fully frank

John Beveridge From: Herald Sun July 27, 2010 9:55AM



IT IS not just Australia's iron ore and coal that the rest of the world is keen to buy.

Phosphate -- used to fertilise crops -- is getting much harder to find in large quantities, which explains why explorer Minemakers is on the verge of a deal.

Chief executive Andrew Drummond yesterday announced a non-binding memorandum of understanding with Australian company Verte Group, which represents a consortium of Asian resource and manufacturing companies.

The idea is for the new investors to buy half of Minemakers through a new share issue at a substantial premium to the share price and then supercharge development of its Wonarah rock phosphate project in the Northern Territory.

Originally Minemakers planned to slowly start selectively mining ready-to-ship phosphate and plough the profits back into further developing the mine and infrastructure.

If the Verte group deal comes off, that timetable will be dramatically sped up with plans for a 260km spur railway running halfway to Mt Isa off the Adelaide-to-Darwin railway at Tennant Creek, a gas pipeline of a similar length from Tennant Creek, a large beneficiation plant at Wonarah and a range of storage and chemical processing plants at Wonarah and Darwin.

Early company approval of the plan is due later this year with final equity and debt funding for engineering, procurement and construction set down for the second quarter of next year.

Andrew said the deal could be a "great leap forward" for the company, giving it significant cash to further explore and develop its other tin/tungsten/fluorspar and rock salt projects while still having a substantial stake in a much faster development of Wonarah.

"This could really get it going big time," said Andrew.

"There is a one-off 50 per cent dilution to accommodate the new shareholders, but that is much better than shareholders facing lots of capital raisings and dilutions down the track.

"Food security is a big issue in Asia, which is why investing in this project has been so attractive," said Andrew.

Minemakers shares firmed 5.5, or 22.9 per cent, to 29.5.