Thursday’s announcement caused Centrex’s share price to triple from $0.04 to $0.12 at the close of the ASX.
The South Australian iron ore developer that re-positioned itself as an organic fertiliser producer trucked its first sales out of the far west Queensland project in August.
The initial conditional term sheet agreement is for the first three years of production of phosphate from Centrex’s Ardmore Phosphate Rock Project 130km south of Mount Isa, where it plans to ramp up production to 800,000 tonnes a year.
Better known for its electronic devices such as televisions and mobile phones, Samsung is one of the world’s largest fertiliser traders with representatives in 43 countries.
This month Centrex also launched its market-facing subsidiary Agriflex and will soon ask shareholders to remove Metals from its name, shrugging off its iron ore roots, which began in the early 2000s with several undeveloped projects on Eyre Peninsula.
Samsung will provide Agriflex with marketing services for sales of 20 per cent of production or 160,000 tonnes per year. It will also assist Centrex with sales of additional quantities not taken up by other off-takers.
Conditions of the Samsung deal include the Agriflex board final approval and financial close to proceed with the 800,000 tpa processing plant in Queensland and the commencement of production there.
Centrex managing director Robert Mencel said the agreement with Samsung cemented the company’s transition from a traditional exploration and mining to a contemporary resource company.
“We are committed to positioning Agriflex Pty Ltd as a leader in the agricultural sector providing an ever-growing range of phosphorus products, not just fertiliser,” he said.
“There is significant demand for low cadmium phosphate for a vast range of applications, but we will focus primarily on the fertiliser market in the immediate term whilst we progress other related interests, especially as the current market is very conducive to delivering value for our shareholders.
The term sheet agreement with Samsung is a fantastic launch pad for our Ardmore Phosphate Rock Project and will open many new doors for us, whether it’s new clients or access to funding opportunities.
Centrex estimates a full-scale processing plant to take its production to 800,000 tonnes a year will cost about $78 million.
Mencel joined Centrex in May and has 25 years of experience as an engineering and mining executive developing and operating a wide range of mining, mineral processing and engineering operations.
His previous roles included CEO of the Republic of Nauru’s phosphate company RONPHOS where he was responsible for the production, marketing and export of phosphate.
This included dealings with Samsung.
Centrex listed on the Australian Securities Exchange in 2006 with the aim of developing several iron ore projects on South Australia’s Eyre Peninsula.
But in 2015 the company decided to step back from iron ore as a result of low global prices. It sold off its South Australian assets and dissolved its joint ventures, returning more than $30 million to shareholders in the process.
It then pivoted to become a fertiliser focused project developer and picked up the Oxley Potassium Project near Geraldton, Western Australia, in 2015 and acquired the Ardmore project from Incitec Pivot for $5 million in February 2017.
While the WA potassium project seeks a partner to advance it to the next stage, Centrex has recently pushed ahead with Ardmore after the phosphate price last year recovered to about US$125 a tonne from US$70 a tonne where it had hovered for almost two years.
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