MNB 1.67% 5.9¢ minbos resources limited

That's going to be an interesting question - what will the first...

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    That's going to be an interesting question - what will the first year's sales be?
    The recent sales offtake was for 869,000t over 7 years;
    "Fertilizer supply agreement for up to 869,000 tonnes of Cabinda Phosphate Rock over the first 7 years of production"

    That doesn't give us a breakdown of how much in the first year as opposed to later years but we have been told previously that heavier applications in the first year are the best method of application on each site. So demand from Carrinho could be quite high in the first year if they are able to convince enough small farmers of the benefits of fertiliser early on. They might already be working on that, now that they have signed the offtake. It's in their interest to get their billion dollar food processing plant up to full capacity as soon as possible.
    I'll assume a flat 124,000t per year. That's a decent number but it doesn't include sales to the larger commercial farms which could increase that number. From the recent offtake announcement;
    "In addition, Minbos continues other offtake discussions with several large private farms. Field trials at the Biocom sugar plantation in Angola are progressing very well, and Cabinda Phosphate Rock has been trucked to the SARIS sugar plantation in the Republic of Congo for trials this year. Cabinda Phosphate Rock is known to perform very well in sugar, and the Biocom trial is already outperforming adjoining plots. Minbos estimates the potential market for the three sugar plantations in the region at 15,000tpa."

    I.e. just the three sugar farms could see sales of up to a further 15,000tpa added to the (potential) 124,000t for 139,000t.
    The plant capacity for the first plant from the DFS is 187,500t but that can be doubled for only around $3million. If we were to be delayed by up to three months to get production up to nameplate capacity, the plant should still be able to produce over 140,000t next year which equates to the potential demand calculated above and that would be 40% more than the production forecast in the DFS. That would mean the plant could still generate A$42mill after tax in year 1 even with a three month delay, compared to the DFS forecast A$30mill. Hopefully any potential delay is significantly less than three months but even with as much as a 3 month delay, potential profit could still be 40% above the DFS forecast depending on actual demand. Long story short, anything up to a three month delay shouldn't impact next year's earnings which potentially could be 40% higher than DFS forecasts if demand is high enough.
    There is also the possibility that some of the lower grade phosphate is shipped next year for use in P4 for LFP batteries.
    "The Company continues discussions with parties interested in producing Yellow Phosphorus in Angola and was pleased to introduce one of these parties to the Minister for Minerals, Resources and Petroleum last week in Angola.
    Stage 1 of the Cabinda Phosphate project (187,500tpa) cannot supply all of these opportunities so, as the market prospects mature, our marketing and project teams will work together to finalise a schedule to double the capacity of the plant. The additional capital required to double the capacity of the Cabinda Phosphate project has been estimated at between $US1.7-3.3M3."

    All indications are that we should see the opening ceremony this November, first production early next year and a lot of positive developments next year across three projects. I also wouldn't be surprised to see something new again although we certainly don't need it.
 
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