NMDC enters into an agreement with Minemakers

State-owned mining company NMDC has entered into an agreement with Minemakers Limited, an Australia-based mining company, to develop latter's Wonarah Phosphate deposit in the Northern Territory, according to Minemakers.

Under the MOU, NMDC and Minemakers will undertake a joint Feasibility Study into the agreed aspects of the full development of Wonarah, Australia's largest known, undeveloped, phosphate deposit, sources in NMDC said.

This is the second investment the Indian miner has made in Australia.

A few days ago NMDC entered into a memorandum of understanding with Perth-based Australian exploration company Legacy Iron Ore for acquiring up to 50% stake in the latter, subject to all necessary regulatory approvals.

Based on the feasibility study, NMDC may acquire 50% stake in Wonarah project after formation of a Joint Venture for the purpose, sources said.

The proposed Wonarah development will include a mine and downstream processing facilities to produce beneficiated rock phosphate for export; phosphoric acid (an intermediate product); and finished fertiliser products such as DAP and MAP (Diammonium Phosphate and Monoammonium Phosphate).

NMDC and Minemakers will then form a JV in which NMDC will take a 50% stake in Wonarah and have responsibility for arranging project finance for the project by way of a debt raising. NMDC will also repay Minemakers for costs already incurred for Wonarah.

The investment made by the NMDC may be converted as capital later when the JV is formed, a senior official of NMDC told PTI

The Feasibility Study may start by early fourth quarter 2011 so that results support Minemakers and NMDC signing a full Joint Venture Agreement governing the completion of bankable feasibility, financing and development of Wonarah and the downstream fertiliser manufacturing facilities.

According to Minemakers, Wonarah is also the only Australian rock phosphate project that has been granted Government's Major Project Status and enjoys important Traditional Owner and stakeholder support.

A positive Direct Shipping Ore Feasibility Study and bulk sampling operation were completed in 2010.