Centrex Targets $10.4M Capital Raise at $0.012 Per Share to Fund Ardmore Expansion

Centrex’s Strategic Capital Raise

Centrex Limited (ASX: CXM), Australia's sole high-grade phosphate rock producer and exporter, has launched a pro-rata, non-renounceable Entitlement Offer to raise approximately A$10.4 million. This capital raise is earmarked to finance the Stage 1.5 Expansion at its Ardmore Phosphate Project in Queensland, a move designed to elevate production capacity to 625,000 tonnes per annum (ktpa) of beneficiated phosphate concentrate.

The offer price is set at A$0.012 per new share, representing a significant discount to recent trading prices, reflecting the company’s urgent need to shore up its financial position. Eligible shareholders will also receive free attaching options, incentivizing participation in the offer.

Unlocking Production and Operational Efficiency

The Stage 1.5 Expansion centers on a comprehensive upgrade of the Ardmore phosphate plant, targeting a processing capacity of up to 140 tonnes per hour. The upgrade aims to minimize capital expenditure and operational downtime while improving product quality by reducing ultrafine deleterious materials.

Complementary infrastructure enhancements include a tailings facility upgrade to increase storage flexibility and expansions to workshops and camp facilities, supporting Ardmore’s transition to a larger-scale mining operation. The upgrades are expected to be completed within six months following the successful close of the Entitlement Offer, targeting early September 2025.

Projected operating costs post-expansion are estimated between A$170 and A$180 per tonne FOB Townsville, positioning Ardmore competitively within the phosphate market, especially given its high-grade concentrate and strategic location in the Asia-Pacific region.

Financial Position and Strategic Agreements

Centrex has recently strengthened its financial footing through strategic agreements, including a deed of forbearance with Aurizon Operations Ltd, its key logistics provider. This agreement has improved working capital by reducing trade payables and securing more flexible transport logistics terms, crucial for the ramp-up in production and shipment volumes.

Despite these improvements, the company’s cash position remains tight, with only A$0.48 million on hand as of December 31, 2024, supplemented by receivables of approximately A$4.1 million received in early January 2025. The Entitlement Offer is therefore critical to maintaining operational viability and meeting short-term working capital needs.

Risks and Market Context

Centrex’s announcement is candid about the risks inherent in the offer and the company’s operations. Failure to reach the minimum subscription of A$9 million could force drastic measures, including halting mining activities, asset sales, or seeking alternative funding under less favorable terms. The company also faces risks related to transport infrastructure, reliance on third-party contractors, and potential operational disruptions from weather or technical challenges.

The phosphate market outlook remains cautiously optimistic, with global demand forecast to grow steadily, driven by fertilizer needs and emerging uses such as lithium iron phosphate batteries for electric vehicles. Centrex’s high-grade product and established export relationships provide a solid foundation, but the company’s financial and operational execution will be pivotal in capitalizing on these market dynamics.

Looking Ahead

Centrex’s ability to successfully complete the Entitlement Offer and execute the Stage 1.5 Expansion will be closely watched by investors. The company’s next shipment is scheduled for early February 2025, signaling ongoing operational momentum. However, the path forward hinges on securing sufficient funding and managing the outlined risks effectively.