Centex Metals was formed back in 2001 and listed on the ASX in 2006 as a developer of iron ore projects in South Australia, signing two large joint venture agreements with Chinese steel firms in 2010. But, anticipating the oversupply of iron ore into global markets, Centrex soon began a process of diversification into other bulk commodities. Today, Centrex is focused on the development of phosphate projects in Australia to feed fertiliser markets in the Asia-Pacific (APAC) region. “We have an increasing middle class in the APAC region and arable land is decreasing because of that growth,” says CEO Simon Slesarewich. “Therefore, there is a requirement to get more productivity out of each of those hectares used for production of important plant-based food crops.”
Phosphate is essential to the production of fertilisers, which provide vital nutrients to plant-based crops, boosting yields and supporting food supplies for growing global populations, particularly in the APAC region, which contains 60% of the world’s population and continues to grow at a rapid rate.
Therefore, the decision to move into phosphate mine development made sense from a thematics perspective, according to Slesarewich. Centrex’s starting point in the business was the Oxley Potash Project in Western Australia, which was acquired in 2015.
At around the same time it purchased the Oxley project, Centrex identified the Ardmore Phosphate Rock Project in Queensland as a high priority, owing to its close alignment with the company’s new focus. While it took some time to unlock the project, it has been owned by Centrex for two years now and is the firm’s flagship development.
Slesarewich was appointed CEO of Centrex in April 2019, bringing a track record of success in mine development across Queensland over a 20+ years career. Next to Slesarewich in the firm’s new look leadership is CFO Mark Terry. He also brings over 20 years of experience in financial roles for mining firms. Together, they lead the senior management team from Centrex’s head office in Adelaide.
The flagship project
Based on the results of Centrex’s definitive feasibility study (DFS), the Ardmore project is a high-quality asset with a relatively low capital requirement, low technical risk and the potential to provide strong returns.
“At Ardmore, we have been blessed with a combination of premium grade phosphate rock and ultra-low cadmium content. Our product will be delivered to the processing plant at around 30% P2O5 [phosphorous pentoxide], compared to the mid-teens for most other projects around the world.
“Therefore, we’re able to easily make a high grade product at around 34-35% P2O5, via simple washing of the ROM ore,” says Slesarewich. Meanwhile, the low cadmium content of the ore means that local manufacturers can use the product without the need for blending.
An optimised DFS was published in February 2019 and laid bare the economics involved in the delivery of the project, including capex which has been estimated at AUS$69 million providing an initial payback of 1.8 years for a 10-year operation.
Although much of the infrastructure required for the project is already in place, with a railway line only 90 km away that can support the delivery of material to the Port of Townsville, thereby negating the need to develop costly and long lead logistics infrastructure.
Low risk capex requirements
“Overall, the capex does not include any high risk investments with large pieces of capital that need to be delivered. Instead, it’s quite a group of small projects like roads, camps, office blocks and other infrastructure items. That makes it a lower risk delivery methodology.
“And, we think there is a very significant opportunity to decrease our operating costs by looking at bulk handling solutions. The base case in the DFS was to containerise the material and use rotainers throughout the logistics chain, but we are now looking into a bulk rail and bulk port solution.
On top of that, the state government recently announced an annual $20 million subsidy to users of the Mount Isa to Townsville rail line, for the next four years, which will reduce access charges on the line. Centrex hopes to take advantage of this in the final two years of the arrangement.
Elsewhere in the DFS, the optimisation increased the project’s pre-tax NPV by 56% to $269 million with an IRR of 63%, while annual production at Ardmore has been set at 800,000 wet tonnes – making it one of the most significant undeveloped phosphate deposits in Australia.
Key contributors to the DFS included RPM Global for the mineral resources, Optima Consulting & Contracting for the ore reserves and mining, GR Engineering Services for process and mine site infrastructure as well as overall compilation of the study.
The start-up mine
Centrex has designed a start-up mine facility at Ardmore which will produce up to 30,000 tonnes of premium concentrate, ahead of the upgrade to the full-scale mine. The start of June saw the arrival of the modular processing plant for the trial mine, which should be commissioned before the end of the year.
Once the start-up mine is fully operational, the company plans to ship 5,000 tonnes trial shipments to priority potential customers. This underlines the importance of the start-up mine with regards to securing long-term offtake contracts for Centrex’s product.
“What we need to do is get a couple of large bulk samples out to high priority customers, let them process the product and that should underpin offtake negotiations for next year.”
Centrex has already signed off two 5,000 tonnes trial shipments with priority customers based in New Zealand, the latest of which is with nutrient supplier Ballance Agri-Nutrients, who previously trialled 400 wet tonnes of run-of-mine ore from Ardmore to produce single superphosphate.
“The company is very pleased to be partnering with one of New Zealand’s leading fertiliser producers in Balance,” said Slesarewich after the deal was announced. “The contract validates the quality of Ardmore’s product and its attractiveness to target customers.”
Meanwhile, the Northern Australian Infrastructure Facility (NAIF) completed a strategic assessment of the Ardmore project in May and is currently engaged on a due diligence investigation into the viability of Centrex receiving funding assistance through the $5 billion facility, which aims to provide loans and support the development of infrastructure projects in Northern Australia.
Full steam ahead
Centrex is continuing to make steady progress on its path towards full-scale production at the Ardmore project, which is slated for late 2021. Before that, the company must wrap up offtake and financing agreements next year, while construction of the mine is planned to commence at the end of 2020.
“We’ve also got some near-mine exploration that we can look at to increase the mine life around the existing mine plan at Ardmore, and there some high priority exploration targets within trucking distance as well.
“We will look at other similar style deposits in the Queensland region to see if we’re able to get involved in those projects and use the knowledge from Ardmore to deliver those projects as well.”
In summary, Centrex is closing in on the development of the uniquely positioned Ardmore Rock Phosphate project in Queensland – a high grade, minimal capex project that will benefit from existing infrastructure, along with attractive state subsidies and funding support facilities.
When it starts up full-scale production in 2021, the project will become the latest significant source of phosphate for fertiliser markets in the APAC region, helping to enhance the growth of plant-based crops that are vital in feeding the ever-expanding population in the region.