Australian Miners Leap Into Action on Phosphate Projects

Three Australian phosphate companies are moving into high gear over coming months – but another is pulling the plug on the phosphate sector and re-focusing on gold.

The country so far has only one phosphate mine – the aptly named Phosphate Hill in Queensland – owned by fertiliser power Incitec Pivot.

But now local investors are being asked to subscribe A$20 million to get a new IPO, Paradise Phosphate, off the ground. The man behind it is Joseph Gutnick, one of Australia’s best known mining entrepreneurs – and a man whose previous companies have come up with some of the biggest gold discoveries in Australia over the past 40 years (and also the last remaining independent diamond explorer in Australia). Paradise Phosphate has its deposits in northern Queensland close to the mining town of Mt Isa – the same region as hosts Phosphate Hill. Gutnick has been working on the project for several years and plans to be mining direct shipping ore by the third quarter of 2013.

But two other big projects have been held up for more than a year as two partners tried to take each other out. UCL Resources (ASX:UCL) and Minemakers (ASX:MAK) own equal shares in the Sandpiper marine phosphate deposit off the coast of Namibia.

Well, the impasse has been broken with Oman mining giant Mawarid offering Minemakers A$25 million for its stake in the project, an offer which has been accepted. The project has been worked on since the 1970s, and was taken up by a succession of companies in the 1990s and early 2000s. It has become more attractive since the increase in the phosphate price from 2007. UCL plans to supply phosphate rock to African and other customers. Sandpiper has a resource of more than 220 million tonnes and the scoping study was based on a 25 year mining life with output of 3 million tonnes a year of phosphate rock. It would be mined by dredges operating in water depths up to 225 metres, and then moving the rock ashore by slurry pipeline.

For Minemakers, that $25 million will allow it – at long last – to move ahead with its Wonarah project in the Northern Territory, which the company claims is Australia’s largest undeveloped phosphate deposit. The resource there is 1.5 billion tonnes at a grade of 11.6 per cent. Minemakers has become a cornerstone investor in Florida-based JDC Phosphate, which has a patented process to produce super phosphoric acid.

Alas, the last story is not so happy. Phosphate Australia (ASX:POZ) has mothballed its Highland Plains project in the Northern Territory with its 14 million tonne resource. The company has searched for the past few years for a partner without any luck, and will now consider a trade sale.