Centrex Metals’ (ASX: CXM) wholly-owned subsidiary Agriflex has appointed Samsung C&T Corporation as its marketing agent for fertiliser sales from the Ardmore phosphate project near Mount Isa in north Queensland.
As one of the world’s largest fertiliser traders, Samsung will sell Agriflex’s product into Korea, Japan, Indonesia, India and Mexico over an initial three-year term.
Under the conditions of a term sheet signed by the two parties, Samsung will market an annual quantity amounting to either 20% of product generated from Ardmore’s 80,000 tonnes per annum processing plant, or 160,000t (whichever is the lesser).
In addition, Samsung may also assist Agriflex with sales of additional quantities not taken by other offtakers.
Samsung will pay a market netback price for the product, defined as the actual sales price minus direct costs and a marketing service fee.
Conditions precedent for the agreement include approval from the Centrex board to proceed with the construction of the Ardmore processing plant as well as a final decision on financing arrangements for the project and start of production.
Centrex managing director Robert Mencel said the deal reflects “strong international interest” in the Ardmore project and its future production.
He said the company is also in advanced discussions with a number of other potential customers in Australia and overseas.
Agriflex and Samsung plan to eventually enter into a more detailed marketing services agreement which will replace and expand upon the conditions set out in the term sheet.
The Ardmore project is one of the few remaining undeveloped high-grade phosphate rock deposits in the world.
Centrex is in the process of building a phosphate rock export operation from the shallow deposit via open-cut strip mining without the need for blasting.
Once the high-grade ore is crushed to meet export sizing specifications, the fine-grained (mainly clay material) will be removed to leave a premium-grade concentrate product.
In August, an updated definitive feasibility study confirmed Ardmore to have a net present value of $207 million, a 52% pre-tax internal rate of return and a payback period of less than two years.