Ann: Approval for Listing on the NSX, page-3

The latest Quarterly Report for September 2024 highlights critical solvency risks facing Danakali Limited. The report shows that DNK had $31.4 million in cash at the end of the quarter. However, $30 million of this cash is tied to the company’s indemnity provisions as a required minimum asset backing to cover potential project-related and tax-related claims. This potentially leaves DNK with only $1.0 million of available cash at the end of this quarter, based on its burn rate last quarter to fund its ongoing operations. Given DNK’s current quarterly cash burn rate of $499,000, the company will be effectively insolvent by Q2 2025 unless it raises additional capital, and this is before it starts spending on exploration in Eritrea or on its whatever project in Saudi. Furthermore, the company’s suspension from the ASX and plans to pursue a listing on the NSX raise further concerns, as the NSX is a highly illiquid exchange, making a significant capital raise both challenging and unlikely. The inability to secure additional funds for projects in jurisdictions considered high risk could lead to operational cessation, further eroding shareholder value and compounding financial distress unless they breach the indemnity covenant.