Korab Resources Limited [ASX:KOR] - Phosphate and rare earths at Rum Jungle
Korab Resources provided update regarding Geoslec phosphate and upcoming work programs targeting additional phosphate, uranium, rare earths, and polymetallic mineralisation at Batchelor and Green Alligator projects located near the town of Batchelor in the Rum Jungle mineral field 70km south of Darwin.
Following our review of data produced by previous field exploration programs, Korab plans to commence reverse circulation and diamond drilling around Batchelor. The aim of this part of the program will be to increase phosphate inventory and to test phosphate, uranium and rare earths anomalies located nearby. Uranium Australia Limited, which has uranium joint venture with Korab over the Batchelor and Green Alligator projects, will contribute to the costs of this part of the program. In conjunction with the program targeting phosphate, uranium and rare earths, Korab plans to drill-test nickel, titanium and base metals anomalies which are located within Batchelor and Green Alligator projects and which were reported to the market in 2010 and early 2011. Negotiations regarding the two off-take agreements for bulk sales of phosphate rock reported on 24 December 2010 and 4 February 2011 are still incomplete. Nonetheless, subject to receiving all required permits and approvals, Geols ec intends to commence quarrying of soft phosphate rock this calendar year.
Un-processed rock suitable for direct application to pastures and fruit plantations sells for between AU$600 and AU$800 per tonne (wholesale) and between $1,000 and $1,300 per tonne (retail). This is substantially higher price than the prices paid for phosphate rock suitable for processing into phosphoric acid and soluble fertilisers (AU$150-AU$180 tonne).
Geolsec’s indicative cost for the production of soft phosphate rock are as follows:
• Indicative operating cost for un-processed, un-ground phosphate rock ~ $30 per tonne.
• Indicative operating cost for un-processed, ground-up phosphate rock suitable for direct application ~ $70 per tonne in 1 tonne bulk bags and ~ $100 per tonne in retail-size 15-20 kg bags.
Whilst the near-term, substantial cashflow from low-priced bulk sales under the potential off-take agreements is very attractive, and Korab continues to pursue this avenue, we are also cognisant of the fact that the direct application market is considerably more lucrative and is offering much larger profit margin. Therefore Korab’s preference would be to channel greater proportion of Geolsec phosphate rock into the more profitable direct application market rather than sacrifice higher profit margin for the sake of higher volumes achieved at much lower prices.
Geolsec deposit is located on a granted mining lease ML27362, 3 km from the regional centre of Batchelor in close proximity to the Darwin port allowing for easy access to most ports in Asia and Australia. Local infrastructure includes road, rail, high-voltage power, potable water and piped gas. Korab is intending to develop the Geolsec deposit as a simple quarrying operation with low environmental impact and low operating costs using local contractors. Since no chemical processing of phosphate rock is involved and all basic infrastructure is in place, the CAPEX and start-up costs are estimated at between $200,000 and $300,000.
Korab Resources provided update regarding Geoslec phosphate and upcoming work programs targeting additional phosphate, uranium, rare earths, and polymetallic mineralisation at Batchelor and Green Alligator projects located near the town of Batchelor in the Rum Jungle mineral field 70km south of Darwin.
Following our review of data produced by previous field exploration programs, Korab plans to commence reverse circulation and diamond drilling around Batchelor. The aim of this part of the program will be to increase phosphate inventory and to test phosphate, uranium and rare earths anomalies located nearby. Uranium Australia Limited, which has uranium joint venture with Korab over the Batchelor and Green Alligator projects, will contribute to the costs of this part of the program. In conjunction with the program targeting phosphate, uranium and rare earths, Korab plans to drill-test nickel, titanium and base metals anomalies which are located within Batchelor and Green Alligator projects and which were reported to the market in 2010 and early 2011. Negotiations regarding the two off-take agreements for bulk sales of phosphate rock reported on 24 December 2010 and 4 February 2011 are still incomplete. Nonetheless, subject to receiving all required permits and approvals, Geols ec intends to commence quarrying of soft phosphate rock this calendar year.
Un-processed rock suitable for direct application to pastures and fruit plantations sells for between AU$600 and AU$800 per tonne (wholesale) and between $1,000 and $1,300 per tonne (retail). This is substantially higher price than the prices paid for phosphate rock suitable for processing into phosphoric acid and soluble fertilisers (AU$150-AU$180 tonne).
Geolsec’s indicative cost for the production of soft phosphate rock are as follows:
• Indicative operating cost for un-processed, un-ground phosphate rock ~ $30 per tonne.
• Indicative operating cost for un-processed, ground-up phosphate rock suitable for direct application ~ $70 per tonne in 1 tonne bulk bags and ~ $100 per tonne in retail-size 15-20 kg bags.
Whilst the near-term, substantial cashflow from low-priced bulk sales under the potential off-take agreements is very attractive, and Korab continues to pursue this avenue, we are also cognisant of the fact that the direct application market is considerably more lucrative and is offering much larger profit margin. Therefore Korab’s preference would be to channel greater proportion of Geolsec phosphate rock into the more profitable direct application market rather than sacrifice higher profit margin for the sake of higher volumes achieved at much lower prices.
Geolsec deposit is located on a granted mining lease ML27362, 3 km from the regional centre of Batchelor in close proximity to the Darwin port allowing for easy access to most ports in Asia and Australia. Local infrastructure includes road, rail, high-voltage power, potable water and piped gas. Korab is intending to develop the Geolsec deposit as a simple quarrying operation with low environmental impact and low operating costs using local contractors. Since no chemical processing of phosphate rock is involved and all basic infrastructure is in place, the CAPEX and start-up costs are estimated at between $200,000 and $300,000.
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