Sunkar Resources PLC: Operations Update
December 12, 2013 (Source: Sunkar Resources) — Sunkar (AIM: SKR) is pleased to announce the following operational results.
Earth Moving Contracts
During the period from 1 January to 1 November 2013, the Company’s wholly owned subsidiary, Temir Service LLP (“Temir”) generated overall revenue of $11.7 million from two earth-moving contracts for the construction of a rail track foundation on a stretch of the new railway line from Beineu to Tassai stations in Western Kazakhstan. Temir expects to complete the required earth moving works before the year end.
Subsoil Use Contract operations
As of November 30, 2013 the Company has mined 270,000 tons of phosphate ore under its revised ore mining commitment of 300,000 tonnes of rock per year. This volume has been achieved in two months of work during October and November this year. Management believes that this amount, which is above 90% of the target volume, will be sufficient to satisfy the relevant authority’s requirements under the Subsoil Use Contract, as the early onset of winter meant that mining activity had to be aborted earlier than expected.
Phosphate Rock and Direct Application Rock (“DAR”) sales
During the course of 2013 the Company expanded its target markets for Phosphate Rock and DAR flour sales and completed its first shipments to Eastern Europe, namely, Hungary, Estonia and Belarus. Although these shipments were for relatively small quantities, they mark another step forward for Sunkar as a developing phosphate fertilizer company.
NP fertilizer granulation project
The applications of trial quantities of DAR flour from Chilisai have increased gradually over the past 4 years. However, farmers, the end user of the product, have expressed concerns regarding the lack of specialized equipment required for DAR application. Most of these farmers have requested DAR to be shipped in granulated form, to enable the use of regular planting equipment during its application as farmers are typically using their planting equipment to apply other types of fertilizer.
DAR granulation can be accomplished after wet blending of DAR with nitrogen fertilizers such as ammonium nitrate or ammonium sulphate, whilst the Company currently has the equipment to produce the powder only form of DAR. According to the Company’s preliminary assessment, sales of granulated DAR within Kazakhstan and neighboring countries could reach 100,000 tonnes per annum.
As a result, the Company is currently examining the potential to produce DAR in granulated form. Temir has contracted the Sumy State Scientific Research Institute of Mineral Fertilizers and Pigments in Ukraine to run pilot plant tests on producing trial quantities of granulated DAR. The product will be an NP fertilizer in composition 11-11-0(note 3) and the pilot plant tests will provide design parameters for the front end design of an NP manufacturing facility. The pilot plant tests are in progress, and the Company is pleased to confirm that blending of DAR with ammonium nitrate has proved to be technically feasible. The presence of ammonium compounds in the granulated product will also increase availability of P2O5 nutrient, contained in phosphate rock, to crops.
The first samples of this NP fertilizer are now being sent to potential users in Kazakhstan in order to solicit preliminary orders. The tests reports and design parameters for the front end design are anticipated before year end, and Sunkar plans to complete a feasibility study, with regard to building a plant to produce NP fertilizer during the first half of 2014.
The Company will provide an update on further developments of the NP fertilizer granulation project as and when appropriate.
The management’s main goal remains the development of the chemical complex for the Chilisai Project to produce DAP/MAP. The management team is continuing to hold strategic partnership talks with a number of industry participants and financial institutions concerning the Chilisai Project, with the aim of achieving the Company’s objective of becoming a world-class vertically integrated phosphate producer. Further announcements will be made as and when appropriate.
Notes to Editors:
1. Sunkar Resources plc
Sunkar Resources plc, through its wholly owned subsidiary Temir Service LLP, operates a phosphate rock mine in Aktobe Oblast, North West Kazakhstan. Temir Service LLP holds a Subsoil Use Contract to part of the Chilisai Phosphate Rock Deposit. The contract area is estimated to contain 1,128 million tonnes of phosphate ore.
Sunkar’s strategy is to build a world class integrated ammoniated phosphate fertilizer plant with low operating costs. Sunkar’s low cost base derives from its near surface phosphate rock deposit and access to sulphur from the nearby North Caspian oil and gas fields.
2. Sumy State Scientific Research Institute of Mineral Fertilizers and Pigments
Sumy State Scientific Research Institute of Mineral Fertilizers and Pigments (Gos NII MINDIP) is the principal organization of the Ukrainian Ministry of Industrial Policy providing scientific and technical support for the production of phosphate compound fertilizers, organic- mineral fertilizers, inorganic pigments, paints, coagulants to treat potable water and sewage, and salts of inorganic acids.
3. NP 11-11-0 Fertilizer
All commercial bulk fertilizers are characterized by content of main plant nutrients. The NPK rating (or N-P-K) is used to label fertilizer based on the relative content of the chemical elements nitrogen (N), phosphorus (P), and potassium (K) that are commonly used in fertilizers. The N value is the percentage of elemental nitrogen by weight in the fertilizer. The values for P and K represent the amount of oxide in the form of P2O5 and K2O that would be present in the fertilizer if all the elemental phosphorus and potassium were oxidized into these forms.
Correspondingly the NP 11-11-0 fertilizer contains 11% N and 11% P2O5.
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