Paradise growing phosphate exports

• by: Tim Morris
• From: The Australian
• September 11, 2012 12:00AM

Collectively, Morocco, Iraq, China, Algeria, Syria and Jordan control 90 per cent of the world's remaining known phosphate reserves.

Australia's share of global reserves stands at less than 0.5 per cent, and is mainly attributable to Phosphate Hill near Mount Isa, Queensland.

Discovered in 1966 and now operated by Incitec Pivot (IPL), Phosphate Hill produces about 2 million tonnes per annum (tpa) of high-grade phosphate rock for the on-site production of 900,000 tpa of fertiliser.

Australia's only other operating mine, located on Christmas Island, sells unprocessed ore directly into export markets.

The coming listing of Paradise Phosphate aims to further develop our nation's export industry for the mineral.

The company has a portfolio of advanced phosphate assets in Queensland's Mount Isa region, covering a total area of 1533 sq km. Its most developed asset is the Paradise South deposit, which hosts proved and probable reserves of 198 million tonnes.

With a grade around half that witnessed at Phosphate Hill, product mined at Paradise South will need to be upgraded via beneficiation.

As construction of such processing facilities is capital intensive, the company aims to initially develop a higher grade deposit north of the project area. With seven million tonnes of Resources in the Indicated and Inferred categories, the high grade deposit offers limited scale, but appears suitable for sale as direct shipping ore (DSO).

Float proceeds are earmarked for completion of a bankable feasibility study into a DSO operation and subsequent mine development.

Together, these assets have witnessed over $100 million worth of development during the last decade by major shareholder Legend International.

New investors are gaining entry at a discount to historic project spend, among which Acorn Capital is the most significant.

Value growth rests on off-take negotiations.

While rock phosphate prices have increased threefold since 2007, constrained market volumes require a collaborative approach for new developments.

COMPANY: Paradise Phosphate

ASX CODE: PPO

SHARES ON OFFER: 40 million

Listing Price: 50c

MARKET CAPITALISATION: $85 million

LISTING DATE: September 17

Tim Morris is an analyst at www.wise-owl.com