Barry FitzGerald: From little things big things grow for PhosCo

News.com.au

09-05-2025

'Garimpeiro' columnist Barry FitzGerald has covered the resources industry for 35 years. Now he's sharing the benefits of his experience with Stockhead readers.
There's a book in the dramas endured over the years by PhosCo (ASX:PHO) in its journey to secure its future as a phosphate producer from a world-scale resource base in sunny Tunisia.
But Garimpeiro has to keep today's column to 600 words so the long and short of it is that PhosCo's local partner in the project effectively stole the interest PhosCo held in the joint venture by transferring it to themselves.
It was a horrid period for PhosCo. But the sun is shining again over the company and its phosphate project thanks to legal victories and support in PhosCo's favour from the Government and the European Bank for Reconstruction and Development.
Full ownership of the advanced Gasaat project now rests with PhosCo, as does tenure to the Sekarna exploration project, both in the north of the country. In short, PhosCo (named Celamin up until 2021) can now get on with things.
The stock traded during the week at 7c for a market cap of $30m on capital expanded by a recent fund raising exercise which powers up work on growing resources of the key fertiliser at the two projects in the lead up to a bankable feasibility study.
A scoping study back in 2022 on Gasaat – it was called Chaketma at the time – pointed to a long life 1.5Mtpa (concentrates) project costing $US170 million to develop and capable of generating annual net cashflow of $US93m in its first 10 years.
Estimated operating costs of $US79/t for the first 10 years of the project reflect the low strip ratio open pit, high grade phosphate mineralisation, and Tunisia's low operating cost environment.
The study assumed $US150/t phosphate concentrates sale prices which is pretty much where the market in the fertiliser is today. It is that sort of potential that has got Garimpeiro's interest up in PhosCo, given its modest market cap.
Big margins
Large scale bulk commodity projects with big margins per tonne don't come along that often, particularly when housed in a junior like PhosCo. And it has got to be remembered that as a key crop nutrient, phosphate is plugged in to the need-to-feed-the-world thematic which is never going to fade.
Lithium-ion phosphate batteries in which purified phosphoric acid are used is a growth market, so much so that China has export restrictions on its big domestic phosphate production to protect its leadership in LFP batteries, as well meeting its food needs.
Lion Selection Group (ASX:LSX), the listed investment company that specialises in the junior space, is a 15% PhosCo shareholder and has been a long-term supporter of the company, riding out the horrid times and now hopeful that the good times are about to roll.
Its managing director Hedley Widdup told Garimpeiro that PhosCo was currently trading cheaply because of the past tenure dramas. 'What PhosCo needs to do now is demonstrate the value that is in those assets,' he said.
His high-level take on PhosCo's projects is that they are enormous – hundreds of millions of tonnes of phosphate which beneficiates reasonably simply to a very saleable product in the global phosphate market.
Having been a long-term shareholder, Widdup said PhosCo's attraction now was what interest could be stirring from the world's big fertiliser companies in Gasaat (currently a 146Mt resource grading 20.6% phosphate).
'It is something that possibly – or should be – owned by a big phosphate company, yet here it is owned by little old PhosCo,'' Widdup said.
He said the big fertiliser companies haven't wanted to wade in to a legal battle in a foreign country. 'Now that's over and PhosCo is at the point where it can start to talk to people about partnerships and everything else,' Widdup said.
'The attraction for us is how attractive this could be for partners. We think this is an opportunity for someone who is big in the fertiliser world.'
The views, information, or opinions expressed in this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.