New Zealand-based Chatham Rock Phosphate has bought the Korella phosphate mine in North West Queensland.
Chatham Rock told the ASX it was paying $12.3m to buy the mine from Australia Venus Resources and shareholders will now proceed with the acquisition subject to conditions.
The Korella Mine is located 150km southeast of Mount Isa and adjoins Incitec Pivot's Phosphate Hill Mine.
The mine is on a mining lease in force until 2033 covering 1602 ha of grazing land on Chatsworth Station in Cloncurry shire and is connected by sealed road to Cloncurry with the Phosphate Hill rail line just 3km to the north.
Chatham Rock said that while export options through Townsville port have been considered, the Korella Mine will predominantly service the growing domestic demand for competitively priced fertilisers.
Exploration at Korella started in 2007 and resulted in the discovery of a shallow phosphate ore body.
A trial mining operation at Korella in 2015 recovered and stockpiled over 10,000 tonnes of direct shipping phosphate from a shallow open cut. The stockpiled phosphate remains on site and will provide early cash flow with sales directly from the mine.
Chatham Rock said Korella phosphate was low cadmium, direct application phosphate, with a low carbon footprint, suitable for the organic and regenerative farming sector and with rising fertiliser prices and restricted supply, Korella phosphate is also being considered as a lower cost source of phosphate for general agriculture.
The Korella mine is planned to operate on a campaign mining basis, contract operated, delivering selectively mined phosphate to the mine storage areas. Another contractor crush on demand to meet market requirements.
Production at Korella is expected to commence after the transfer of the lease to Chatham's wholly-owned Australian subsidiary, Avenir Makatea Pty Ltd, trading as Korella Fertilisers.
Chatham Rock said as the phosphate ore will be contract-mined and crushed, their capital costs were expected to be low and they were finalising a detailed overall capital budget for the recommencement of the mine operation.
"The acquisition of the Korella Mine, along with cash flow from early sales of stockpiled phosphate, is a further game changer for the expanding Chatham group transforming the company from developer to producer," the company said.
"The acquisition of Korella is the next step in our strategy to building an international phosphate mining and trading house with a focus on low cadmium, organic phosphate."
Exploration within the mining lease has also identified yttrium, a rare earth element resource with other valuable heavy rare earth elements such as dysprosium and neodymium, and recovery options will be the subject of ongoing investigations.
The purchase will be funded by a cash payment of $300,000), a $2m issue of shares and $10m in royalties payable for the first million tonnes of rock phosphate sold.
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