Phosphate Australia (ASX:POZ) would welcome direct approaches from potential bidders, said chairman James Richards. The company would make a good fit for a North American fertilizer company looking to vertically integrate and extend reach into Asia, he said.
The West Perth-based company, with a market cap of USD 33m, has seen approaches mainly from companies in Asia and India looking for offtake agreements, said Richards. It is “waiting for the right party or offer,” he said, adding that it is still early in the game for the company, which listed on the Australian exchange last June.
Meanwhile, the company believes that it is a good fit for North American fertilizer companies looking to vertically integrate and expand product reach into Asia, he said. Richards pointed to companies such as Agrium, Potash Corporation, and The Mosaic Company as potential suitors that could look to do so. If any of those are looking to expand into Asia, Phosphate Australia would be the “first part of the call,” as it is geographically close to Asia but has a common language and the security of a stable environment, he said.
The company is not working with financial advisors at this point, preferring to “cut out the middle man.” It has legal counsel in Australia that would be called upon for any potential deal, Richards noted. Bell Potter was the sponsoring broker for its IPO, and PKF Corporate Advisory Services (WA) Pty Ltd was the investigative accountant, according to a company prospectus.
The company’s projects are 100% owned with no private royalties, which is important for any bidders that may pursue it, he said. The company is also located close to a port, which expedites exports, and has low impurities in its product. Australia is also likely to provide more political security than many phosphate companies based in Morocco, making for a secure phosphate supply, he said.
Phosphate Australia is also open to companies interested in taking equity, as it can issue up to 15% “if the price is right,” he said. He urged such companies to “give a call.”
It is currently conducting the drilling, studying and permitting phase of exploration, and will be a full mining operation in the “medium future”, he said, although would not specify a date for that transition. by Bryce Covert in Hong Kong
POZ Price at posting:
35.0¢ Sentiment: None Disclosure: Held
