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Fertoz Ltd: DEEP DIVE
OVERVIEW

Fertoz highlights 2020 vision with investors during half-year reporting

The Australian company will host a Q&A call for investors this Thursday at 10.30am eastern time.
N-P-K, nitrogen-phosphorus-potassium acronym image
OVERVIEW: FTZ The Big Picture
Fertoz expects a 15% cost saving from Fernie rock phosphate, compared to its Montana stockpiles
  • The addition of rock phosphate from the Fernie claims permit in Alberta, Canada, is expected to increase productivity and lower costs in 2019, impacting the bottom line
  • A 100,000-tonne US stockpile in Montana will enable a scale-up in sales targets in 2020
  • Marten and Barnes Lake claims in British Columbia have bulk sample permit applications pending this year from British Columbia’s regulatory authority

What does Fertoz do?

Fertoz Ltd (ASX:FTZ) specialises in phosphate ore supply in the US and Canada. It is run by executive chairman and CEO Pat Avery, a civil engineer and seasoned industry profession with more than 30 years experience in all phases of industrial business.

Avery has built and managed mines, processing plants and infrastructure projects and previously led Prospect Global Resources Inc (OTCMKTS:PGRX) and its American West Potash asset as the company’s executive CEO. He also led Intrepid Potash Inc. (NYSE:IPI) (FRA:58I) as its president.

He is also a business development director at MGX Minerals Inc’s (CNSX:XMG) (OTCMKTS:MGXMF) (FRA:1MG) North American subsidiary PetroLithium Corporation of America.

Avery was in the petroleum refining and pipeline/terminal operations game for 15 years, holding roles at ARCO and Santa Fe Pacific Pipelines.

What does Fertoz own?

US and British Columbia-focused Fertoz’s key income-producing assets are the company’s Montana-based stockpiles of phosphate ore.

The Victorian-headquartered, ASX-listed development company is also moving into mining, with a bulk sample permit for its Fernie claims in Alberta, Canada, being granted in January 2019.

Other permit claims are pending for the Marten and Barnes Lake claims in British Columbia in 2019 as the mining push is tipped to have a difference on the company’s bottom line from this year.

Rock phosphate from Fernie claim will be used for planned sales and N-P-K (nitrogen-phosphorus-potassium) blending trials to be conducted this year.

Fertoz expects the rock phosphate seams at the project will have a very low strip ratio and save about 15% of extraction costs compared to its Montana stockpiles.

The ASX-listed phosphate ore supplier has a diversified strategy to meet demand for high-quality, low-metal phosphate across the organic supply chain.

It also supplies non-organic producers and expects a maturing organic supply chain as it fosters its evolution with key efforts.

Adding another string to its bow, Fertoz expects to meet increasing demand from the emergent cannabis industry as regulators ease historically applied restrictions and the industry continues to blossom.

The company hopes to a achieve a 100,000 tonnes sales target for 2020 while drawing on a 100,000-tonne stockpile of high-quality ore near its operations at Deerlodge, Montana, which it added to inventory in October 2018.

Fertoz has set a 30,000-50,000 tonnes sales target for 2019 for its Solvoy stockpile, also in Montana.

Last year the company’s Montana-based operations trucked out about 800-1,000 tonnes of phosphate a week to ensure the company had enough product ready for spring 2019 orders for delivery in North America.

Fertoz and contract ore processors had processed more than 11,000 tonnes of ore in the US and Canada by the end of last year to despatch in the June 2019 half-year.

A number of customers have signalled they will require additional ore from the company this calendar year, including its largest customer.

Jacksonville, Florida-based international fertiliser company Humic Growth Solutions LLC (HGS) and Fertoz have a 10-year sales and supply agreement for producing blended humate/phosphate fertilisers inked in November 2018.

The companies also signed an MOU towards creating a formal joint venture that puts in place cost and volume reviews and includes joint marketing as well as branding and sales incentives.

What are Fertoz’s latest results?

Fertoz posted its December 2018 half-year report to shareholders last Friday, reporting sales, marketing, exploration, permitting, mined and stockpiled ore supply, and agronomic research and logistic results for the half-year.

The company had $902,372 in receipts from customers during the half-year period, with $2.7 million of net cash inflows keeping total comprehensive losses at $1.1 million for the half-year as $1 million of loan facilities were undrawn at quarter-end.

Fertoz executive chairman and CEO Pat Avery and sales and marketing senior vice-president Sean Gatin will host an investor conference call later this week to answer queries from investors.

The company had $8.7 million total equity at the end of 2018, including $1.9 million of cash reserves.

Fertoz has tipped a slim $105,000 of cash outflows for the March quarter of 2019, noting in January 2019 that $600,000 of funds from a customer cheque were likely to clear its account in the fiscal quarter.

The company’s March quarterly reports are expected by the end of April 2019.

Inflection points

  • Marten and Barnes Lake claims expect a bulk sample permit from the Canadian regulator

  • Scale-up of sales targets in the 2020 calendar year, fuelled by addition of 100,000-tonne Montana stockpile to inventory

  • Strategic agreements, including joint venture formations with partners such as HGS

  • Inventory, permit claim or project acquisitions that add further stocks to inventory

  • Evolution of organic fertiliser and emerging cannabis industries in North America and beyond

Fertoz executive chairman & CEO Pat Avery highlights supply chain focus

“We’re executing in mining by getting more supply and getting our permitting system going, we’re executing in logistics and supply chain and processing, and then … in sales,” Fertoz executive chairman and CEO Pat Avery told Proactive Investors in December.

“We have essentially located all the high-quality phosphate in the Western US and in Canada, and have attempted to tie that up. We’ve got real strategic strength.”

Fertoz will host its investor conference call this Thursday, April 4, 2019 at 10.30am AEDT, with participants able to pre-register questions with an email to [email protected]To access the real-time conference, register at the Choruscall online invitation or dial 1800 908 299 or +61 2 9007 8048 from within Australia on the day. The conference ID is 658841. Phone numbers for North America, UK, Singapore, Hong Kong, New Zealand and Japan-based investors can be found at the invitation page or on the invitation extended through the Australian Securities Exchange platform.

 

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