PhosCo (ASX:PHO): Gasaat Already Had Enough Phosphate For A 46 Year Life, But It Could Go On Even Longer!

PhosCo has spent the last four years reshaping expectations for what the Gasaat Phosphate Project in Tunisia could become. The company began with two deposits, KEL and GK, and a Scoping Study that already delivered unusually strong economics for a project of its scale. What has unfolded since then is a steady broadening of the resource base, a deepening of geological confidence and, most importantly, the emergence of a development pathway that could support a materially larger, lower‑cost and longer‑life operation than the market had assumed.

Gasaat Has Another 20.2Mt And Potentially More To Come

The latest step in that evolution is the addition of 20.2 Mt at 20.5 % P2O5 from the maiden KM and SAB Mineral Resource Estimates, lifting Gasaat’s global resource to 166.6 Mt at 20.6 % P2O5. As the report notes, “KM carries an average strip ratio of just 0.4:1” and this is the detail that changes the complexion of the entire project.

The company has also confirmed a discovery at the DOH prospect, where eight drill holes intersected phosphate mineralisation over a 1,300 m strike and more than 600 m width, with 13 m drill thickness. It would be easy for investors to disregard it just because there is no MRE here just yet. But PhosCo believes a Resource could be even greater than KM and SAB, and this is the quiet but critical point. Gasaat is becoming a district‑scale system with multiple low‑strip, near‑surface ore sources that can be sequenced to maximise margins and accelerate early cash flow.

The most striking feature of Gasaat’s evolution is the consistency of grade and the repeatability of mineralisation across the basin. The original KEL and GK deposits already provided 146 Mt at around 20–21 % P2O5. The addition of KM and SAB lifts the total to 166.6 Mt, with 92 % now in the Measured and Indicated categories. That level of geological confidence is unusual for a project at this stage and reflects both the continuity of the phosphate horizon and the systematic nature of PhosCo’s drilling.

KM is the standout

KM is the standout addition. Its 12 Mt at 20.5 % P2O5 is not large in absolute terms, but its geometry is exceptional. A strip ratio of 0.4:1 is rare in global phosphate mining and almost unheard of in North Africa. Reported drill intercepts such as 53 m at 22.3 % P2O5 and 49.8 m at 22.4 % P2O5, indicate thick, high‑grade, near‑surface mineralisation ideally suited to a starter pit. SAB adds a further 8.2 Mt at 20.6 % P2O5 with a strip ratio of 2.6:1, still well below the 5.7:1 life‑of‑mine ratio assumed in the 2022 Scoping Study.

The more important point is that these deposits sit close to the proposed plant site. Lower haulage distances, lower mining intensity and higher early grades all compound into a meaningfully lower cost base in the first years of production. In a discounted cash flow model, those early years carry disproportionate weight. A cheaper starter sequence does not just improve margins; it accelerates payback, strengthens debt capacity and reduces financing risk.

DOH: the next leg of growth

If KM is the near‑term economic lever, DOH is the long‑term growth engine. The company has not yet published a maiden MRE for the prospect, but the spatial footprint alone suggests a deposit of meaningful scale. The document notes that DOH mineralisation extends over “a 1,300 m strike length and a width exceeding 600 metres”, and that the company believes the eventual resource “could be even greater than KM and SAB”. That is a significant statement, because KM and SAB together added more than 20 Mt to the project.

The 2022 Scoping Study modelled a 46‑year mine life using only KEL and GK. Gasaat now has four resource‑stage deposits and a fifth discovery that could be larger than the two most recent additions. The implication is clear. Gasaat is not a 46‑year project. It is a multi‑generational asset with the potential to support expanded production, extended mine life or both. The updated Scoping Study due in Q3 2026 will not capture the full DOH contribution if the MRE is not ready in time, but investors can already see the direction of travel.

A structurally advantaged project in a dislocated market

The timing of Gasaat’s expansion is fortuitous. The phosphate market is experiencing one of the most significant supply disruptions in decades. China has suspended phosphate fertiliser exports until at least August 2026, and the US‑Iran conflict has disrupted Gulf shipping routes that account for nearly 30 % of global phosphate trade. The report notes that DAP prices have risen above US$690/mt and are expected to remain elevated through 2026. Tunisia’s Mediterranean location, independent of the Strait of Hormuz, gives Gasaat a structural advantage that is becoming increasingly relevant to offtake partners.

PhosCo has also secured institutional backing that few junior developers achieve. The European Bank for Reconstruction and Development has awarded the company €1 m in grant funding and will provide US$7.5 m in equity to support the Bankable Feasibility Study. This is not just capital. It is validation. Development finance institutions do not allocate funds lightly, and their involvement materially reduces perceived jurisdictional risk.

Lower costs, higher margins and a materially higher NPV

The 2022 Scoping Study delivered a post‑tax NPV of US$657 m using a phosphate price of US$150/t and an all‑in cost of US$79/t. Those assumptions now look conservative. The updated Scoping Study will incorporate KM and SAB, revised mine scheduling, updated metallurgical test work and current pricing. Pitt Street Research has issued a fresh report this morning and found that an NPV >$1bn is plausible if costs fall. Specifically, an opex of US$65/t or lower would push the NPV above A$1 bn. In the original Scoping Study, it was US$79/t but the company believes it could be lower now given the strip ratio.

This is where KM’s strip ratio becomes decisive. A reduction in mining intensity of the magnitude implied by a 0.4:1 strip ratio can cut mining costs by US$8–12/t. When applied to the early years of production, those savings lift margins, accelerate cash flow and materially increase valuation. The effect is mechanical rather than speculative. Lower strip equals lower cost, and lower cost equals higher NPV.

Bottom line

PhosCo is now approaching the inflection point where the scale of the resource, the quality of the starter sequence and the structural tailwinds in the phosphate market converge. The updated Scoping Study will provide the first integrated view of Gasaat as a four‑deposit project with a fifth discovery in the wings. It will also quantify the cost benefits of sequencing KM at the front of the mine plan.

The document that underpins this analysis is clear on the direction of travel. Gasaat is larger than previously understood, lower‑cost than previously modelled and strategically better positioned than most phosphate developments globally. The next phase is about demonstrating that these geological and structural advantages translate into a materially higher NPV. On the evidence to date, they will.

PhosCo is a research client of Pitt Street Research. Pitt Street directors own shares.