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international resource journal

  1. 3,048 Posts.
    I have reposted an article from what appears to be the international resouce journal here. It is a bit untidy as it appears to be a direct dictation. Certain words like Suez are written as 'sewers'. I could clean it up but I think everyone else can piece their way through it like I did.

    There are some full and frank comments from Dean Richardson and Andrew Drummond.


    "The International Resource Journal: Minemakers

    admin on 18 December, 2009 02:50:00

    “Helping to feed a phosphate-hungry world”
    Just how does a once uneconomical phos­phate project grow from 70 million
    tonnes to 1.8 billion tonnes in 15 months, when all around us reports suggest
    that the world is running out of the commodity and it is becoming tougher to
    discover new deposits?
    As Chinese demand for phosphate skyrockets, the rate at which it is extracted
    has risen from the usual two per cent annually to seven per cent last year.
    It’s pricey to import, a fact that North America has already succumbed to.
    Minemakers Limited, a phosphate-focused emerging major player from West Perth,
    Australia, predicted the increasing worldwide hunger for phosphate some time
    “In about 2004, it became apparent to myself and a couple of the other
    directors that there was going to be a minerals price super cycle purely based
    on the fact, that for a long while, the world had been digging up deposits that
    had been discovered quite some time before. From the 1990’s and early
    2000’s, there was a great wind down in exploration because the industry
    simply wasn’t finding enough ore bodies to replace the ones that it was
    digging up,” Andrew Drummond, Managing Director of Minemakers tells IRJ.
    “Given that conceptual background, we thought that there might be
    potential for acquiring straw heads in winter by finding major known deposits of
    non-mainstream minerals within Australia (not gold, nickel or iron).”
    Drummond says that the company acquired the deposits in its current portfolio
    fairly cheaply and in anticipation of this mineral’s price super cycle.
    “This has worked very well for us with our phosphate project. We pretty
    much acquired it for a song. We also got Australia’s biggest fluorspar
    deposit down in Tasmania which has a lot of tin, tungsten, bismuth, magnetite
    and others. We acquired the most productive combined tin/tungsten field (which
    is also in Tasmania) and we own 100 per cent of that; we have a couple of plays
    for salt and iron and others, too.” “If we were sitting on a major
    deposit that had been discovered before, we didn’t have to be an
    exploration company. If there was to be a significant correction in the
    commodity price, then the company would be very nicely established,” he
    The phosphate project which Drummond speaks of is Minemakers’ 100 per cent
    owned Wonarah deposit: Australia’s largest undeveloped rock phosphate
    Drummond and Dean Richardson, Investor Relations Manager of Minemakers, told IRJ
    to tell the Wonarah project story and talked about some of the other exciting
    exploration projects in the company’s portfolio.
    Wonarah: Economical now
    Following its whirlwind acquisition trail, Minemak­ers was listed on the
    Australian Stock Exchange in 2006.
    “At the end of 2007, the price of phosphate went into the stratosphere,
    and I think our company followed thereafter. We’ve been running very hot
    and hard on the phosphate as our lead project ever since. We’re not
    neglecting the rest, but it’s certainly taken over in the short
    term,” Drummond says.
    “Wonarah was originally discovered back in the 1960’s, but it was in
    a rather remote part of Australia, about 1,200 kilometres inland from Darwin.
    The remoteness and lack of infrastructure rendered it uneconomic through several
    evaluation phases by American companies and CRA.”
    Drummond says that there are two key aspects which make Wonarah economical for
    extraction today. The first is the construction of the north-south railway link
    which joins South Australia through to Darwin. It sits about 250 kilometres from
    Wonarah, which, Drummond explains, isn’t very far by Australian standards.
    “The second is the big increase in rock phosphate price that occurred
    which was driven last year by Morocco, and persisted strongly through 2008, then
    into 2009. That enabled us to realize that we probably had a potentially very
    economic project,” he explains.
    “Wonarah is on the doorstep of Asia, and 90 per cent of phosphate goes
    into phosphate fertilizers such as food fibres and biofuels. The largest number
    of bodies to be fed occur quite close to the northern coast of Australia in an
    arc through from India and Pakistan, through to China to Japan, Taiwan and on.
    There’s very little indigenous phosphate production in Asia, apart from
    mainland China, so now Asia is fed by phosphate which predominantly comes from
    the middle-east or West Africa (from Nigeria and Morocco, for example).”
    Sitting on Asia’s southern doorstep and poised to produce very good
    quality phosphate, Wonarah enjoys significant location benefits as opposed to
    other major phosphate producing, and exporting, regions.
    “We don’t have to bring our material round the Cape or through
    sewers, so we have a 20 day shipping advantage for a lot of Asian destinations.
    This stands us in very good stead. It’s going to give Asian countries an
    alternative source of supply and our planned appearance on the market is being
    warmly welcomed by potential consumers,” Drummond says.
    “We have nearly finished our field investigations. The drilling should
    finish in the next few weeks. That will lead on to a new resource estimation.
    We’ve already got over one billion tonnes that are JORC compliant and we
    expect a significant increase on that shortly. We’re not chasing extra
    tonnes, we think we have enough for a 100 year mine already.”
    Now, Minemakers is focusing on finding the best quality material which is
    thickest and closest to surface in order to minimize capital and operating costs
    during the early years of operation.
    “We’ve just submitted the Environmental Impact Statement in order to
    get our permits to do the mining. They’re being assessed by the government
    now and we expect to get positive assessment of those around about the first
    quarter of 2010. We expect to get the mining tenement granted to us in the next
    few weeks, and the outstanding bit of permitting then is the finalization of an
    agreement with the Aboriginal freehold owners of the land,” Drummond says.
    “They’re very supportive and we’re working on the lease
    documentation for the mining agreement now. In short, we expect to have all of
    our permitting complete by April 2010, which will allow us to begin production
    subject, of course, to markets and raising the capital risk we need. We expect
    this to happen on the cusp of the end of the first quarter/start of the second
    quarter next year.”
    Richardson says that the company has also been granted Major Project Status on
    the Wonarah project from the Northern Territory government. This is a clear
    indication of support from the government and reflects their interest in the
    great impact the project could make on the local communities and environment.
    Under the Major Project Status, Minemakers reports directly to the chief
    minister’s office, as opposed to the department of mines alone, and has an
    assigned senior public servant to oversee project development.
    “That’s helping to streamline our processes in terms of making sure
    that our documentation and developments are giving a fair heading and expedited
    as quickly as possible. Again, part of the reason for this is that the Northern
    Territory government can see the value of this project in terms of the
    population centres around us, and the opportunity for them to have a long-life,
    reasonable profit and reasonable growth mine,” Richardson says.
    “We’re talking 100 years, so this is not a short-term mining
    development. This has some long-term positive ramifications for the Northern
    Territory government and its people,” he continues.
    However, as Drummond says, Minemakers is not about to neglect its other projects
    despite its focus on Wonarah. In fact, in July 2009 the company acquired an
    unusual and exciting project further afield.
    Acquiring the Sandpiper/Meob Joint Venture marine phosphate project
    When Minemakers acquired Bonaparte Dia­monds Mines NL, the company also took
    owner­ship of Bonaparte’s 42.5 per cent of the Sandpip­er/Meob
    marine phosphate project in Namibia, a joint venture project with Union
    Resources (42.5 per cent) and Namibian partner Tungeni Invest­ments CC (15
    per cent).
    “Bonaparte had essentially been founded by the same directors that
    Minemakers had, but as a diamond company. The company’s focus has moved
    across to phosphate but with the GFC its cash flows were running fairly low. The
    ability to raise significant money for what would be the world’s first
    marine phosphate project in a very tough climate was something which we thought
    would be very difficult,” Drummond says.
    “Minemakers put a successful takeover bid in for Bonaparte, and as
    Minemakers wholly owns Bonaparte, in turn the company also owns 42.5 per cent of
    this offshore deposit. It’s very interesting. The resources to date are
    over 1.5 billion tonnes. It’s been sampled down to a maximum depth of two
    metres in the sands (which contain the phosphate at the bottom of the
    Drummond says that Minemakers are currently working on constructing a deeper
    penetrating test tool capable of drilling down to six metres depth, which the
    company plans to commission around the end of 2009. “We’re quite
    confident that we can increase this resource quite substantially and potentially
    become a very major supplier through this joint venture to the Atlantic seaboard
    he continues. “Because phosphate is a bulk commodity it costs a lot to
    ship. From Wonarah, we’re not looking to export into locations such as
    Europe or Brazil, but we think we can look at exporting to all of the Atlantic
    seaboard countries subject to market and product quality from Namibia.”
    A future phosphate focus
    With Wonarah ready to come into operation and a first-class exploration project
    elsewhere in the world, Minemakers has cast its net wide, pipped most of the
    companies currently interested in phosphate to the post, and has already
    accom­plished astounding growth of its flagship deposit.
    “Given that finding phosphate is getting tougher, the enterprise value for
    our company right now is less than US3 cents per tonne of phosphate, so we have
    a huge upside potential which is something we will look to drive home when we
    address Mines and Money in London,” Drummond says.
    “If anybody really believes that the world is going to need phosphate,
    then they really ought to be looking at Minemakers.”
    And looking the industry is. When appearing with a London Mines and Money
    conference booth for the first time this year on December 2 and 3, Minemakers
    attracted a great deal of interest. The company is in a truly unique position as
    the world faces an increasingly difficult search for phosphate."
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