Danakali : Annual Report for the Year Ended 31 December 2020

DANAKALI LTD

ABN 56 097 904 302

AUDITED FINANCIAL REPORT

FOR THE YEAR ENDED

31 DECEMBER 2020

Corporate Information

Directors
Seamus Cornelius	(Executive Chairman)
John Fitzgerald	(Independent Non-Executive Director)
Zhang Jing	(Non-Executive Director)
Robert Connochie	(Independent Non-Executive Director)
Samaila Zubairu	(Non-Executive Director)
Taiwo Adeniji	(Non-Executive Director)
Neil Gregson	(Independent Non-Executive Director)
Executive Management	Joint Company Secretary
Stuart Tarrant	(Chief Financial Officer)	Catherine Grant Edwards
		Melissa Chapman

Registered Office and Principal Place of Business

Level 1, 2A / 300 Fitzgerald Street

NORTH PERTH WA 6006

Telephone: [phone]

Bank

National Australia Bank

Level 12, 100 St Georges Terrace

PERTH WA 6005

Share Register (Australia)

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace

PERTH WA 6000

Telephone: [phone] (Inside Australia)

Telephone: [phone] (Outside Australia)

Facsimile: [phone] www.computershare.com

Auditors

Ernst and Young

11 Mounts Bay Road

PERTH WA 6000

Share Register (United Kingdom)

Computershare Investor Services PLC The Pavilions, Bridgwater Road Bristol BS13 8AE, United Kingdom Telephone: [phone] www.computershare.com

To facilitate trading of Danakali's shares on the Standard Segment of the London Stock Exchange (LSE) Main Market, Danakali has established a Depositary Interest (DI) facility, under which it has appointed Computershare Investor Services Plc as the depositary. Securities of Australian issuers such as Danakali cannot be directly registered, transferred or settled through CREST (which is the electronic settlement system in the UK). The DI facility overcomes this by creating entitlements to Danakali's shares (the DIs), which are deemed to be UK securities and therefore admissible to CREST. The underlying shares are listed and traded on the Standard Segment of the LSE Main Market, while the DIs are transferred in CREST to settle those trades.

Website

www.danakali.com

Stock Exchange Listing

Danakali Limited Shares are listed on the Australian Stock Exchange (ASX:DNK) and the London Stock Exchange (LSE:DNK).

American Depository Receipts

The Bank of New York Mellon sponsors DNK's Level 1 American Depository Receipts Program (ADR) in the United States of America. DNK's ADRs are traded on the over-the-counter (OTC) securities market in the US under the symbol DNKLY and CUSIP: 23585T101. One ADR represents one ordinary share in DNK.

US OTC Market information is available here:	http://www.otcmarkets.com/stock/DNKLY/quote
DNK's ADR information can also be viewed here:	https://www.adrbnymellon.com/?cusip=23585T101

ADR Holders seeking information on their shareholding should contact: [e-mail] OR

LONDON	NEW YORK
Mark Lewis	Rick Maehr
[e-mail]	[e-mail]
Telephone [phone]	Telephone [phone]

DANAKALI LIMITED ABN 56 097 904 302

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Contents

	Page
Directors' Report	4
Auditor's Independence Declaration	33
Consolidated Statement of Profit or Loss and Other Comprehensive Income	34
Consolidated Statement of Financial Position	35
Consolidated Statement of Changes in Equity	36
Consolidated Statement of Cash Flows	37
Notes to the Consolidated Financial Statements	38
Directors' Declaration	64
Independent Auditor's Report	65
ASX Additional Information	71

DANAKALI LIMITED ABN 56 097 904 302

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Directors' Report

The directors present their report together with the financial statements of the consolidated entity being, Danakali Limited (Danakali or the Company) and its controlled entities (the Group) for the financial year ended 31 December 2020.

DIRECTORS

The names and details of the Company's directors in office during the financial period and until the date of this report are as follows. Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below. Directors were in office for this entire period unless otherwise stated.

The Company restructured its permanent sub-committees on 23 January 2020. The Audit Committee was reconstituted to become the Audit and Risk Committee, and the Technical and Risk Committee was ceased..

Names, qualifications, experience and special responsibilities:

Seamus Ian Cornelius

Non-Executive Chairman, LLB, LLM, initially appointed Non-Executive Chairman 15 July 2013, transitioned to Executive Chairman 14 June 2018, resumed Non-Executive Chairman role 25 June 2019, and transitioned to Executive Chairman 26 February 2021)

Mr Cornelius is a corporate lawyer and former partner of one of Australia's leading international law firms. He has a high degree of expertise in cross-border transactions, particularly in the resources and finance sectors.

Mr Cornelius was appointed as Non-Executive Chairman of the Company on 15 July 2013 and acted in the role of Executive Chairman from 14 June 2018 to 25 June 2019. As announced on 26 February 2021, Mr Cornelius was re-appointed as Executive Chairman.

Mr Cornelius is currently the Non-Executive Chairman of Buxton Resources Ltd (appointed 29 November 2010), Element 25 Limited (appointed 30 June 2011), and Duketon Mining Ltd (appointed 8 February 2013).

Special Responsibilities:

During the year Mr Cornelius was a member of the Audit and Risk Committee (and Audit Committee), a member of the Remuneration and Nomination Committee, and a member of the Technical and Risk Committee.

John Daniel Fitzgerald

Independent Non-Executive Director, CA, appointed 19 February 2015

Mr Fitzgerald has over 30 years of finance and corporate advisory experience in the resource sector.

Previously, he held senior positions at NM Rothschild and Sons, Investec Bank Australia, Commonwealth Bank, HSBC Precious Metals and Optimum Capital.

Mr Fitzgerald is a Non-Executive Director of Northern Star Resources Limited (appointed 30 November 2012) and Medallion Metals Limited (appointed 5 October 2020).

Previously Mr Fitzgerald was Non-Executive Chairman of Exore Resources Limited (23 December 2015 to 25 September 2020).

Mr Fitzgerald is a Chartered Accountant, a Fellow of the Financial Services Institute of Australasia (FINSIA) and a graduate member of the Australian Institute of Company Directors.

Special Responsibilities:

During the year Mr Fitzgerald was Chairman of the Audit and Risk Committee (and Audit Committee) and a member of the Remuneration and Nomination Committee.

Zhang Jing

Non-Executive Director, M.Sc, appointed 17 June 2016

Ms Zhang has more than 15 years of international trading and business development experience in China and previously held investment and project managerial roles in public listed companies.

Ms Zhang holds a Master's degree in International Consultancy and Accounting from the university of Reading in the United Kingdom.

Special Responsibilities:

None.

DANAKALI LIMITED ABN 56 097 904 302

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Directors' Report

Robert Gordon Connochie

Independent Non-Executive Director, B.A. Sc, M.B.A., appointed 6 February 2017

Mr Connochie is a highly-experienced potash and mining specialist with over 40 years of industry experience. He brings extensive senior line management experience from the potash industry, including marketing, corporate development, evaluations, financing and acquisitions.

Previously, Mr. Connochie held positions as Chairman of Canpotex (a world leading potash exporter for over 40 years) and Chairman of Behre Dolbear Capital, Inc.

Further, Mr Connochie was Chairman and CEO of Potash Company of America, CEO Asia Pacific Potash, Director of Athabasca Potash, Chairman of the Phosphate and Potash Institute, Director of the Fertiliser Institute, and Director of the Saskachewan Potash Producers Association.

Special Responsibilities:

During the year Mr Connochie was a member of the Audit and Risk Committee (appointed on 25 August 2020), and a member of the Technical and Risk Committee.

Samaila Zubairu

Non-Executive Director, FCA, appointed 23 April 2020

Mr Zubairu is African Finance Corporation's (AFC) President and Chief Executive Officer. Previously, he was the CEO of Africapital Management Limited, where he established a joint venture with Old Mutual's African Infrastructure Investment Managers to develop a fund for infrastructure private equity across West Africa, and Chief Financial Officer for Dangote Cement Plc. Prior to that, he was the Treasurer for the Dangote Group during its transformation from a trading company to an industrial conglomerate. He has undertaken investments of over US$3 billion, financing green-field project finance, acquisitions, corporate transformation, privatization and equity capital market transactions.

Mr Zubairu is an Eisenhower Fellow and sits on the Eisenhower Fellowship's Global Network Council and the President's Advisory Council. He holds several non-executive board positions including being the advisory board member for KSE Africa, a leading operations and management provider of captive power plants in the mining sectors in Botswana and Nigeria. He is also a Fellow of the Institute of Chartered Accountants of Nigeria (FCA) and holds a BSc in Accounting from Ahmadu Bello University, Nigeria.

Special Responsibilities:

None.

Taiwo Adeniji

Non-Executive Director, HCIB, appointed 23 April 2020

Mr Adeniji is Senior Director for Investment Operations & Execution at AFC, where he has responsibility, amongst other things, for the institution's investments in oil & gas, and mining projects. Taiwo has had over 26 years of post-graduate and extensive professional and managerial experience in several areas of banking and finance. He has deep knowledge and extensive experience with infrastructure and mining policy issues, as well as the analysis, evaluation and financing of infrastructure and mining projects. Mr Adeniji has supervised AFC's investments in mining projects that spanned different products, including gold, copper, bauxite, and iron ore, as well as in different geographies, including countries in West, North and Central Africa. From 1994 to 2007, Mr Adeniji worked with the African Development Bank, focussing largely on infrastructure investments and financial sector development.

Mr Adeniji's academic background is in economics and finance. He is an Honorary Senior Member (HCIB) of the Chartered Institute of Bankers of Nigeria.

Special Responsibilities:

None.

Neil Gregson

Independent Non-Executive Director, Qualified Mining Engineer, appointed 3 August 2020

Mr Gregson is an experienced resource sector investor having spent over 30 years managing investments predominantly in mining and energy companies.

Mr Gregson's previous roles included portfolio manager in J.P. Morgan Asset Management's Global Equities Team based in London and responsible for global natural resource mandates. Prior investment roles were with CQS Asset Management as a Senior Portfolio Manager, with a focus on the natural resource sector and Credit Suisse Asset Management as Head of Emerging Markets and related sector funds.

DANAKALI LIMITED ABN 56 097 904 302

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