http://www.theaustralian.com.au/business/minemakers-project-proce...

http://www.theaustralian.com.au/business/minemakers-project-proceeds-as-tax-hits-52pc/story-e6frg8zx-1225876218205


MINEMAKERS' planned Northern Territory phosphate mine will not be killed by the government's new mining tax but will have its tax rate raised from 36 per cent to beyond 50 per cent over 10 years.

Perth-based Minemakers has released a feasibility study on its $215 million Wonarah project, including an independent analysis of the effect of the planned resource super-profits tax.

It is the first study of its kind released since May 2, when the new tax was announced.

Minemakers managing director Andrew Drummond said the study showed that if Wonarah ran for five years, the tax rate (including company tax and royalties) would grow from 35 per cent under the current tax and royalty regime to 42 per cent under the proposed RSPT, representing a $12m increase from a total pre-tax take of $313m.

But if, as expected, the mine was extended to a 10-year life, the total tax rate would jump from 36 per cent of the $1.28 billion of earnings received to 52 per cent.

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This meant tax paid to the government would increase by $190m.

The difference in the rates is mainly due to depreciation of capital expenditure in the early years.

It is still unclear whether the tax will apply to phosphate, which is used to make fertiliser.

If it did not, Mr Drummond said the extra $190m would not be going back to shareholders, but would be reinvested in new projects.

"That money would be for longer-term plans to build railway lines and fertiliser plants," Mr Drummond said.

He said the increased tax would also hinder capital raising and decrease returns to shareholders.

Wonarah is about 200km east of Tennant Creek and about 1000km south of Darwin.

Minemakers plans to rail the phosphate from Tennant Creek to Darwin, where it will be exported.