an underwater mak part 1

Hi fellow holders

Following on from the mention of MAK in the Scuba thread by dbrassp I thought it might be worthwhile to have a bit of a look at MAK, the Australian darling in phospates at present. Following is a summary in a couple of parts of my reading today to prompt some discussion.

For MAK fans please don't construe any criticism on my part - I'm looking to get a good grip on the dynamics in this sector of the industry and I'm aware this is only a basic summary. But by all means bring on constructive discussion that can help UCL holders gain understanding of where we are heading.

MAK
Price: $1.72
Shares on issue: seems to be about 78 million going by last top 20.
Market cap: $134 million
Options as at 8/07: 12 million
Recent high: $2.95

Basics about MAK:
Projects: a suite of prospects with the most significant appearing to be the Wonarah Phosphate project. It has led the share price up from lows in 2007 of around 20 cents.

Wonarah Phosphate project:
- Located in the Northern Territory.
- About 1000km2 of target stratigraphy which MAK believes is Australia’s largest known phosphate field.
- Currently doing additional drilling to prove up historic resources base and extend it.
-Aiming for a PFS by the end of September quarter with a 2010 start up production goal. - Initial planned throughput of 3 m tpa.

Historic resource base/zone:
- The project has been through a number of hands during periods when it was not considered economically viable.
- Rio Tinto Exploration had it between 1999 and 2002 and, using historic drill data, made a non Jorc classified estimate of a very large global mineralized zone of 1955 mt at 14.4% P2O5 at a 10% cutoff.
- This resource zone appears to be largely located between 30-50 m below surface. 20% of the phosporite beds appear to be between 3-5m thick, 32% less than 3 m thick, the balance over 5m thick but little of large thickness. I haven’t found an average thickness yet.

- There is a separate body too that RIO took to a JORC inferred status of 72 Mt at 23% which MAK are seeking to define further and they have a 3rd target under exploration at Arruwurra nearby.

It appears Rio did not proceed at the time due to much lower rock phosphate prices, cost of recovery at the depth, inability to upgrade the mineralization economically, factors leading them to reduce the estimated size of the resource, inadequate rail infrastructure and apparently a need for a reduction in government royalties. At the time of the 2007 Annual report it was still considered unviable due to cost of freight but the continuing growth in phosphate prices is turning that around quickly.