Investment into Saudi Arabia (KSA) offers access to the largest economy in the Middle East and North Africa. With a growing market of 35 million people, KSA is rapidly expanding its private sector, guided by its “Vision 2030” initiative.

Establishing KSA as the next world’s “mineral hub” is one of the pillars of KSA’s industrial growth strategy. Through collaboration with ministries, government agencies, and the private sector, Vision 2030 seeks to unlock new opportunities for mining companies across the country.

KSA has a variety of metallic and non-metallic resources that range in size to world class. Most metallic-mineral resources are located in the Arabian Shield, in the western half of KSA. Danakali’s interest in the geological formations along the Red Sea spans both Saudi Arabia and Eritrea. A development in Saudi Arabia could present good opportunities for the Company, leveraging its regional expertise and successful track record. This potential is further reinforced by strong local interest from the financing sector, which is eager to gain exposure to the growing hard rock minerals market in both Saudi Arabia and Africa.

Danakali has signed a non-binding term sheet with a prominent group in KSA, for the establishment of an exploration joint venture company, in which Danakali will hold an 80% interest, to explore prospective mineral projects in KSA (“Term Sheet”).

Pursuant to the Term Sheet, the KSA group will leverage its extensive relationships in KSA to identify and introduce potential mining exploration opportunities to the Company. The KSA group will coordinate the generation of business development opportunities and carry out business development activities in Saudi Arabia as requested by Danakali. Additionally, the KSA group will identify exploration licenses or applications for exploration activities, which could be developed into an operational mine if the land qualifies as a “Designated Development Project” (being an area identified by Danakali which has reasonable prospects for development based on the results of the exploration operations of the joint venture company).

Upon securing an appropriate exploration licence, Danakali will establish an incorporated joint venture with the KSA group and contribute a minimum of US$4 million for the establishment and initial exploration programme. Danakali will provide the technical and commercial mining expertise, lead the evaluation assessments of potential exploration areas, and spearhead the development of technical, commercial, and financial plans.

The Term Sheet is non-binding and the matters set out above are subject to execution of binding joint venture agreements. As at the date of this Information Memorandum, there is no certainty that matters contemplated above will proceed.

Subject to execution of binding joint venture agreements, Danakali will commence a thorough evaluation of the exploration areas identified by the KSA group. This evaluation will involve an in-depth assessment of the geological potential, resource availability, and strategic value of each site to determine their viability for further exploration.

Once the agreed exploration licenses have been granted, Danakali will proceed to design and implement a comprehensive exploration program. This program will be tailored to the specific characteristics and potential of the licensed areas. The exploration strategy will encompass geological surveys, sampling, drilling, and other necessary exploration activities to assess the mineral prospects. The timing, scope, and objectives of this program will be carefully developed to maximise the potential for discovering commercially viable mineral deposits.

Danakali’s exploration efforts will be guided by its technical expertise and a commitment to efficient resource development. The outcomes of the initial exploration phase will inform subsequent decisions on how best to advance the project, including funding, potential further investment, resource estimation, and long-term development planning.