Just over a decade ago, PhosCo’s former joint venture partner in the Chaketma phosphate project in Tunisia illegally transferred PhosCo’s 51% stake, leaving the company without a project and embroiled in legal action.

The former partner still owes PhosCo at least A$7 million after PhosCo was successful in international arbitration.

During the years of litigation, the Chaketma permit was cancelled.

The Tunisian government encouraged parties to re-apply for the permit, which PhosCo did, still in joint venture with its former local partner.

In the meantime, PhosCo started engaging with the local community in mid-2024.

“One thing that became really apparent was this immense vocal support for PhosCo to develop the project,” PhosCo managing director Taz Aldaoud said.

The support gave the company confidence to apply for the Gassaat permit, as well as the nearby Sekarna permit, in its own right in August last year, both of which were recently granted.

In November, PhosCo signed a landmark memorandum of understanding with the Tunisian government and the European Bank for Reconstruction & Development (EBRD) to potentially collaborate on exploring, funding and developing the Northern Phosphate Basin Hub, which includes Gassaat.

“I sort of pinch myself sometimes because this time last year, we didn’t have a single phosphate permit,” Aldaoud said.

“We now have Sakarna and Gassaat is not only 100% ours, but it’s double the size of what Chaketma was.”

A big cream cake

Gassaat was discovered by PhosCo in 2010 and has a resource of 146.4 million tonnes at 20.6% phosphorus pentoxide.

“That’s only from drilling two out of nine prospects, so it’s massive,” Aldaoud said. “The potential is massive, and the geology is really simple.”

Mineralisation outcrops at surface and Aldaoud likened it to a cream cake.

“You can see the cream all around the side, and it’s just a matter of poking some holes through the middle bits of the cake to make sure that the cream goes the whole way through, and I think that’s a beautiful analogy,” he said.

“I like it for two reasons. One, it’s food-related, which is what fertiliser is ultimately about, but that’s also where we got the name for Gassaat.”

Gassaat also means bowl of food.

“I just think that’s a beautiful thing that everyone can ultimately eat from the same bowl – the community, Tunisia, and then also PhosCo and its shareholders,” Aldaoud said.

Earlier this week, PhosCo announced exploration targets for Gassaat and Sekarna ahead of drilling and trenching work, which is due to start within weeks.

Gassaat has an exploration target of 110-165Mt at 20-22% P2O5, while Sekarna’s target is 137-210Mt at 17-23% P2O5.

The results of the drilling program will feed into an updated resource estimate in the September quarter, which in turn, will feed into a bankable feasibility study.

A 2022 scoping study outlined capital costs of US$170 million for a 46-year operation to produce 68Mt of phosphate.

Operating costs for the first 10 years were estimated at US$79 per tonne, while annual net cashflow was forecast at US$93.4 million.

The study returned a post-tax net present value of US$657 million and payback period of just 18 months.

The study was based on a phosphate price of US$150/t, which is roughly what it is trading at today.

Strong funding support

Last week, PhosCo launched a one-for-2.84 non-renounceable entitlement offer to raise up to A$5 million at A5c per share, with the option to accept oversubscriptions of up to A$1 million.

The offer is fully underwritten by Westar Capital, with Cumulus Wealth acting as sole lead manager and priority sub-underwriter.

Chairman Robin Widdup and Aldaoud have agreed to priority sub-underwrite the offer for A$2.25 million with major shareholder Lion Selection Group providing a further A$1 million of priority sub-underwriting

Lion Selection and Aldaoud have also agreed to loan the company A$1.5 million to fast track work on Gasaat and Sekarna.

“We’re very lucky to have the support of a mining specialist like Lion,” Aldaoud said.

“We’ve provided a loan offset against our underwriting commitments so that we could expedite drilling and exploration work, so rather than do what most companies probably do, which is wait until the end of the entitlement issue for the money to be banked, we want to just press the button and get moving and get going.”

PhosCo concurrently signed a mandate letter with the EBRD for a potential US$5 million strategic investment.

“It’s very exciting, especially to be working on an asset that’s so highly strategic. It’s not often you get to be involved in an asset like this,” Aldaoud, a self-confessed gold bug said.

“What’s a gold bug doing in a phosphate stock? There’s gold stocks, and then there’s golden opportunities.

“There’s a million opportunities out there, but there’s only a handful of golden opportunities and that’s why I got involved in PhosCo and invested as well.

“It’s because myself, Lion and our shareholders can see the value that this asset holds, and we’re looking forward to realising some of that, first with drilling, and then with the BFS.”