by: Barry FitzGerald From:The Australian November 21, 201212:00AM
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TALKING about Gutnick, his decision last month to pull the planned $20 million float of Paradise Phosphate because of the "pathetic" market conditions for initial public offerings of all types has not detracted from the growing status of the Georgina Basin as a new phosphate province of global standing.
The basin straddles the Queensland and Northern Territory borders and, apart from Gutnick's project way over east, there are several companies involved in the chase to become suppliers of the fertiliser to a world increasingly anxious about how it is going to feed the rising middle classes of the most populous nations, India and China.
The standout performer of late has been former Top End uranium explorer Rum Jungle on the strength of its Barrow Creek phosphate project northeast of Alice Springs, and its Karinga Creek potash joint venture. It is now a $60m company and boasts Washington H. Soul Pattison (13.5 per cent), Lion Selection (4.9 per cent) and Acorn Capital (4.9 per cent) as supporting shareholders.
But today's interest is in a little thing called NuPower Resources, which is in the process of raising $2m from a one-for-four rights issue at 1.6c a share. Assuming it gets taken up in full, NuPower would be valued by the market at about $10m. Mind you, the stock was trading at the princely price of 1.4c yesterday. So there will be a shortfall. The question is how big and what success management has in later placing the homeless shares.
It is on that score that they need only point to the success of Rum Jungle. NuPower's Arganara phosphate project is in the same part of the Georgina Basin as Rum Jungle's and at last count it was estimated to have a bigger resource (310 million tonnes at 15 per cent phosphate compared with 253 million tonnes at 15 per cent phosphate).
Patersons analysts Matthew Trivett and Lisa Moylan pointed out last month that while Rum Jungle was being valued at 70c a tonne of phosphate, NuPower -- also a former Top End uranium explorer, which is to change its name to Central Australian Phosphate -- gets valued at something like 18c a tonne.
No real explanation for the difference other than Rum Jungle is more advanced and has solid backing for its plans to help feed the world. The trick for NuPower is to convince the market of all that, or find a cornerstone investor out of India or China.
