Phosphate Market
Phosphate stands as a crucial fertilizer, serving as the backbone of global food production. The market for rock phosphate has experienced a significant upswing, escalating from US$88 per metric ton in February 2021 to as high as US$348 per metric ton in 2023.

Worldwide, phosphate rock production is notable for its reliance on key players, with approximately a third sourced from China, a third from Morocco, and the balance coming from other countries including Uzbekistan and Russia.

Recognizing the finite nature of phosphate, concerns about political and geographic control have prompted the realization that relying on only a handful of nations for supply is precarious. This is where Tunisia emerges as a pivotal player, being a global top-10 producer of phosphate with ambitions to bolster production further.

The government is actively advocating for the revival of this industry, and its success could not only reshape Tunisia’s role in the global phosphate landscape but also address broader concerns about concentrated supply in a few nations.

PhosCo’s Assets Overview:
Chaketma Phosphate Project
The Chaketma project stands as one of the most substantial undeveloped phosphate projects globally, with a JORC resource of 146.4 million metric tons at a concentration of 20.6% P₂O₅. Boasting a Net Present Value (NPV) of US$657 million, resolving joint venture (JV) issues and securing the re-granting of this asset could establish the necessary foundation for potentially transforming the company into a major industry player.

Sekarna Phosphate Project
The prospective acquisition of the Sekarna Phosphate project has the potential to complement the Chaketma project, expanding PhosCo’s position in Tunisia’s Northern Phosphate basin. According to a geological paper from 2011 focusing on lead-zinc mineralization at Sekarna, phosphate grades ranging from 19.7% to 27.8% P2O5 were reported in five core samples, indicating a notably high-grade nature.

Amoud Phosphate Project
In June 2023, PhosCo submitted an Exploration Permit application to the Tunisian Ministry for the Amoud project area, strategically located to the east of the globally renowned Sra Ouertane Project—one of the largest phosphate projects on a global scale.

Simitu Copper-Gold
This permit encompasses an exceptionally promising mineralized corridor that spans over 30 kilometers, featuring multiple targets and historical workings. A soil sampling program has been completed at the priority Bey prospect, with those results due to be released soon. What captivates my interest in this project is the historical work that has been carried out along this corridor with minimal modern day follow-up.

Similar to the success observed in high-grade copper discoveries among junior mining companies, this aspect adds to the project’s appeal, parallel to the favorable trends witnessed in the phosphate sector.

Peer Analysis
Owing to entry barriers in the Chinese, Moroccan, and Russian markets, the ASX has limited representation of listed phosphate companies. Besides PhosCo, Centrex Limited (ASX:CXM) and Avenira Limited (AEV) are notable contenders that offer valuable insights into the sector.

Starting with AEV, the company possesses a substantial deposit; however, its remote location comes with its own challenges.

Conversely, CXM boasts a commendable project but maintains a relatively modest JORC resource of 10.1 million metric tons at 30.2% phosphorous pentoxide. Having transitioned into a small-scale producer, CXM caters to a different investor base compared to junior mining explorers. Consequently, CXM may not be considered a suitable direct comparison to PhosCo, especially as PhosCo aims to develop one of the largest phosphate projects globally.

In summary, PhosCo appears to be a singular presence on the ASX, uniquely positioned to compete with major players in China, Russia, and Morocco. The company’s focus on developing one of the largest phosphate projects globally sets it apart within the ASX landscape.

Risk Factors:

  • PhosCo holds a majority (51%) interest in CPSA, the operating company that has re-applied for an exploration permit over Chaketma. PhosCo is currently entangled in legal proceedings with its joint venture partner in CPSA, TMS (49% owner of CPSA) for failing to pay PhosCo TND14M (~A$6.7M). The outcome of this dispute remains uncertain.
  • The application for a new exploration permit for Chaketma, mirroring the original boundaries, is subject to approval by the Tunisian Ministry of Industry, Mines & Energy. There is no assurance that this permit, or the other permits under application, will be granted, introducing regulatory approval risk.
  • Funding Risk: Similar to other junior mining explorers, PhosCo faces the challenge of raising capital for the development of its phosphate project. The price at which funds are raised depends on the company’s progress, achievements, and the prevailing market conditions, introducing financial uncertainty.

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