namibia phosphate economic scenarios

Some further reading, forward looking scenarios and open question

I) ***** Reading *****
Reading on large scale dredging operations (from JAN DE NUL the industry leader: http://www.jandenul.com/activities.asp?actype=DLR&acsubid=3)

The Dubai Palm Island was a 4 years contract (2002-2006) reclaming 70,000,000m3 for 137,000,000$US, or 3.52$/T.

In contrast, UCL in Namibia is looking at 37.8Mm3 output over 10 years @ 7Mpa @ 15%P2O5 (or 3Mpa @35% P2O5)

Note that Palm Island project was a shallow water dredging operation (<50m). 2004 technology warrants 155m max dredging depth (http://www.ihcholland.com/t/ihcholland_com/0_frameset/frames_1.htm?/t/ihcholland_com/3_products/B06/b06.1_giant_deep.htm).

I emailed IHC, the consultant commission in 2002 by Ocean Phosphate Consortium Pty(http://www.ihcholland.com/t/mtiholland_com/index2.htm?/t/mtiholland_com/e_referencelist/rev_list6.htm) to get some info about where they are at in 2008, and to know if their patented pump system works in ~300m. I also ask about other methods (airlift, remote vehicule (ROV), ...). Hopefully they ll reply.

II) **** scenarios ****
Anyway, lets imagine 3 scenarios:

(1) imo, the worst case scenario cost would be the like of Neptune Minerals deep sea marine mining (use ROV): OPEX 91$/t, CAPEX 500M$ @ 2Mtpa.

(2) This CAPEX is actually 3.5 time greater than DE BEER Cons. Min., who paid $142M for a custom made marine diamond mining vessel (incl. ROV) (http://www.mineweb.com/mineweb/view/mineweb/en/page37?oid=19899&sn=Detail)

(3) Of course even better for UCL (in the short term) the scenario (3) to contract the dredging out would cut down CAPEX totally (for the ore recovery at least) and transfer to OPEX (say +~10$/T=500$M/10y=50$Mpa/5MTpa, Dubai OPEX~3.5$/T).

Assuming, plentyfull reserves @15%P2O5 and long term offtake sales of 2Mpa @35% P2O5 @350$/T, and considering 900Msh+500Mopt rating equally. UCL share price estimates would fall in the following ranges:

(1) OPEX 91$/t, CAPEX 500M$
0.04-0.08$ @ JORC / 0.2-0.4$ @ production.

(2) OPEX 91$/t, CAPEX 150M$
0.059-0.110$ @ JORC / 0.30-0.55$ @ production.

(3) OPEX 101$/t, CAPEX 0M$
0.055-0.102$ @ JORC / 0.27-0.51$ @ production.

The financing of 150M$(500M$) at a ratio of 50% (equity/debt) would require the share price to raise to 0.1$(0.35$). therefore, If UCL can come up with a costing close to scenario (2), it would leave enought upside for a 50/50 JV partner, big placement or debt funding arrangement.

III) ***** offtake agreement ? *****
No matter how good it looks on paper, we need an offtake agreement. For 2-3MTpa, we need to find a taker happy to pay 350$/T long term....?!

As an example, fertilizer maker IPL's Phosphate Hill/ Southern Cross plant 900,000Tpa output DAP(20%N-50%P205-0%K2O). Is that ~1.3Mtpa (0.9M*50%/35%) of ore @35%P2O5 needed ? Who nearby Namibia can process UCL's ore?

Any one has a clue on that.