One Materials Company Having Decent Prospects Over Long-term- Chatham Rock Phosphate Limited

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One Materials Company Having Decent Prospects Over Long-term- Chatham Rock Phosphate Limited

 One Materials Company Having Decent Prospects Over Long-term- Chatham Rock Phosphate Limited
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As the market players know, the COVID-19 pandemic has significantly impacted the broader equity market as well as the companies. The lockdowns were imposed in order to restrict the spread of COVID-19 pandemic which impacted several companies. The operations of numerous companies were impacted and the impact was visible in the share prices. However, now there are some companies which are expected to witness a decent performance moving forward. This company is possessing a decent outlook and it is progressing towards its objectives. The stock price of this company has managed to deliver a return of ~33.8% in the time span of just one month.

Chatham Rock Phosphate Limited

Summary

  • CRP recently declared the commencement of a prefeasibility study for the production of Dicalcium Phosphate (or DCP) from the Korella as well as Korella South phosphate projects in Queensland.
  • The Makatea project in French Polynesia is expected to deliver 250,000 tpa, which is likely to start in 2024 and the Korella mine is anticipated to generate 250,000 tpa starting in 2022.
  • Chatham Rise project has the potential to be fully permitted as well as in production by 2027 at the rate of 1.5 million tpa.

CRP Details

Chatham Rock Phosphate Limited (NZX: CRP) is the New Zealand’s custodian of material resource of environmentally friendly pastoral phosphate fertiliser. The company intends to be the leading provider of direct application phosphate to the New Zealand as well as global agricultural sector.

Q3FY22 Result Performance (For the Quarter Ended 30 September 2021)

  • The company reported an increase in the net loss to CAD0.18 million in Q3FY22, compared to a loss of CAD0.13 million in Q3FY21.
  • Group’s current assets surpassed its current liabilities by CAD1.04 million as on 30 September 2021 (March 31, 2021: current assets exceeded its current liabilities by CAD0.43 million).
  • The group witnessed operating cash outflows of $0.23 million during the period against $0.18 million in Q3 FY 2021.
  • The cash balance at the end of the period amounted to $0.71 million (September 30, 2020: $78,166).

Total Assets

Source: Company Reports, Analysis by Kalkine Group

Advancement At Its Korella Dicalcium Phosphate Project

In the press release dated 17 January 2022, the company stated that it has taken an additional step forward to its phosphate production with planned manufacturing of Dicalcium Phosphate (DCP) at Korella South. The company declared the commencement of a prefeasibility study for the production of Dicalcium Phosphate (DCP) from the Korella as well as Korella South phosphate projects in Queensland.

Please Read: Chatham plans Dicalcium Manufacturing at Korella South

Strategy Update

Over the past year, the company has grown from a single project company having a difficulty of uncertain and expensive permitting to a fast-growing group of projects and on the verge of generating operating cash flows. The prospects are further enhanced by higher phosphate prices that are currently at 10-year highs.

As part of the initial step of the company’s strategy, CRP acquired the Avenir Makatea to set up an international phosphate mining and trading house along with an emphasis on low cadmium, organic phosphate.

The Makatea Project in French Polynesia is expected to generate 250,000 tpa and is likely to start in 2024. Further, the acquisition of the fully permitted Korella phosphate mine in Queensland, Australia was the second step with the ability to produce positive cash flows in 2022. The Korella Mine is expected to produce 250,000 tpa starting 2022. 

Do Read: 3 NZX penny stocks turning heads today despite a weak market

Stock Information

Driven by the existence of rare earth elements in Korella as well as potentially Korella South offers the push for its wholly owned Pacific Rare Earths Limited to undertake strategic partnerships to beneficiate REE from these 2 projects. 

By 2026, the company is anticipating to be garnering substantial operating income  from Avenir Makatea, trading of granulated  fertilizers, as well as from the Dicalcium Phosphate manufacturing facility. 

CRP further intends to start dividend payments and funding the reapplication for a Marine (environmental) Consent for the Chatham Rise project.

Driven by the Chatham Rise operation, CRP’s overall strategy is for annual total sales of 2.43 Mn tonnes of phosphate/phosphate-based products.

The company plans to generate the first cashflows during calendar 2022 from the Korella Mine, and from phosphate rock trading.

Do Read: Chatham (NZX:CRP): What are its key milestones?

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