HAVING pulverised the King or Queen) Coal theory, we turn to the notion that while resource commodities are in strife, food -- and therefore fertiliser -- demand is growing. "The wonderful thing about phosphate is that everyone eats and there's a quarter of a million people born every day," says Minemakers CEO Andrew Drummond.
In essence, we're the only civilisation to rely on petrified insects or bird poo and the primordial slime known as oil.
Minemakers' selling point is its Wonarah phosphate deposit near Tennant Creek. But the catch is it needs to get its paws on $100 million to fulfil its vision of 3 million tonnes a year production by 2010.
Wonarah is Australia's biggest untapped rock phosphate deposit, boasting reserves of 200 million tonnes (an upgrade is in the offing). Under a direct-shipping ore model, Minemakers plans to truck the ore to Tennant Creek and then pop it on the train to Darwin, where the NT Government has agreed to build a $100 million port facility.
According to Drummond, phosphate prices are controlled by the Moroccans -- the only major phosphate exporter -- in a manner which would do the De Beers diamond cartel proud.
Phosphate prices have soared from $US50 a tonne at the start of the year to a peak of $US500 a tonne, settling more recently at $US400 a tonne. Unlike with coal there's no sign of weakness, but that could change if the Moroccans -- the phosphate equivalent of OPEC's swing producers -- sense that rivals (such as the Algerians) are tempted to crank up production.
Drummond says Minemakers has $10 million cash, courtesy of a well-timed $11 million capital raising in March. Then there's a wad of options exercisable at 13c a share. "We should finish the year with $12-13 million in the bank, which is all we need to complete our studies," he says.
Criterion last had Minemakers as a speculative buy at $1.46 on August 1. We'll maintain the call because while Chinese toy makers can shut shop, it's not an option for food makers. Minemakers rates as this year's third-best stock performer, despite retracting from its April peak of $2.95.
AEV Price at posting:
46.9¢ Sentiment: ST Buy Disclosure: Not Held
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