Interview with Lindsay Reed, CEO of Minbos Resources (ASX:MNB)

Our previous interview: https://www.cruxinvestor.com/posts/minbos-resources-mnb-taking-advantage-of-rising-phosphate-prices-2011

Recording date: 14th May 2024

Minbos Resources, an Australian company listed on the ASX, is developing Angola's promising Cabinda phosphate project. The project offers an attractive investment opportunity in the growing African agricultural sector with a large, high-grade resource, low projected costs, and strong domestic demand.

The Cabinda project boasts a JORC resource of 8 million tonnes at 30% P2O5 content. Minbos plans to produce a phosphate rock concentrate well-suited for direct application as fertiliser in the Angolan market. CEO Lindsay Reed highlights the product's high citrate solubility, ideal for Angola's phosphate-deficient soils.

The project's initial capex is estimated at just US$24 million, with a quick projected payback of 2 years. Operating costs are forecast at a competitive $117/tonne, providing strong margins at current phosphate prices. Minbos aims to start construction in July 2024 and achieve first production for the 2025/26 cropping season.

Minbos is uniquely focused on supplying the domestic Angolan market. Despite vast agricultural potential, Angola currently imports nearly all of its fertiliser. The government has prioritised food security and incentivised local fertiliser production. Minbos has signed an offtake MOU with Grupo Carrinho, a major Angolan food producer, for approximately 80% of the project's initial 200,000 tonne per annum output.

The company has conducted extensive field trials in Angola, demonstrating yield increases of up to 300% using its phosphate product. With millions of smallholder farmers and significant undeveloped arable land, Angola's fertiliser demand is set to grow substantially.

The Angolan government strongly supports the Cabinda project, granting Minbos a preferential 6.1% tax rate. The company has also secured $14 million in debt financing from the South African IDC, which sees the project as aligning with regional development goals.

While the initial project scope targets 200,000 tpa of production, the facilities are designed to enable a low-cost expansion to 400,000 tpa. Minbos is exploring opportunities to serve export markets beyond Angola. Additionally, the company is studying green ammonia production in Angola, leveraging the country's low-cost hydroelectric power to potentially offer a more complete fertiliser product range.

Minbos stands out among the few junior companies with African phosphate projects. Peers include Avenira, Kropz Plc, and Ikwezi Mining. Minbos differentiates itself through its Angola focus, low costs, strategic partnerships, and low capex requirements.

The investment thesis for Minbos centers on its exposure to the expected growth in fertiliser demand across sub-Saharan Africa, its low-cost and high-margin project, binding off-take agreement, strong government support, expansion and diversification potential, and valuation upside as it transitions to production.

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View Minbos Resources' company profile: https://www.cruxinvestor.com/companies/minbos-resources-limited

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