Centrex Limited (CXM.ASX)Ardmore Phosphate Mine – Stage 1.5...

Centrex Limited (CXM.ASX)
Ardmore Phosphate Mine – Stage 1.5 Expansion Fully Financed
Our View
Centrex Limited’s (CXM.ASX) Ardmore Phosphate Mine in QLD is the newest
phosphate mining operation in Australia and Centrex is aiming to complete
the “Stage 1.5” expansion plan by the end of CY2024 to increase output to
625ktpa.
Centrex is on the cusp of transitioning Ardmore to a more cost-efficient operation
that will benefit from economies-of-scale with only modest capital expenditure
required. Funding for the Stage 1.5 Expansion (total Capex $17.6m) has been
secured from the share placement in Q1 CY2024 and the A$10 million National
Australia Bank financing package.
Centrex continues to invest and focus on increasing production rates at Ardmore
in anticipation of larger and more frequent shipments. Currently the mine is
producing a low deleterious, >34.5% P2O5 concentrate, which by all metrics is
considered a premium concentrate by international standards. This has validated
by the customer base established by Centrex.
We continue coverage on Centrex Limited (CXM.ASX) with a Speculative Buy
recommendation.
Key Points
Total resources currently stand at 16.2Mt @ 27.8% P2O5, which supports a
healthy mine life at the proposed production rates. Ardmore has a low Life-OfMine strip ratio of 5.6, with progressive backfilling into the pits limiting
rehabilitation liabilities and environmental footprint. There is a simple
process flowsheet with well-understood commercial techniques and the plant has
exceeded metallurgical design parameters, consistently achieving above
nameplate throughput capacity.
The production profile at Ardmore continues grow, and as of the 25th of March,
Centex reported more than 16,000t of phosphate product is stored at the
Townsville port. During April, CXM expects to sell approximately 20,000t of
beneficiated phosphate concentrate.
In February 2024, Centrex received credit approval from National Australia Bank
Limited for a ~A$10m secured financing package designated for the Ardmore Mine.
The financing package now fully funds Ardmore’s planned production upgrade and
will increase output from the current ~240,000tpa rate to 625,000tpa by
December 2024. This substantial increase in production capacity is set to lift
revenues whilst also reducing operating costs on a per-tonne basis.
Furthermore, the Expansion will cement the Centrex’s position as a major and
dependable supplier of rock phosphate in the key Asia-Pacific market, thereby
underpinning food security throughout the region.
Upon completion of the Stage 1.5 expansion, Centrex estimates All-In Sustaining
Costs (AISC) will be in the range of A$160 - A$180 per tonne of phosphate
concentrate.
Agriflex is CXM’s 100% owned market-facing brand behind the Ardmore Project.
Several offtake agreements are in place with industry-leading trading and
agricultural groups including Incitec Pivot, Samsung C&T, Ameropa AG,
Ballance Agri-Nutrients and Ravensdown. These contracts essentially cover the
majority of the projected production from Ardmore over the next three years.

Estimated net profit after tax 2024 $15.4 million and 2025 $45.6 million