Stock...ead today. Taylor Collison has slapped a “Speculative...

Stock...ead today. Taylor Collison has slapped a “Speculative Buy” recommendation on Centrex (ASX:CXM), with no specific price target.
Centrex is a $40m market-capped company exploring its Ardmore Phosphate Project in North West Queensland, and Oxley Potash Project in midwest of Western Australia. The products from both of these projects are used in sustainable agriculture and food production.Taylor believes that 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 of Ardmore (total Capex $17.6m) has been secured from the share placement in Q1, and the $10 million from National Australia Bank’s financing package.
Ardmore’s Stage 1.5 expansion to unlock offtake dealsIn February, Centrex received credit approval from National Australia Bank for a ~$10m secured financing package designated for the Ardmore Mine.The loan 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,” said Taylor Collison.
“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 $160 – $180 per tonne of phosphate concentrate.
Several offtake agreements are already in place with industry-leading names 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.
“Capital remains allocated in a prudent manner, ensuring the expansion remains on budget and on schedule as previously outlined,” said Centrex’s CEO, Robert Mencel.Mencel adds that we’ll really start seeing the benefits of the Stage 1.5 expansion as it ramps up production in the latter half of 2024.“During December 2024, upon the conclusion of the Stage 1.5 Expansion, Ardmore will unlock a production run-rate of 625ktpa, transforming it into a highly cashflow positive asset for the company,” Mencel said.Mencel adds that he sees Centrex eventually becoming a major supplier of beneficiated phosphate concentrate.