The Ardmore mine site in January 2025. Photo: Centrex

PHOSPHATE miner Centrex, and its subsidiary Agriflex, have entered voluntary administration, placing a cloud of uncertainty over the Ardmore operation in north-west Queensland.

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

In a statement released to the ASX on Tuesday, Centrex said it had appointed John Park and Joanne Dunn of FTI Consulting as joint administrators to oversee the process.

“The voluntary administrators are continuing to operate the businesses of Centrex and Agriflex with a view of assessing possible restructuring options,” the statement said.

In a follow-up statement, the administrators confirmed a “process for the sale and/or recapitalisation” had commenced and it was “anticipated that final offers will be sought from interested parties by 25 March”.

Trading of Centrex stock on the ASX had been suspended since December 12.

Since January, the company had been undertaking an entitlement offer to eligible shareholders to raise $10.4 million, with the net proceeds used to fund plant upgrades and working capital.

Due to close on February 19, the company extended the offer to March 17 “to allow several external investors time to complete their due diligence”.

Following advice from ASX, the offer was terminated.

Export milestones

Despite reporting a loss of $19.32M for the 2024 financial year, Centrex’ Ardmore operations appeared to be progressing well towards scaling up production of beneficiated phosphate to 625,000 tonnes per year.

In its annual report released in September, Centrex reported it had sold just over 116,000t of beneficiated phosphate concentrate in the year to June 30.

This was an increase of 155 percent on the FY23 sales total of 45,590t.

The company was also progressing a plant upgrade which was expected to enhance processing capacity by up to 140t per hour.

It recently secured a $2M grant from the Qld Government, and is expected to receive a loan of up to US$3.45M from Export Finance Australia.

In December, it completed a record shipment of 30,550t of beneficiated phosphate concentrate exported from the Port of Townsville.

Logistics, cashflow concerns

Despite operational wins, Centrex faced headwinds during FY24 year which may have contributed to the ultimate decision to place the company into administration.

In September, managing director Robert Mencel noted freight expenses for the year had increased 145pc from $8.34M to $20.43M.

Of this figure, a significant figure was owed to rail freight cost operator, Aurizon, including an estimated $4.15M contract minimum charge.

On January 3, Centrex announced it had reached a strategic agreement with logistic providers, including Aurizon, which restructured the terms of supply to “enable Centrex to meet debts owed to those suppliers”.

“The nature of the restructure involved certain security arrangement with Aurizon, including general security, guarantees and forbearance, so as to enable the company to proceed with confidence to a capital raising,” Centrex said in a statement published to the ASX.

Mr Mencel said the agreements “strengthen our working capital position and provide a pathway to completing the Stage 1.5 Expansion”.

“We are grateful to our suppliers and financiers for their support and partnership,” Mr Mencel said in a statement.

“I now have greater confidence in Centrex’s ability to unlock the potential of the Ardmore Rock Phosphate Mine.

“Although the company has suffered from cash flow issues, current and projected operations at Ardmore will benefit from strong phosphate prices, a strengthening US dollar, and declining operating costs.”

Robbie Katter represents the north-west Qld electorate of Traegar in the Qld Parliament.

Government intervention needed

Traeger MP Robbie Katter, whose state electorate covers north-west Qld, has pointed to the high cost of using the rail line as a barrier for future investment, and one reason behind Centrex’s financial issues.

He said it was the only length of track in Qld that must be completely funded by users, as opposed to being propped up by the Qld Govt and utilised as an economic enabler.

Mr Katter called for an immediate restructure of the way the Qld Govt manages the Mount Isa-Townsville Rail Line.

“I have been in talks with [Centrex] and they have explained to me the economics just do not stack up, particularly around the cost of logistics and what they are having to spend getting their product to port,” Mr Katter said.

“Two-thirds of their operating costs were going on logistics alone, and that is many tens of millions of dollars annually.

“Queensland Rail has refused to use legal avenues available to them to provide discretionary pricing to this, and other, projects and sadly this is the result.

“Had those road and rail access charges been halved or at least reduced, we may have had a very different outcome here.”

Mr Katter said, due to the Mount Isa line’s pricing conditions, Centrex’s closure would have flow-on effects to other users down the track

“It is perverse, but once capacity goes out of the line, Queensland Rail then assesses how it can make up for that loss by passing on additional costs to other users.”

Aurizon statement

Aurizon provided an update to the ASX on March following the Centrex announcement as well as noting the recent South Australian Government decision to place GFG Group’s OneSteel operation at Whyalla also a rail-freight user, into administration.

The company said it was owed approximately $50M in total from both customers.

“Aurizon holds security over certain assets for both customers and, in conjunction with the respective administrators, will assess options regarding the enforcement of those respective security interests to recover amounts outstanding, in addition to engaging with the administrators in relation to the continuation of services,” the statement said.

“Aurizon is working with the administrators, who are continuing to operate the businesses of Centrex and Agriflex with a view to assessing possible restructuring options.”

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