Resources reporter
Melbourne @mattchambers1
As billionaire Gina Rinehart bets big on English fertiliser plans, fellow rich-listers the Millner family are focusing on local phosphate play Rum Jungle, where former Rio Tinto executive Chris Tziolis is studying a plan he says can spur a significant new industry in the Northern Territory.
Rum Jungle, 38 per cent owned by the Millner-controlled Washington H Soul Pattinson after a May equity raising, has kicked off a feasibility study on the Ammaroo phosphate project, 240km southeast of Tenant Creek.
The first stage of the project is seen as having a roughly $300 million first stage that would produce 1 million tonnes of phosphate rock concentrate for Asian markets.
Beyond this, broader plans involve a push to expand into a $1bn-plus ammonium-phosphate fertiliser operation with downstream processing.
Plans for Ammaroo are stepping up at the same time Mrs Rinehart’s Hancock Prospecting is shining a light on the appeal of agricultural investment through her $370m shootout with a Chinese partner for the S. Kidman cattle empire, and yesterday’s announcement of a $US300m ($393m) royalty financing deal on a fertiliser project in Yorkshire with London’s Sirius Minerals.
The Ammaroo plans are ambitious for a junior with a market value of just $18m.
But Rum Jungle has a respected major shareholder that has been increasing its share and is assembling a development-focused board as it evolves from an explorer.
It plans to rename itself Verdant Minerals at its annual meeting in Melbourne next month and recently appointed former Incitec Pivot chief operating officer James Whiteside to its board.
With chairman David Muller flagging his intention to retire at the AGM as the company shifts into development gear, Mr Whiteside looms as a potential successor.
Mr Tziolis, former chief development officer of Rio subsidiary Energy Resources of Australia, says the $300m first stage is seen as one that would start generating cash as the company works on a bigger plan.
“The longer-term game is the production of ammonium phosphate fertilisers for Australian and Asian markets,” he said.
“The Northern Territory is one of the few parts of the world where you’ve got the three key nutrient ingredients, nitrogen from gas, phosphate and potassium, all within close proximity.”
The Adelaide-Darwin railway features heavily in the plans.
“You can service Australian markets through South Australia into western NSW and Victoria, and north to Darwin for distribution in Northern Australia, if we can get agricultural growth going there, and into Asia.”
Early plans are to finance the first stage through a combination of equity and debt.
Mr Tziolis says the company will take 12 to 15 months on the study and getting environmental and native title approvals — something that is becoming increasingly important to attract foreign equity partners.
“Talking to industry people around the world over the past few months, there is a bit of concern about investing in early stage projects in Australia, particularly in getting terms of environmental approval and native title sorted out,” he said.
RUM Price at posting:
1.8¢ Sentiment: None Disclosure: Not Held
