. Some field work will be required, but it is fairly minor. But that work will have to wait until we get access to the site. Very good. This next audience question I think is a good one for you, John. What projects has Vida implemented in Eritrea before and what were the outcomes? Thank you. Yeah, in the last 20 years, as I said, 32 projects have been completed with funding from European Union, from Irish government, from UK, from French government, a whole variety of different projects, mainly in the agriculture sector.

50:53 So as I outlined previously, mostly on national, supporting the Ministry of Agriculture and Water and energy with national programs around seed development, potato national, potato development, dairy farming, and then in the energy, Eritrea has a serious issue with trees have been cut down over the last 50 years, So these efficient cook stoves that Eritrea has developed, which are absolutely extraordinary item, 52,000 of those have been built by women in their homes with support from the ministry and ourselves. And then the national repair of broken village hand pumps, which has taken us the last couple of years. 3 regions have been completed, 320 villages have had their water pumps are now fully functioning.

51:42 And by the end of next year, we hope that Northern Red Sea, Southern Red Sea and Gashparka also will have the opportunity to repair those. So it's quite a wide program, working with the ministries, as I said, across the country. Very good. This next one says, have other HRIA studies been conducted in Eritrea? And what were the results of those? Perhaps Lloyd, this one might be a good one for you. Thank you, Bianca. Yes, Another human rights impact assessment process was undertaken for the Bishan mine in Eritrea between 2013 and 2018. I had the opportunity to work on that human rights impact assessment process.

52:32 There were reports that were published by the company Nevsun Resources. They were published at the time and those reports contained a series of recommendations that were based on the UN guiding principles across a series of potential impacts on workers and communities, and they were acted upon by the company. I'm unaware of other HRAs that have been undertaken for projects in Eritrea, either in the mining or in other sectors. But I do note that the United Nations in one of its studies on Eritrea did recommend that other private sector projects in Eritrea should consider undertaking human rights impact assessments.

53:20 And so I see this as a real opportunity for the work with Dana Calley on the Kululi project. First of all, there's an opportunity for learning from other HRIs in Eritrea and elsewhere around the world. There's an opportunity related to a proactive approach where the HRI study is done prior to construction, prior to activities being done, so that there can be a preventative approach to try and mitigate and prevent any adverse impacts. And also there's an opportunity for a very long-term perspective of embedding human rights due diligence processes within the project, within the company, so that the human rights considerations will be taken into account over the long-term of this project.

54:15 Thank you. Very good. Another audience question here, is Danicali pursuing any hybrid energy systems during the project? Can you repeat the question? Yeah, absolutely. The question says, is Danitalli pursuing any hybrid energy systems during the project? Right. That's a very good question. And I think there's where the project is actually based, it's a very remote area. There's lots of sun, there's wind, there's also thermal activity that can be used.

55:01 And as we mentioned, we have a 200-year lifetime, and those sustainable and more environmental-friendly power systems are definitely on the agenda. Currently, we need to have a single power provision. So initially, because it's so remote, we cannot rely purely on solar, for instance. But those are all considerations that, if you look at our, one of the things that we have in our plans is to work towards a carbon neutral as much as possible in the years to come. But I think it is important to get the project up and running and then look at all the opportunities that we have there with the environment which is there.

55:56 And the question that was asked is clearly one of the options that we'll be looking at. Very good. Next one here. What has been the company's involvement in local community projects? And what response have you received so far? This would be a good one for you, Niels, as well. Yeah, I mean, very little to this stage, because obviously we're not operating yet. What we do have is a lot of interaction with the communities. And Maybe Zeray, I'm not sure what you're on the call, but our country manager there obviously works closely with the elders of the communities which are around the Kululi project.

56:45 Zeray, are you available to give some comments there? I see Zerah's on the line. I just see his mic is turned off. Maybe we'll give him a second to turn his mic back on and if we hear from him, he can jump in and answer the question. But in the meantime, I might take a moment. Yeah, okay. So, I mean, so the question, have we been involved in any project at this stage? No, we've been really focusing on getting the studies done and doing all the environmental studies and the management projects, we are clearly communicating with the communities and have their inputs in all these assessments and the SEAs and the work that James is working on.

57:36 And we haven't a particular project that we are not active yet at that stage. But it's clearly in our plans to support through the economic development and through the infrastructure development that will benefit the region. Excellent. This next one says, what will be the process water retention slash recycling measures in such a hot environment? What will be the impact on marine life and what are your plans with WITA? Maybe Jamie, this would be another good one for you. Righto, so the Cluly project will be relying heavily on intake of seawater from the coast as their process water. Water.

58:32 The idea at this stage is to pass the seawater through a reverse osmosis recovery system where that will then send fresh water to site and then there'll be a discharge pipeline for the brine water back out to sea via dispersal system. At this stage the impacts are fairly minimal and it's an international standard method of obtaining fresh water. The company is also looking at options to minimise the requirement for that. That works ongoing at the moment, but at this stage the basis is that the company will be using seawater. That's our base case.

59:24 In terms of recycling, most mining companies, Kululi is no different. The system is they want to recover as much water as possible within the system, so that water that is used in the process, a lot of it returns back into the system as much as possible. It's not a closed system because there is loss obviously to evaporation in a climate like Dandikelli's area, sorry the Dandikill Basin, very high evaporation rates so there is water loss, but there is a very high reuse of water as a result of having a fairly closed system but not completely closed. Very good.

1:00:11 This next one is a simple one but a good one and Niels I'll throw it to you. When will construction start? When will construction start? That's a good question. I mean, we're currently in phase 2, finalizing phase 2 of our 6 phases of our EPCM work. Construction, we're planning in 2021 and then for production in 2022. So yeah we're doing all the preparing with the EPCM with our DRA provider who are in South Africa and going through the studies, going through all the work that we can do at this stage. We don't have to go to site yet.

1:00:58 I mean, COVID-19 is obviously giving us some challenges there since the country is still in lockdown on international flights. As Jamie also highlighted in the work that he's doing. But we are able to progress with the design work and do that and then planning construction in 2021. Good stuff. All right, this next one's around financing and it says, is Dana Kelly accurately looking to finance the remaining capital needed from other banks slash financiers other than AFC? Yeah, it's a very good question. And, and The answer is yes, we are.

1:01:48 We're talking to a number of potential parties and pools of investors. And so that is an ongoing focus for the team to close that funding gap. We were encouraged by the support by the African banks and by all the other shareholders who have been very loyal to us. But yeah, there's a number of activities and work streams addressing different pools of investors. And we'll hope in the next couple of months that we'll make some significant progress there.

1:02:35 Good stuff. This next one is around local talent and it says, can you secure enough qualified local operational staff on a technician level? Yeah, it's a very good question. And I mean, the country obviously has some mining activity with the mining that are currently operational. So there's staff there. But one of the reasons why we developed this project in a modular phase is to make sure that we can manage the amount of people. If we don't go too big immediately, so we don't have a big need for a significant amount of people that we need to train.

1:03:21 So having a modular approach, first module, 470,000 tons, second module, another 470,000 tons, gives us the ability to manage the amount of people that we need to train and that we need to attract. I think we're hopeful that we'll be able to get a lot of local people employed. If we look at what the other mines have been able to do over the years, they've been able to get really high percentage, more than 90% of their workforce is local. Initially, you will need to have some potash engineers and really specialized people there. But the beauty, we have 200 years of mine life and we can really have a sustainable and long-term training program and get people up to speed.

1:04:19 And hopefully for generations provide jobs and resources locally. Good stuff. Okay, folks, we have a handful of questions left. I understand that we're going to overtime, but if everyone's good, I'm good to keep going if you are. Yep. All right. Yep, by all means. Awesome. This next one is around human rights. And it says, is it possible to stress human rights in a one-party militarized state which has itself a dismal record in the area? So I guess that question is for me. So I think one of the things that a human rights study will need to do is to look at the country context and at the role and responsibilities of different actors.

1:05:15 And the UN Guiding Principles on Business and Human Rights are helpful in that regard to distinguish what are the responsibilities of a company, in this case Dana Kelly and the Kulili Mine Share Company, versus what are the responsibilities of the government. And so part of the human rights impact assessment will be looking at different areas of potential human rights impacts, and then the roles and responsibilities of different parties in relation to those. So those sorts of considerations will definitely be looked at in the study. Very good. This next audience question says, are there intentions to use solar panel for the project even in a backup capacity?

1:06:05 Yeah, I think it's similar to the earlier question that we had on power. And yes, there are definitely opportunities there. Obviously you are in a very solar rich area. As I mentioned, there's wind as well. So we will definitely look at that opportunity there. To be fully reliant on solar is something that we're looking at. It's definitely in our plans to get as much as possible, making use of the environment and make the impact on the environment as little as possible.

1:06:56 Very good. Our next question says, will Danikali be filing a voluntary modern slavery statement under Australian Modern Slavery Act? If not, what steps are Danikali taking to address modern slavery risk? Yeah, I think it's a very good question. And obviously, where we are in the process is doing this assessment. I think it's being early enlisted company, it's clearly something that is high on our radar. We want to make sure that we comply with all the rules and the laws.

1:07:48 And we want to do the right thing. I mean, we're a force for good, as we mentioned before. We think we can make that positive impact. And we want to make sure that we play within the principles, the equity principles, and also the IFC performing standard. And those are things that coming out of this assessment, this will address this question as well. Good stuff. Next question here, are there plans to eventually add to the contracts with Eurochem and own the distribution system for the Potash products like fertilizers? I didn't quite get the first part of the question.

1:08:39 Yeah, it says, are there plans to eventually add to the contracts with Eurochem and own the distribution system for the products like fertilizers. Okay, so the Eurochem agreement is for 10 years, is an option for another 3 years. That's for module 1, Module 2 is completely open. And what we want to concentrate as a team here is to build a business that is operational, we have supply chain organized, that we have a product which is there, which has the right quality. And initially we want to make sure that we will be able to deliver a quality product, establish our name, establish a quality product.

1:09:32 So in the future, we have module 2, that could go somewhere else, but we want to make sure that we want to get and walk before we run and get the production running, build the project, do it in a sustainable way. That's our focus now and later on we can see once we're operational what other marketing and sales and distribution we can organize. We are going to be there for 200 years, so it makes sense to build a fertilizer business which will be long lasting, which will have its own marketing, sales and distribution. But we're currently focusing on building the project, getting the studies in practice, starting with the construction, getting the finance organized and do it in a way, as we discussed today, with the right systems in place and the sustainability.

1:10:38 Good stuff. All right, we're at the final question now. As you know, this Potash deposit is also in Ethiopia. Do you have any plans to expand your project to Ethiopia? Yeah, it's a good question. I mean, so the deposit is indeed in the Danakel Basin, which is stretching out to Ethiopia. Our licenses, our products, are on Eritrea. And the amount of tons that we have available there, 1.1 billion tons of ores, will give us 200 years already. So there's no need to really go out and expand over the border. There's no plans to it.

1:11:24 The current setup and the resource that we're developing is big enough to service a very big size of the market already. And the way it's laid out, it gives us the opportunity to scale already in the area just near a train. Good stuff. And with that, we're at the end of our Q&A period. A big thank you to everyone who submitted questions. And as a reminder, if you have questions for the Dan and Kelly team, do not hesitate to reach out and contact them. I'm sure they will be happy to answer them. With that, I want to thank you all for presenting.

1:12:09 Thank you, Niels, Jamie, John, Lloyd. It was fantastic having you And I'll pass it back to you, Niels, for the final word. All right. Well, thank you, Bianca, for organizing this. Thank you for Jamie, Lloyd, John, Zero's on the call, but also the ESG team from Danakali has been supporting and getting this webinar organized. It's a great opportunity for you listeners and thank you for your time to actually listen to us and ask your questions. I'm sure there will be more questions. We're happy to take them outside of the webinar, as I mentioned before. But I think it's a great opportunity to connect with you this time. And we'll be back soon with the next version of a webinar. But I really appreciate your time. And have a great day wherever You