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minemakers on fertile ground with phosphate

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    Minemakers on fertile ground with phosphate

    February 18, 2008

    NOT many mining companies target the rural press as a key place to promote themselves to investors, but junior explorer Minemakers has a special appeal for canny farming types.

    While the gold price has been soaring as investors seek a hedge against inflation and share market jitters, farmers have been on the look out for hedges against rising fertiliser prices and, for some at least, Minemakers' Wonarah rock phosphate project near Tennant Creek in the Northern Territory fits the bill.

    Indeed, managing director Andrew Drummond estimates that fully 10 per cent of his register is held by farmers.

    And it is these farmers that Drummond can thank for helping to alert him to the potential value Minemakers was sitting on at Wonarah at a time when the company was more focused on promoting its other potential projects, be it tungsten, tin, fluorspar or uranium.

    Minemakers shares have gone on a stellar run since January when, after finally realising the extent of the market opportunity in fertiliser, the company put out a release reminding the market that global rock phosphate prices had soared from just $US50 a tonne a year ago to around $US200 a tonne.

    On the day of the release Minemakers shares gained 22.5c, or 86 per cent, to 48.5c, and have continued to rise, closing Friday at 84.5c, giving the company a market capitalisation of $54.3 million.

    Only a few months before, in October, the Wonarah project was for Mr Drummond just an "after thought" in his presentations promoting Minemakers' other projects.

    Now it is the first project in every presentation he makes, and last week he was off in Paris attending a global fertiliser conference.

    "The word is getting out there and people are starting to listen to the story," Mr Drummond told The Australian from London after doing the rounds of British brokerages.

    Minemakers has taken definitive steps towards drilling out the resource at Wonarah. It is aiming to have an updated resource by mid-year that would form the basis of a feasibility study on a project producing 2-3 million tonnes a year of beneficiated rock phosphate, grading 30 per cent phosphate. First production is targeted for 2010.

    Earlier this month, Minemakers said it had secured drilling contracts to enable it to start a $600,000 drill campaign in April. And last week it appointed Lycopodium Engineering and Coffey Mining as consultants to start work on plant design and resource definition.

    Rock phosphate is the raw material for producing fertilisers such as monoammonium phosphate (MAP) and diammonium phosphate (DAP) by adding acid and ammonia. Incitec Pivot is the only producer of MAP and DAP in Australia from its Phosphate Hill project in Queensland.

    The surge in global fertiliser prices, and the prospect of sustained strength on the back of rising food demand in developing economies and the use of fertiliser for biofuels, is starting to attract miners worldwide.

    Rio Tinto is looking to develop a potash project in Argentina, and could have had Wonarah in its portfolio.

    Back in 1999, Rio spent three years exploring Wonarah, establishing a main zone JORC inferred resource of 72 million tonnes at 23 per cent phosphate. But when it came time to exercising its option over the project, rock phosphate prices were only at $US40 a tonne.

    And the infrastructure challenge at Wonarah was daunting given its isolation from the Gulf of Carpentaria and Darwin, which were the obvious places from which to ship.

    But that challenge is now substantially easier since the construction of the Darwin-to-Alice Springs rail link.

    With $3.3 million in cash in the bank there is no immediate need for Minemakers to raise additional financing, though some sort of placement will eventually be needed as the project progresses.

 
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