The Pulse: Phosphate takeover time; RE stock snapshot; New potash play; Chinese expert: gold is being rigged
First, Oman-owned Mawarid Mining has almost certainly grasped a marine phosphate project off the coast of Namibia. Second, a Canadian gold miner has entered the race for a phosphate project in the centre of Australia.
The Sandpiper phosphate project, 12km southwest of Walvis Bay, Namibia, has had a contentious history. It was jointly owned by two Australian companies, UCL Resources (ASX:UCL) and Minemakers (MAK), the latter also owning the huge Wonarah phosphate deposit in Australia’s Northern Territory. There was a long drawn-out battle as each of the Namibian project partners tried to take over the other, the stalemate broken when Oman’s Mawarid Mining made an offer to acquire the Minemakers’ stake – which was accepted.
Well, now Mawarid has moved to acquire UCL with a cash offer 182% above the Australian’s company’s share price the previous day. The largest shareholder in UCL (after Mawarid) accepted the offer for his 33%.
The Sandpiper marine project is 115km long and 25km wide and the resource totals more than 200 million tonnes average just under 20% phosphate. The plan is to dredge it at a cost of $52.50 a tonne.
The deal is a let-out for UCL: it was facing having to raise as much as $90 million for its share of the project development, a tall order for a low-priced junior at a time when investors are closing their wallets in regard to junior mining companies.
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Meanwhile, Canada’s Monument Mining (TSX.V:MMY) has come in over the top of another bidder for a project that has – according to the target company – the potential to hold up to 1 billion tonnes of phosphate.
Before we get to those details, why is a gold company bidding for a phosphate project? The Canadian company owns the Selinsing gold project and Mengapur polymetallic project in Malaysia. Here is Vancouver-based Monument’s explanation: “As part of the planned operation of Monument’s Mengapur polymetallic project, one of the main by-products will be sulphuric acid. In combination with an adequate supply of phosphate rock, it is intended that Monument will manufacture a range of high-grade fertilizer products. Accordingly, sourcing a large and stable supply of phosphate rock is a core component of our long-term strategic objectives.”
So it is proposing to make an offer for Central Australian Phosphate (ASX:CEN) and its Arganara deposit in the Northern Territory. The Canadians are talking A3.1c a share.
Only one complication: CEN is already under a takeover bid from Rum Jungle Resources (ASX:RUM). RUM offered A2.15c consisting of cash plus shares. As I reported when the RUM offer landed, the two companies have adjacent projects in the Northern Territory and RUM’s plan is to amalgamate the two operations, prove up a 1 billion tonne resource and attract some big finance. The deposits lie just 80km from the transcontinental railway that runs north to the port of Darwin and the shipping lanes across the Timor Sea to Asian markets.
RARE EARTHS: Australia’s rare earth players can’t seem to take a trick. Even with good news, investors keep their arms folded. Lynas Corp (ASX:LYC) which has overcome extraordinary problems in Malaysia, has its shares on Wednesday morning sitting at A48.7c, just a fraction above the 52-week low and well off the 52-week high of A$1.15. Alkane Resources (ASX:ALK) is well on the way to becoming a successful producer, but its 53c share price must be a continuing disappointment to executives there. Hastings Rare Metals (ASX:HAS) at A5.5c is well off its 15.5c high last year.
And, while so many rare earths projects have development costs that cost a lot closer to $1 billion than $100 million, you would have to be frustrated if you were running Crossland Uranium Mines (ASX:CUX) with a share price of just A2.8c. This company’s Charley Creek project has a development price tag of a comparatively modest A$156 million, with annual running costs of A$85.4 million and projected revenues of A$154 million. Moreover, that includes a refinery on site producing 10,000 tonnes a year of concentrate – which, moreover, will consist of 18% heavy rare earths.
No one can say when the climate will change for REE stocks, but those in the business will be hoping (much) sooner than later.
POTASH: Add another project to your list. Sheffield Resources (ASX:SFX) says it has secured tenure over 32km of strike length near Three Springs, Western Australia. The company says the target is an unconventional, hard rock style of mineralisation – very similar geologically to the Cerrado Verde hard rock project in Brazil, owned by Verde Potash (TSX:NPK).
GOLD: Song Hongbing, author of the popular Currency Wars series of books, provided a quote to China’s Security Times on the reasons for the recent collapse in the gold price.
“This is a coordinated move led by the U.S. government that is averse to expensive gold,” he said, referring to the dumping of 400 tonnes of gold as the market opened in April 12. “There is no way it is normal. The massive scale of selloff is unprecedented. So it must have been a planned and organized manipulated move … Neither a slowdown in China’s economy nor the feared gold selloff by the government of Cyprus was enough to inflict the damage. They were played up by media to assist the launch of the attack on April 12.
As early as April 3, a message appeared online that says the United States would launch an assault on gold in April. This means the plan was leaked. Rising gold prices would impede the recovery of the U.S. economy, which depends primarily on a recovery in asset prices. This is why the United States does not like to see the price of gold rising.”
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