$568 million Verdant Ammaroo phosphate mine twist

THE future of the proposed $568 million Verdant Ammaroo phosphate mine in the Barkly region has taken an interesting twist with the junior miner urging shareholders to vote in favour of a $40.5 million takeover by a foreign-owned private equity group

THE future of the proposed $568 million Verdant Ammaroo phosphate mine in the Barkly region has taken an interesting twist with the junior miner urging shareholders to vote in favour of a $40.5 million takeover by a foreign-owned private equity group

THE future of the proposed $568 million Verdant Ammaroo phosphate mine in the Barkly region has taken an interesting twist with the junior miner urging shareholders to vote in favour of a $40.5 million takeover by a foreign-owned private equity group.

It is hoped that the mine will unlock the door to a fertiliser manufacturing industry in the Territory, bringing 300 jobs in construction and a further 165 jobs in ongoing operations.

Verdant Minerals has entered into a Scheme Implementation Agreement (SIA) relating to the acquisition by London-based private equity firm CD Capital of all of the issued shares in Verdant, other than shares held by major shareholder Washington H. Soul Pattinson (WHSP).

Verdant Minerals investors are expected to vote on CD Capital’s scheme implementation agreement on June 5, 2019.

Verdant investors would then receive 3.2 cents per share held as at the scheme record date of June 17, 2019.

The offer represents a 113 per cent premium to the 1.5-cent closing price on the last trading day before the proposed scheme was unveiled to the market.

Verdant Minerals managing director Chris Tziolis supports the CD Capital proposal.

“The advancement of the Ammaroo Phosphate Project will require significant capital which, at the market capitalisation and share price prior to the offer, is highly unlikely to be raised from existing shareholders and without very significant dilution,” Mr Tziolis said.

“Subject to an independent expert’s report and in the absence of a superior competing proposal, I have voted with my fellow independent directors to recommend CD Capital’s proposal to VRM’s shareholders.”

Mr Tziolis said, if the takeover was successful, CD Capital would end up with about 66 per cent of the company, with Washington H. Soul Pattinson and Company Limited keeping its share of 33 per cent.

He said shareholders would hopefully seize the opportunity.

The proposed Territory phosphate project is on Ammaroo Station, on Alyawarre country, 22km from the community of Ampilatwatja, about 200km southeast of Tennant Creek.

Verdant has already achieved several milestones on the long road to start up.

The NT Government awarded the project major status in 2017. The feasibility study found a business case to produce one million tonnes per annum of phosphate rock concentrate before doubling the quantity in year six. The mine’s life is expected to be around 20 years.

Other key infrastructure including a rail spur line, gas pipeline and water supply infrastructure would form part of the initial stage construction. The feasibility study estimated stage one would cost $368 million while stage two, which includes doubling the tonnage output two million tonnes per annum, would cost $200 million.

“The project also represents a compelling opportunity for large scale global participants in the fertiliser industry to build downstream phosphoric acid and fertiliser production capacity in Northern Australia,” the study found.

Last year Ammaroo phosphate mine received Federal Government environmental approval. It also attracted the attention of the Federal Government’s Northern Australia Infrastructure Facility (NAIF), which provided Verdant Minerals with a pathway towards receiving a long-term concessional loan of up to $160 million.

The NAIF continues to work with Verdant Minerals as it looks to meet the conditions in the indicative term sheet to move towards a final investment decision on financial assistance from NAIF.