A birds-eye view of the Ardmore Phosphate Rock mine taken in May last year. Photo: Centrex

CHRISTMAS Island-based fertiliser company, Phosphate Resources Ltd (PRL Group) has emerged as the preferred candidate to takeover owner of Ardmore phosphate mine, Centrex, after the company entered voluntary administration in March.

The news comes as the owners of another north Queensland phosphate project, Korella North and South—still yet to begin commercial operations—raise doubts over a proposed sale to the Marshall Group.

Last week, ASX-listed PRL Group was granted a 45-day exclusivity period to carry out due diligence on Centrex and its subsidiaries.

Centrex’s Ardmore Phosphate Project, 120km from Mount Isa, is one of only two Australian mines producing commercial quantities of phosphate concentrate.

The other being Incitec Pivot’s Phosphate Hill operation.

Administrators John Park and Joanne Dunn of FTI Consulting had aimed to keep the Ardmore mine running while seeking a buyer or recapitalisation deal.

However, on March 12, they confirmed that due to a lack of appropriate funding the Ardmore Phosphate Project was put into “care and maintenance” with “a number of employee positions” made redundant.

PRL Group operations

In a statement published to the ASX, the PRL Group said an update would be provided on completion of the due diligence.

“The acquisition of [Centrex] would provide the opportunity to expand PRG’s customer base and market access, and drive growth and value for our shareholders and other valued stakeholders into the future,” the statement said.

“Subject to the due diligence being completed to the satisfaction of PRG, the parties will finalise the terms of the potential acquisition.

Established in 1990, the PRL Group was created to revive operations at the phosphate mine on Christmas Island.

Since then, the company has expanded to include subsidiaries in the logistics, agribusiness, resources and facilities management sectors.

In addition to its phosphate operations, PRL Group also runs PRL Shipping, a cargo and bulk freight service provider, and fertiliser supply businesses Phosphate Resources Malaysia and Liven Nutrients.

The Christmas Island Phosphates business already counts Australia as a key customer, as well as Malaysia, Indonesia and New Zealand.

In its half-year earnings report to 31 December, PRL Group reported sales of 340,000 tonnes of phosphate.

Korella sale process update

New Zealand-based Chatham Rock Phosphate is one of two other operators progressing new phosphate mining projects in north-west Qld.

The Korella North and South mines are being developed to supply phosphate to both domestic and international markets.

In January, Chatham announced that it had agreed in-principle to sell the four mining and exploration leases related to the Korella North and South properties to arm’s-length Australian entity, the Marshall Group.

The deal included an upfront cash payment of $4.1 million upon lease transfer, plus a royalty to Chatham’s subsidiary, Avenir Makatea Pty Ltd, of $10 per tonne for the first 190,000 tonnes produced and $1/t thereafter until 31 March 2040.

Chatham said in a statement that the transaction was “conditional on a successful outcome in respect of a due diligence process” set to conclude on or before 31 March.

However, the company later said the due diligence process had been extended to 30 June.

The process was further complicated when, on April 17, Chatham announced that the Marshall Group had “moved to a non-exclusive negotiation process as they sought to investigate complementary opportunities in the overall phosphate value chain”.

“Accordingly other parties who earlier expressed interest in the acquisition of the Korella leases have re-engaged,” Chatham said in a statement.

“Of recent times [Chatham] has also received unsolicited interest in its other phosphate projects in New Zealand and French Polynesia.

“Shareholders will be kept informed as matters progress.”