Centrex exported an impressive 19kt of phosphate in 2Q23

Nick Sundich Nick Sundich, January 18, 2023

It is still only early days for Centrex‘s (ASX:CXM) Ardmore phosphate project, but there are very positive signs out of the company. After selling a trivial amount in 1Q23, the company revealed that it sold a total of 19,675t of phosphate in its latest quarter. 

 

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19kt of phosphate from Ardmore

The company sold a total of 19,675t of phosphate from Ardmore. 12,175kt of this was sold to existing clients Balance Agri-nutrients and Ravensdown, which are both New Zealand agricultural co-operatives.

The company recorded $7.5m in receipts from customers during the quarter. Although it recorded a $481,000 outflow from operations activities, this was much lower than the $7.6m outflow last quarter when it had minimal receipts from customers.

Centrex has $5.1m in cash, enough to last two and a half years at current burn rates, although we think the cash burn rate will slow in the coming quarters or may turn positive given the production ramp up and phosphate prices at the moment.

 

Elevated prices persist

The phosphate price has remained elevated at US$300/t, 140% ahead of the US$125/t used in the August 2021 DFS.

This price has not been reflected in this quarter’s shipments from Ardmore because the early deals were signed at lower prices.

Nevertheless, the continued elevated phosphate price is a good sign for shareholders, giving confidence that Centrex will be able to ship phosphate from Ardmore at higher prices down the track. 

 

What’s next?

Centrex told shareholders there were three things for shareholders to look forward to from Ardmore in the coming months. First, increased sales of phosphate – it anticipates selling 26,000 tonnes in the March Quarter and 45,000 tonnes in the June Quarter.

Second, Centrex is continuing work on Stage 1.5 of Ardmore, which will expand capacity to 625kt, up from 240kt today.  

And thirdly, it expects to finalise long-term offtake agreements early in CY21.  

 

Centrex is exceeding expectations  

Last November, our parent company Pitt Street Research valued Centrex at A$0.32 per share base case and A$0.63 cents per share optimistic case using the DCF approach, using reasonable assumptions on the phosphate price, the obtaining of finance and its meeting of forecasted timelines for development.

Given that the modelling assumed 84kt during FY23, but Centrex is on track for 91kt, the company is exceeding expectations!

We expect the market will start to pick up on this story, which would be good for CXM’s share price down the line.

 

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