Centrex to Exit Iron Ore, Shift to Phosphate with Port Spencer Sale

Centrex Metals (ASX:CXM) has entered a contract with a local rural investment business to sell its Port Spencer landholding in South Australia for $1.4 million.

The deal, which is expected to go through in late February, is with FREE Eyre, a rural investment company based around South Australia’s Eyre Peninsula.

FREE Eyre’s goal is to develop new businesses and add value to the area’s rural community, and Port Spencer is located on the Eyre Peninsula’s east coast.

Centrex had made it to the feasibility stage with Port Spencer, which was to be primarily used for the export of bulk commodities in the region, including the company’s iron ore projects.

However, the company has been gradually shifting out of the iron ore business and towards the fertilizer market, with the sale of Port Spencer marking its official exit from iron ore.

The company plans to funnel the proceeds from the sale into developing its flagship Ardmore phosphate rock project in Northwest Queensland, which Centrex says is “fast approaching” production.

In early October, the company released a definitive feasibility study (DFS) and maiden ore reserve for Ardmore. The asset is set to have a 10-year mine life with annual production of 800,000 wet tonnes of phosphate concentrate. Its maiden ore reserve came in at 10.1 million tonnes at 30.2-percent phosphorus pentoxide of high-grade phosphate rock ore.

Shortly after the release of the DFS, Centrex signed its first contract for Ardmore with an unnamed major regional fertilizer manufacturer for a 5,000-wet-tonne trial shipment of phosphate rock concentrate.

The company anticipates startup operations at Ardmore will produce 30,000 wet tonnes of concentrate in mid-2019 to provide 5,000- to 6,000-wet-tonne trial shipments to “priority customers.”

Capping off Ardmore’s recent progress is the early December announcement that Centrex has received an environmental permit from the Queensland Department of Environment and Science for the project’s startup mining and processing operation.

According to Centrex, the approval also includes the installation and operation of a 70-tonne-per-hour modular wet processing plant.

The company’s share price closed flat on Monday (December 31) at AU$0.115.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.