Wonarah Phosphate, Northern Territory

Background

Recent dramatic price rises for phosphate rock have changed the economics of this project.

Discovered in 1967, the previous explorers defined very extensive rock phosphate mineralization.  One of them, Rio, made an unclassified estimate of the mineralization as 1955Mt at 14.4% P₂O₅ for the northern part of the field only.

It subsequently advised a 72Mt resource at 23% P₂O₅ in an upper stratigraphic unit of the Main Zone deposit which generally lies beyond the boundaries of the lower grade 1955Mt estimate.  The main deposit is located immediately adjacent to the bitumen Barkly Highway which joins Tennant Creek and Mt Isa and lies under an average thickness of cover of 40m.

Rio completed an economic study in 2002 and found that development could not be justified at the phosphate price of the time.  In early 2007 Minemakers and some potential international parties re-assessed the capital and operating cost estimates, and conducted a fatal flaw overview and found that, at the then price of US$50/tonne FOB, mining would still not be economic.

Mineralization is controlled by palaeohighs, and some 12-16kms southwest of the Main Zone, outcropping mineralization over a 2km strike and at good grade was located at the Arruwurra Prospect.  It was only lightly drilled towards the end of Rio Tinto's involvement.

Minemakers has recently announced that it has agreed the terms to purchase the 10% clawback right over the initial tenements it acquired, and it has also secured the ground over the known phosphate extent in the district by making additional tenement applications in its own right. 

Price trends and outlook

During latter 2007 there were some fundamental changes to the world rock phosphate supply and demand situation and a strong increase in price.  Important factors were:

• Increasing demand for general food production.
• A strong increase in plantings of biofuels crops and the need for additional fertilizer.
• Increased demand by China and cessation of exports.
• Tight supplies from Middle Eastern and North African suppliers.

At the end of 2007, phosphate prices were rising very strongly and attained US$200/tonne, up from around US$50/tonne at the start of the year.

The outlook looks very positive and the strong oil price is likely to lead to even greater production of biofuels.

Current Minemakers situation

Based on the early 2007 financial study, a world price approaching A$100/tonne was required.  By year end, world price was well over double that.  If that is sustained, there is potential for a highly profitable operation.

Minemakers' Plans

• Commit to feasibility.
• This will include a drill-out of the Main Zone and a drill assessment of the Aruwurra prospect.
• Aim initially for a trucking and rail haulage operation resulting in export from Darwin railhead and port.
• Later, look to a rail link to site, and the potential for economic downstream processing to produce phosphate fertilizer.

Figures:

Locality Map 160 kb PDF enlargement

Wonarah Phosphate Project 274 kb PDF enlargement

World Phosphate Export 183 kb PDF enlargement