PhosCo's Quarterly Report: Updates on Tunisian Phosphate Projects and Corporate Changes
PHO (PHO) Share Update July 2024 Tuesday 23rd
PhosCo Provides Key Updates on Tunisian Phosphate Projects
PhosCo Ltd (ASX: PHO), an ASX-listed company focused on developing the Chaketma Phosphate Project in Tunisia, has released its quarterly activities and cashflow report for the quarter ending 30 June 2024. The report highlights significant progress in project development, ongoing legal actions, and key corporate changes.
Instant Summary:
- PhosCo engages with Tunisian government for new exploration permit over Chaketma.
- Application to seize TMS's 49% interest in Chaketma refused; new legal actions underway.
- Field work commenced at newly granted Ras Ghzir permit.
- Awaiting permits for Northern Phosphate Basin projects, including Chaketma, Sekarna, and Amoud.
- Appointment of Taz Aldaoud as Managing Director and Mehdi Ben Abdallah as Executive Director.
- PhosCo held cash of approximately A$0.5M at the end of June 2024 quarter.
- World Bank rock phosphate price reported at US$152.50/t as of 30 June 2024.
Engagement with Tunisian Government
PhosCo has been actively engaging with the Tunisian government, highlighted by recent in-country meetings with the Tunisian Minister of Industry, Mines, and Energy, H.E. Ms. Fatma Thabet Chiboub. In consultation with the Ministry, PhosCo's Chaketma project company, Chaketma Phosphates SA (CPSA), has applied for a new exploration permit over Chaketma, mirroring the original permit boundary.
PhosCo's application to seize the remaining 49% interest in Chaketma held by its joint venture partner, TMS, for non-payment of damages and costs (circa A$6.3M) was refused on appeal to the Court of Cassation. PhosCo has lodged a new seizure over TMS's 49% interest in CPSA in relation to the unpaid damages and is considering further legal options to enforce payment.
Field Work and Project Updates
Field work has commenced at the newly granted Ras Ghzir permit. The company is also awaiting the anticipated grant of permits that comprise its Northern Phosphate Basin project, including Chaketma (51% PhosCo) and the Sekarna and Amoud phosphate projects (both 100% PhosCo). Sekarna appears to mirror the stratigraphy and scale of the Chaketma Phosphate Project, lying 10km to the northeast. Amoud, the eastern neighbor of Sra Ouertane (a multibillion-tonne deposit), has the potential to create a regional-scale phosphate hub.
Corporate Changes
During the quarter, PhosCo materially strengthened its team by appointing Taz Aldaoud as Managing Director and Mehdi Ben Abdallah as Executive Director. Taz's role reflects his expanded responsibility for driving PhosCo's engagement with investors, government, and the community. Mehdi's extensive operational and leadership experience has proven invaluable to the company in a short time.
Simon Eley resigned as a director during the quarter, having contributed significantly to the company through its extended legal phase since joining in 2018.
Financial Position
PhosCo held cash of approximately A$0.5M at the end of the June 2024 quarter. The company continues to implement cost-saving measures to preserve cash while the status of the Chaketma exploration permit is resolved and pending the grant of the Sekarna exploration permit. The World Bank rock phosphate price was reported at US$152.50/t as of 30 June 2024.
The updates from PhosCo indicate a mixed impact on the company's stock. The ongoing engagement with the Tunisian government and the commencement of field work at Ras Ghzir are positive signs. However, the refusal of the application to seize TMS's 49% interest and the company's limited cash reserves may raise concerns among investors. The appointment of experienced directors is a positive step that could help in navigating these challenges.
Investor Reaction:
Analysts have noted the positive developments in project engagement and field work but remain cautious about the legal challenges and financial constraints. Investor reactions have been mixed, with some expressing optimism about the new leadership team and others concerned about the legal and financial hurdles.
Conclusion:
Investors should closely monitor PhosCo's ongoing legal actions and the progress of its exploration permits. The company's ability to secure permits and resolve legal issues will be crucial for its future success. The new leadership team brings valuable experience that could help in overcoming current challenges. Staying informed about these developments will be key for making informed investment decisions.