PhosCo has expanded its Gasaat phosphate project with a 166.6Mt resource and new processing results, but its auditor has flagged material uncertainty over the company’s ability to continue as a going concern. The ASX-listed explorer ended FY2026 with $5.86 million in cash, a $4.48 million consolidated loss and a $2.71 million working capital deficit.
- Gasaat resource reaches 166.6Mt at 20.6% P2O5
- Single-stage flotation produced concentrate of up to 34% P2O5
- Auditor flags material uncertainty over going concern
- $5.86 million cash against $2.96 million operating outflow
- Updated scoping study expected in October 2026
Auditor flags funding pressure
PhosCo Ltd (ASX:PHO) has paired a stronger technical story at its Tunisian phosphate project with a blunt financial warning: Grant Thornton said a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. The warning reflects a $4.81 million loss attributable to PhosCo shareholders, $2.96 million in operating cash outflows, net assets of just $138,000 and a $2.71 million working capital deficit at 30 June 2026.
PhosCo finished the year with $5.86 million in cash, up from $3.36 million, after a $5 million placement and option exercises helped replenish its balance sheet. That funding came alongside $2.07 million of exploration and evaluation expenditure, most of it directed to Gasaat. The company remains pre-revenue and says it will require additional funding for exploration, technical studies, permitting, project development and corporate operations.
Gasaat resource and processing case expand
The operational counterweight is Gasaat, where PhosCo now reports a 166.6 million tonne Mineral Resource grading 20.6% P2O5. The resource includes 20.2Mt at 20.5% P2O5 from the KM and SAB prospects, with 92% of the broader resource classified as Measured or Indicated. The company says the low-strip KM and SAB deposits, located close to the proposed processing plant, could influence early production and cash flow, although mine planning and further technical work remain underway.
Drilling also identified phosphate discoveries at DOH and KH. DOH returned an average phosphate horizon thickness of 13 metres across a 1.3-kilometre strike and more than 600 metres of width, while five holes at KH intersected zones between 16.5 metres and 20.5 metres down-hole. Those results have not yet become Mineral Resources, and the company plans further drilling before any estimate is prepared.
Metallurgy has supplied another potentially important project variable. First-pass tests on KM ore produced concentrate grades of 29.5% to 31.4% P2O5 at recoveries of 75.1% to 83.7% using a simplified single-stage flotation circuit. Subsequent testing reported after year-end demonstrated potential for concentrate of up to 34% P2O5. PhosCo says the process could remove three silica flotation steps and may reduce technical complexity, capital costs and operating costs, but additional confirmatory testing is still required.
Funding milestones carry conditions
The European Bank for Reconstruction and Development provided a €1 million grant, of which PhosCo received $1.03 million during the year. A further approximately $700,000 is expected in FY2027, subject to pre-agreed project milestones. EBRD also holds 150 million options exercisable at 5 cents, with the right to invest 120 days after the updated scoping study. PhosCo’s going-concern assessment includes a possible $7.5 million EBRD equity investment, but the report states that this remains subject to due diligence and internal approvals.
The next major project test is the updated Gasaat scoping study, expected in October 2026, followed by the planned commencement of a Bankable Feasibility Study later in the calendar year. The company is also advancing drilling at DOH and KH, a maiden program at the King’s Eye prospect within Simitu, and reconnaissance work in the northern section of Sekarna after a proposed nature-reserve overlay complicated its southern area.
Legacy liabilities remain outside the headline resource story
PhosCo’s balance sheet is also shaped by the unresolved Chaketma dispute. Its 50.99%-owned CPSA subsidiary carries $8.42 million of liabilities, including $7.04 million in disputed TMS cash calls and accrued interest. PhosCo says neither it nor Celamin has guaranteed those obligations, and it does not intend to provide further investment to CPSA, which no longer holds permits or permit applications.
Separately, PhosCo is pursuing a $9.08 million arbitration recovery from TMS through Tunisian courts. The company has not recognised that amount as an asset because TMS has repeatedly failed to comply with the award and its ability to pay remains uncertain. That leaves the funding equation dependent on capital markets, project milestones and the eventual treatment of liabilities that are contested but not yet extinguished.
Bottom Line?
Gasaat’s resource and processing advances are substantial, but the October study must arrive before the funding question becomes more urgent than the geology.
Questions in the middle?
- Can the updated scoping study convert Gasaat’s larger resource and simpler flowsheet into a credible funding case?
- Will EBRD exercise its options, or will PhosCo need to rely primarily on another equity raising?
- How will the disputed CPSA liabilities and uncertain TMS recovery affect future liquidity?