Ann: Quarterly Activities Report Dec 2015, page-5

Home > Company Profiles > Fertiliser project to grow company into producer
Fertiliser project to grow company into producer
This company is not your typical resources junior – rather, it offers exposure to the premium specialty fertiliser industry as it transitions to become a producer.

• MiningNews.Net
• 22 Jan 2016
• 12:00

PhosphateAustralia
Rum Jungle Resources has discovered Australia’s largest phosphate rock resource at Ammaroo in the Northern Territory, with exploration potential indicating it could support phosphate production for more than a century.

While the company seeks a developer or partner to advance this globally significant 1.145 billion tonne JORC 2012 mineral resource estimate, it is rapidly progressing the first in its suite of sulphate of potash (SOP) fertiliser projects towards production.

Rum Jungle’s managing director Chris Tziolis said the company’s value proposition lay in its portfolio of fertiliser mineral projects – both phosphate and potash – that were advancing beyond exploration.

“Our projects are advancing and they’re well located in relation to existing transport infrastructure and access to markets, and ultimately that’s what’s going to make them attractive to global and regional fertiliser industry players,” Tziolis said.

The company also holds an early stage silica project at Dingo Hill, where the company is investigating the potential to produce high purity quartz (HPQ) for the growing high-tech market for use in fibre optics and solar panels.

But the company’s key focus is on developing its fertiliser mineral projects which hold ingredients critical to the global food supply value chain.

It is the world’s mounting population, particularly the growing middle class in South East Asia and a rising demand for higher quality food, coupled with less arable land available for farming, that will fuel the need for fertilisers, Tziolis explains.

“So our story isn’t really a traditional minerals story in any sense – it’s more closely aligned to agricultural output and growth rather than a traditional mineral commodities,” he said.

Fortuitously, this difference is also reflected in the prices for downstream phosphate fertiliser products, which have increased significantly in value in Australian dollar terms and have avoided the tumble affecting resources including iron ore and oil.

Tziolis said another factor that set Rum Jungle apart from other Australian fertiliser-focused companies was the fact it held both phosphate and potash projects.

“The Northern Territory is one of the few jurisdictions in the world where almost all those ingredients to create a fertiliser industry – nitrogen, phosphorous and potassium – are all available within a few hundred kilometres of each other,” he said.

“Furthermore, we’ve got markets in our own country, so we’re ultimately developing a fertiliser industry in the NT, to supply both the Australian markets and South East Asia, India in particular.”

Rum Jungle’s crowning achievement to date is identifying the huge Ammaroo phosphate resource, which has increased in potential value thanks to a recent reassessment of its base case economics.

And Tziolis believes the 1.145 billion tonne Mineral Resource is just the beginning of the province.

Rum Jungle has already identified the 70 million tonne Ammaroo South JORC 2012 Inferred Mineral Resource, 53km southeast of Ammaroo.

“Ammaroo is already a global scale resource and the area has the potential to support many, many decades, perhaps even a century or more of phosphate production,” he said.

“It’s really only the tip of the iceberg out there in the Western Georgina Basin because there’s lots of exploration potential.

“It could be the next Morocco in terms of phosphates, there are a couple of large Resources out there that are known but most of it is unexplored.”

Ammaroo’s economics presented in the September 2014 pre-feasibility study (PFS) were reassessed in September 2015, significantly increasing the project’s potential value thanks to lower cost inputs, exchange rates and the positive long-term outlook for phosphate commodity pricing. The free-dig phosphate ore and proximity to the Central Australian Railway line add to the project’s expected low cost production.

The PFS presents three development options: produce 2 million tonnes per annum of phosphate rock; or 500,000tpa of phosphoric acid; or 1.02tpa of di-ammonium phosphate and mono-ammonium phosphate fertiliser, using the acid produced in option B.

“The first decision that needs to be made is which product to produce and what market to serve, and for that we need a strategic player,” Tziolis said.

“You can stop anywhere on the value chain so the further you go, the bigger the capital but the higher the value you create in the product.

“We think it will be attractive to a global fertiliser player because there is the potential for it to be a large-scale, long-life, tier one province and it offers various options.

“Our mission going forward is to either get Ammaroo into the hands of its natural owner and realise value for shareholders, or get a partnership in place to develop it.”

However as a junior, Rum Jungle is perfectly placed to develop its “company starter” operation – the small scale SOP project at Karinga Lakes.

“The sulphate of potash can get us going and serving the relatively small market in Australia and South East Asia,” Tziolis said.

“It’s a premium specialty fertiliser so its high value and you need more than just a resource – you need gas to do the conversion plus access to transport – and that’s the beauty of Karinga’s central Australian location, because the infrastructure is all there.”

Karinga lies on key transport routes, the Lassiter Highway, Stuart Highway and Central Australian Railway.

Karinga’s prime location makes it the frontrunner for development in the company’s growing portfolio of potash projects, which includes bigger salt lakes such as Amadeus also in the NT and Lake Frome and Lake Torrens in South Australia.

“My vision in 10 years’ time is that we’ve got a scale SOP operation in central Australia servicing growing agricultural needs in northern Australia and Asia; and also an operation in southern Australia where we’re servicing the southern Australian horticultural markets,” Tziolis said.

A consortium of GHD Australia and the USA’s Norwest started work in November on a PFS for Karinga Lakes.

Tziolis expects the PFS by mid-2016, which will prompt a decision on progressing to a bankable feasibility study with a view of making an investment decision in late 2016 and producing SOP in late 2017.

“Karinga Lakes marks our transition to producer and it’s a low capital, small footprint operation that we can handle ourselves,” Tziolis said.

“It’s a company starter but it’s our portfolio that creates the longer-term value because at some point, it will be attractive to the bigger players, particularly if we can progress them to bankable study levels and have approvals in place.”

Within a year, Tziolis anticipates progress on offtake agreements for SOP production, exploration work at the bigger lake systems, results from testing Dingo Hill’s silica prospects, advancing towards production at Karinga and a deal in place to develop Ammaroo.

“We’re well supported by institutional investors, our fertiliser mineral projects are well advanced and we hold a 1 billion tonne phosphate resource that is of global interest,” Tziolis said.

“We’ll create value for shareholders by aligning the company’s market value to the inherent value of our projects