Centrex Targets 625ktpa Phosphate Output with $10.4M Capital Raise at $0.012 per Share

Correction and Context

Centrex Limited (ASX:CXM) has issued a correction to its corporate presentation title, updating it from January 2024 to January 2025. This seemingly minor amendment underscores the company’s ongoing efforts to keep investors informed about its current operational and financial status as it advances key projects.

Stage 1.5 Expansion at Ardmore

At the heart of Centrex’s update is the Stage 1.5 Expansion of its wholly owned Ardmore Phosphate Project in Queensland. The expansion aims to increase the plant’s production capacity to 625,000 tonnes per annum (ktpa) of beneficiated phosphate concentrate. This upgrade includes a phosphate plant enhancement designed to boost processing capacity to 140 tonnes per hour, alongside improvements to tailings management and worker facilities.

The company anticipates completing the plant upgrade within approximately six months following the successful close of its Entitlement Offer, targeting early September 2025. Operating costs are projected between A$170 and A$180 per tonne FOB Townsville, reflecting a competitive cost base in the phosphate sector.

Entitlement Offer and Financial Position

Centrex has launched a pro-rata, non-renounceable Entitlement Offer to raise approximately A$10.4 million by issuing new shares at A$0.012 each, representing a significant discount to recent trading prices. The offer includes free attaching options, providing additional value to investors. The minimum subscription threshold is set at $9 million, below which the offer will not proceed.

Strategic agreements, notably a deed of forbearance with Aurizon Operations Ltd and a forbearance agreement with National Australia Bank (NAB), have bolstered Centrex’s working capital and reduced current liabilities from approximately $27.5 million to $17 million as of December 2024. These arrangements provide critical breathing room for the company to execute its expansion plans.

Operational and Market Outlook

Centrex’s Ardmore project benefits from its status as Australia’s only commercial phosphate concentrate producer and exporter, with established offtake agreements spanning key markets including Australia, New Zealand, South Korea, Taiwan, and India. The company’s phosphate concentrate is high-grade and low in impurities, commanding a premium in the Asia-Pacific region.

Global phosphate demand is forecast to grow steadily, driven primarily by fertilizer needs and emerging applications such as lithium iron phosphate batteries. While phosphate prices are expected to remain historically elevated over the medium term, Centrex’s cost structure and strategic location position it well to capitalize on market opportunities.

Risks and Challenges

Despite the positive outlook, Centrex faces significant risks. The company’s ability to continue as a going concern hinges on the successful completion of the Entitlement Offer and securing additional funding as needed. Failure to meet funding targets could lead to operational curtailments, asset sales, or even jeopardize the company’s viability.

Operational risks include potential delays or disruptions at the Ardmore mine, transport logistics challenges, and exposure to commodity price volatility. The company’s reliance on third-party contractors and infrastructure providers adds further complexity. Additionally, dilution risk is notable, with the share count expected to double post-offer, potentially impacting existing shareholders.

Looking Ahead

Centrex’s immediate focus is on closing the Entitlement Offer and advancing the Stage 1.5 Expansion to unlock higher production capacity and improved cost efficiencies. The company’s strategic agreements and operational progress provide a foundation for potential growth, but execution risks remain. Investors will be watching closely for updates on funding outcomes and operational milestones in the coming months.