PhosCo builds a bigger phosphate case around Gasaat

Gasaat’s exploration footprint continues to widen

PhosCo Ltd (ASX:PHO) is approaching a more consequential stage at its Gasaat phosphate project in Tunisia, with the quarter bringing progress on geology, processing and project finance. The 100%-owned project already carries a global Mineral Resource of 166.6 million tonnes at 20.6% P2O5, but new drilling at DOH and scout drilling at Sekarna North are extending the potential footprint beyond the existing resource base.

At DOH, two new holes intersected phosphate over 8.1 metres from 64.9 metres and nine metres from 22 metres, although assays were still pending as at the report. The results are intended to support a maiden Mineral Resource Estimate for the discovery. At Sekarna North, initial drilling returned six metres and 7.4 metres of phosphate, also with assays outstanding. The results build on the DOH and Sekarna drilling reported earlier in October, which identified mineralisation in both areas but remained at reconnaissance stage.

KH drilling adds material near the proposed plant

The more advanced KH prospect delivered a clearer set of results during the quarter. All five maiden holes returned broad phosphate zones with internal higher-grade layers, including a best intersection of 19.4 metres at 20.66% P2O5 from 81.6 metres. That interval included nine metres at 24.21% P2O5.

KH sits about 3.5 kilometres from the proposed plant site, making its significance dependent not only on grade but also on how the prospect might contribute to the project’s early mining sequence. The company says drilling confirmed the continuity and thickness of the phosphate layer previously indicated by historic holes. It has not yet published a resource estimate for KH, so the potential economic contribution remains a study-stage proposition rather than a defined mine plan. The results extend the KH drilling results that previously identified wide, high-grade mineralisation close to the proposed plant.

Metallurgy points to a higher-value product

PhosCo’s processing work provides the quarter’s strongest potential commercial angle. Flotation tests on KM ore produced concentrate grades between 31.4% and 34% P2O5, with recoveries ranging from 73.5% to 77.8%. The best results reached 34% P2O5, while magnesium oxide was reduced to 0.96% and silica remained between 2.42% and 3.2% in the reported tests.

The company says the results validate a relatively simple crush, grind and rougher-cleaner flotation configuration. Concentrate at 33% to 34% P2O5 is above the generally traded 29% to 32% range cited in the report, and higher-grade phosphate can attract a premium. That is a product possibility, not a secured price outcome: variability testing, locked-cycle flotation work and further engineering remain underway. The latest work follows the 34% P2O5 flotation results, which first established the project’s highest-ever concentrate grades.

STUDI partnership adds engineering capacity and proposed capital

After quarter end, PhosCo signed a non-binding memorandum with Tunisian engineering group STUDI International, which is intended to become its preferred partner for the Gasaat pre-feasibility and bankable feasibility studies. The proposed relationship could extend into detailed engineering, procurement, construction support and commissioning, although services would be agreed separately on arm’s-length terms.

STUDI has also agreed to subscribe for approximately 9.52 million PhosCo shares at A$0.15 each, raising A$1.4 million before costs, with one attaching option per share exercisable at A$0.20 until 29 June 2029. The subscription remains subject to final legal documentation. The proposed funding and STUDI engineering partnership give the development story a local industrial counterparty, but neither the partnership nor the capital has yet become a completed financing event.

Scoping study is the next valuation test

PhosCo ended September with A$3.838 million in cash and about A$0.6 million of undrawn EBRD grant funding. Quarterly operating and investing outflows totalled about A$2.0 million, including A$696,000 on exploration and evaluation, leaving the Appendix 5B calculation with estimated funding for 2.63 quarters at the period’s spending rate. The proposed STUDI investment, the remaining EBRD grant and a potential further A$7.5 million from EBRD options would materially change that picture, but each source has conditions still to be satisfied.

The updated Gasaat Scoping Study is due imminently and is expected to incorporate the expanding exploration inventory, KH results and revised metallurgical work before feasibility studies begin. PhosCo is also positioned as the counterparty asset in a US Government funding program offering up to US$1,536,511 to a successful third-party applicant seeking to mobilise US investment and commercial engagement. PhosCo would not directly receive that funding, and the award outcome remains pending. The scoping study therefore has to do more than confirm a large resource: it must show whether the premium product, nearby KH mineralisation and proposed regional hub can support a fundable development pathway.