Kropz, an emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa and exploration assets in West Africa, has announced its intention to seek admission of its share capital to trade on AIM in the second half of 2018.
The vision of the Kropz is to become a leading independent phosphate rock producer and to develop, over time, into an integrated, mine-to-market plant nutrient company focused on sub-Saharan Africa.
Kropz will be seeking admission to AIM in order to raise the funds required to complete the upgrade and commissioning of its flagship Elandsfontein project, to reduce the
its current debt position, to develop a wider African asset base and to take advantage of
AIM’s profile, liquidity and access to a broad institutional investor base.
The directors believe being a publicly traded company will also assist in the achievement of its strategic objectives, which include taking advantage of additional opportunities in the fertilizer supply chain.
The phosphate market presents a bottom of the cycle opportunity
- Phosphorous is an essential element for all forms of life, and it represents one of the three macro-nutrients required by plants
- The main driver of phosphate rock demand is the need to boost crop yields and increase global food supplies to feed an expanding world population
- As a cyclical market, coming off a 10-year low, CRU’s analysis predicts that the decline in phosphate rock prices will bottom out in 2018 and will rise in the long term, spurred by escalating population growth, changing global dietary patterns and decreasing arable land resulting in increases in demand and improvements in phosphate fertilizer prices
- Elandsfontein ore benefits from a low cadmium content (c.5ppm), being one of the few phosphate rock sources readily able to meet the proposed European Union targets
- Sub-Saharan Africa has the fastest growing population in the world, with food demand expected to triple by 2050, and the regions subsequent fertilizer needs anticipated to rise accordingly
- Kropz’s production is substantially covered by off-take contracts.
Senior management team with extensive operational experience
- An experienced management and executive team capable of leading and growing Kropz to become a major player within the sub-Saharan African plant nutrient sector
- Management team has a proven track record that includes exploring, developing, operating and consolidating assets on the African continent and disrupting other mature sectors throughout the supply chain, led by CEO, Ian Harebottle, former CEO of AIM quoted Gemfields.
A near-term producing asset which has been significantly de-risked with all permits in place
- Kropz’s flagship operation is Elandsfontein in South Africa
- Approximately US$120 million has been invested in Elandsfontein on exploration, bulk sampling, feasibility studies and the subsequent construction of a mine and mineral processing facility and associated infrastructure
- JORC compliant M, I&I resource of 101Mt at 7.7% P2O5
- Probable reserve of 63.6Mt at 9.6% P2O5
- Production at Elandsfontein is anticipated to commence in H2 2019, subject to AIM admission and final test work results. Steady state production will exceed of 800,000 tonnes of phosphate rock concentrate with an initial 14-year mine life.
Highly regarded BEE partner
- African Rainbow Capital, a South African based black economic empowerment partner and leading investment company with a total intrinsic net asset value of ZAR9,1 billion (US$730 million), as at 31 December 2017.
Strong growth pipeline with exploration prospects in Ghana
- An application has been submitted for an exciting exploration prospect in Ghana that lies on the extension of a quality, historically exploited phosphate resource in neighbouring Togo
- Potential exists to further extend life of mine at Elandsfontein
- In addition, Kropz is looking at further acquisitions of assets to increase production
Competitive cost structure with marketing arrangements in place with well-known off-takers and proximity to local commercial port
- Kropz’s operating cost estimates suggest Elandsfontein is well-positioned to effectively compete with other phosphate rock suppliers in the traded market. Furthermore, Elandsfontein’s advantageous location in proximity to the deep-water port of Saldanha Bay enables it to target demand in both the Atlantic and Indian Ocean markets, with significant freight advantages over North African producers
- Off-take agreements over a substantial proportion of production are already in place, to supply South Africa, India and the Americas due to highly marketable product
“Phosphorous is an essential, yet non-substitutable and non-recyclable element for all forms of life and a vital ingredient for the downstream fertilizer market and ultimately human survival itself. As the world’s population continues to grow, urbanise and industrialise, farm land per capita decreases, which means that we will need to produce increasing volumes of food from less and less available land, which in turn equates to an increasing reliance on effective plant nutrients,” says Kropz CEO, Ian Harebottle.
“Kropz is seeking an IPO on the back of a 10-year low price environment in the phosphate rock market, driven by a limited period of oversupply and weaker demand. We believe the bottom of the market is now behind us, and the recovery in other commodity prices is beginning to be evidenced in the fertilizer market as well, with phosphate rock prices already reaching above US$100/tonne from their recent lows of US$90 per ton, but they are still significantly down on historical prices achieved.
“Subject to successful recommissioning and financing, Kropz will be in production next year, at our Elandsfontein project in South Africa. Kropz intends to become a significant, low cost, phosphate player on the global stage with a London listing creating awareness for the business and access to further capital to realise our goal of becoming the African champion of the sector.”