Taylor Collison slaps Centrex with \u201cSpeculative Buy\u201d
\nCentrex is exploring the Ardmore Phosphate Project in Queensland
\nCentrex secured funding for Stage 1.5 Expansion, aiming to increase production and offtake deals\u00a0<\/p>\n
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Taylor Collison<\/strong> has slapped a \u201cSpeculative Buy\u201d<\/strong> recommendation on Centrex (ASX:CXM)<\/a><\/strong>, with no specific price target.<\/p>\n Centrex is a $40m market-capped company exploring its Ardmore Phosphate Project<\/strong><\/a> in North West Queensland, and Oxley Potash Project<\/strong> in midwest of Western Australia. The products from both of these projects are used in sustainable agriculture and food production.<\/p>\n 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.<\/p>\n Funding for the Stage 1.5 expansion of Ardmore<\/strong> (total Capex $17.6m) has been secured from the share placement in Q1, and the $10 million from National Australia Bank\u2019s financing package.<\/p>\n The project\u2019s expansion forms part of the company\u2019s strategy to invest and focus on increasing production rates at Ardmore in anticipation of larger and more frequent shipments.<\/p>\n Currently the mine is producing a low >34.5% P2O5 (phosphorus pentoxide) concentrate<\/strong>, which by all metrics is considered a premium concentrate by international standards.<\/p>\n \u201cThis has been validated by the customer base established by Centrex,\u201d said the note out of Taylor Collison.<\/p>\n Total resources for Ardmore currently stand at 16.2Mt @ 27.8% P2O5<\/strong>, which support a healthy mine life at the proposed production rates.<\/p>\n \u201cArdmore has a low Life-Of-Mine (LOM) strip ratio of 5.6, with progressive backfilling into the pits limiting rehabilitation liabilities and environmental footprint,\u201d said Taylor.<\/p>\n The LOM strip ratio<\/strong> is a metric used to describe the ratio of the volume of waste material that must be removed to the volume of ore extracted over the life of a mining project.<\/p>\n A lower strip ratio indicates that less waste needs to be removed per unit of ore, which typically suggests a more economically favourable mining operation.<\/p>\n \u201cThe company has a simple process flowsheet with well-understood commercial techniques, and the plant has exceeded metallurgical design parameters, consistently achieving above nameplate throughput capacity,\u201d added Taylor.<\/p>\n \u00a0<\/p>\n Meanwhile, the production at Ardmore continues to grow, and as of 25 March, Centrex reported that more than 16,000 tonnes(t) of phosphate product is stored at the Townsville port.<\/p>\n Just yesterday, the company announced that 7,199t of beneficiated phosphate concentrate was successfully loaded aboard in preparation for shipping to an existing customer.<\/p>\n The product was loaded on 18-19 May, and was scheduled to depart Townsville Port during the morning of 20 May.<\/p>\n The company\u2019s next anticipated shipment is scheduled for early June, which is expected to be approximately 15,000t.<\/p>\n Centrex also reported the successful installation of the wet concentrate overflow storage pad and the northern drying pads.<\/p>\n This work forms part of the company\u2019s Stage 1.5 Expansion to boost its drying capacity and make the whole process more efficient. When that\u2019s done, Centrex can handle more phosphate concentrate, dry it out, and get it ready to sell in bigger batches.<\/p>\n And on 17 May, additional cyclone banks arrived at Mt Isa \u2013 which are to be installed as part of the Ardmore processing plant.<\/p>\n These additional cyclone banks are expected to enhance plant separation and efficiency, which will enable higher hourly throughput rates.<\/p>\n The increased production is expected to lift revenues and reduce operating costs on a per tonne, FOB Townsville basis, said the company.<\/p>\n \u00a0<\/p>\n In February, Centrex received credit approval from National Australia Bank for a ~$10m secured financing package designated for the Ardmore Mine.<\/p>\n The financing package now fully funds Ardmore\u2019s planned production upgrade, and will increase output from the current ~240,000tpa rate to 625,000tpa by December 2024.<\/p>\n \u201cThis substantial increase in production capacity is set to lift revenues whilst also reducing operating costs on a per-tonne basis,\u201d said Taylor Collison.<\/p>\n \u201cFurthermore, the expansion will cement the Centrex\u2019s position as a major and dependable supplier of rock phosphate in the key Asia-Pacific market, thereby underpinning food security throughout the region.\u201d<\/p>\n Upon completion of the Stage 1.5 expansion, Centrex estimates All-In Sustaining Costs (AISC) will be in the range of $160 \u2013 $180 per tonne of phosphate concentrate.<\/p>\n Several offtake agreements are already in place with industry-leading names including Incitec Pivot, Samsung C&T, Ameropa AG, Ballance Agri-Nutrients and Ravensdown.<\/em><\/p>\n These contracts essentially cover the majority of the projected production from Ardmore over the next three years.<\/p>\n \u201cCapital remains allocated in a prudent manner, ensuring the expansion remains on budget and on schedule as previously outlined,\u201d said Centrex\u2019s CEO, Robert Mencel.<\/p>\n Mencel adds that we\u2019ll really start seeing the benefits of the Stage 1.5 expansion as it ramps up production in the latter half of 2024.<\/p>\n \u201cDuring 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,\u201d Mencel said.<\/p>\n Mencel adds that he sees Centrex eventually becoming a major supplier of beneficiated phosphate concentrate. \u00a0<\/p>\n\n \ufeff<\/span>\ufeff<\/span><\/span>\u00a0<\/p>\n \u00a0<\/p>\n The views, information, or opinions expressed in the interview in this article are solely those of the broker and do not represent the views of Stockhead.<\/em><\/p>\n Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.<\/em><\/p>\n <\/span><\/p>\n The post MoneyTalks: Centrex\u2019s Ardmore Phosphate Project expansion to unlock bigger offtake deals, says broker<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Recent developments<\/h2>\n
Ardmore\u2019s Stage 1.5 expansion to unlock offtake deals<\/h2>\n
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Centrex share price today:<\/h2>\n