The Punter re-invests in Avenira

The Punter re-invests in Avenira
By The Punter
March 8, 2016, noon

The Punter has reinvested in phosphate miner Avenira, having made a small profit from shares in the same company last year.

IN AUGUST last year, The Punter sold his modest shareholding in the would-be phosphate miner, then known as Minemakers, at just under 10 cents a share.

He made a $500 (35 per cent) profit, and it seemed like a good idea at the time.

Sadly, it was somewhat premature – the shares went on to peak at 16c in December.

He had bought the shares largely on the basis of Minemaker’s big phosphate rock deposit at Wonarah in the Northern Territory. The deposit is one of the largest known in Australia. Unfortunately Wonarah will only be worthwhile if the company can use the Improved Hard Process (IHP) technology being developed in the US.

The IHP technique can improve phosphorous yeilds by 96pc as it can capture the element from lower-grade rock.

Years had been spent trying to get IHP to the commercially viable stage, and they are still trying. So Minemakers put Wonarah on the back burner and went looking for easier phosphate deposits. It has plenty of money, and world demand for fertiliser can only grow.

Last April it settled on the Baobab project in Senegal and by the end of November it had raised funds, completed the formal takeover of the project, received the environmental go-ahead, and changed its name from Minemakers to Avenira (ASX code AEV).

It aims to start production as early as the second half of this year. Baobab has an indicated mineral resource estimate of 12.6 million tonnes, at 21pc phosphate, but Avenira is actively exploring in the hope of increasing the resource.

It has also cemented a joint venture with the Senegalese flour and sugar Groupe Mimran, which is looking to expand its agribusiness interests.

Foster Stockbroking last month updated its research on Avenira, classifying it as a “very high risk” speculative buy. Fosters has a 12-month price target of 25c for the shares – double the current price.

Avenira pays Fosters for corporate services such as advice, institutional research and marketing. A cynic might say that Fosters are unlikely to bite the hand that feeds them by giving Avenira a negative report.

The Punter prefers to think that their report is based on particularly good access to the company.

Wishing he had held on to his MAK, he has placed an order for 20,000 of those “high risk, speculative” AEV shares at 12c. That’s 2c more than he sold them for in August. Drat!