Special Report: Phosphate player Centrex Metals has landed its second sales contract with a major fertiliser producer.

The emerging producer (ASX:CXM) will supply 5,000 wet tonnes of its high-quality phosphate rock concentrate from the Ardmore project in Queensland to leading New Zealand-based fertiliser producer Ballance Agri-Nutrients.

Ballance previously trialled 400 wet tonnes of run-of-mine ore from the Ardmore project for the production of single superphosphate.

Single superphosphate was the first commercial mineral fertiliser that led to the development of the modern plant nutrient industry.

Ballance has agreed to now purchase a further 5,000 wet tonnes of concentrate to be produced as part of the trial production process expected to start this year.

This new supply will be part of Ballance’s current high-quality import blend.

“The contract underlines the attractiveness of the Ardmore project and the quality of the product to target customers in the Asia Pacific region,” CEO Simon Slesarewich told Stockhead.

Centrex is continuing further talks with other potential long-term offtake customers regarding taking trial shipments.

Good location and timing

The Ardmore mine in Northern Queensland is located just 90km away from a major railway and is also supported by existing road.

At full production the project will produce 800,000 wet tonnes each year for an initial 10 years.

Phosphate rock demand has been steadily rising at a rate of 2 per cent each year in the five years to 2017 to 203 million tonnes thanks to increased demand from Latin America and Russia.

Independent market researcher Integer Research forecasts that by the time the Ardmore project reaches commercial production in 2021, phosphate rock demand will have increased by 9 million tonnes.

But it won’t stop there.

Demand is expected to increase a further 25 million tonnes by 2025 and 40 million tonnes by 2030.

Centrex’s Ardmore project will have a short payback period of just under two years with an internal rate of return (IRR) of 63 percent.

Those metrics give the project an overall net present value (NPV) of $269m.

NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.

Centrex is currently progressing all other necessary activities to advance the project, including arranging logistics, concentrate sales, contracting and other operational activities so it can start mining and processing this year.

This process is integral in validating the premium product from Ardmore and securing offtake contracts, which will underpin the financing of the project for full-scale operations.

Centrex representative inspecting the initial 400t run of mine Ardmore phosphate rock ore at Ballance, during the 2018 single superphosphate trial.
This story was developed in collaboration with Centrex Metals, a Stockhead advertiser at the time of publishing.
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