The company plans to install a drying process unit and add a flotation line to improve phosphate recovery from the current 50% to 70% at the existing Baobab facility, which it hopes will help lift production to about 500,000 tonnes per annum.
Engineering studies for this portion of the project are already underway, Avenira said, with the company also drawing together capital and operating cost estimates.
The second stage of the expansion will see a second production line installed, delivering about 1Mtpa of additional capacity and giving the company what it said was enough product to supply a dedicated phosphoric acid facility.
The company, which made its first shipment of phosphate rock concentrate in March, currently relies on third parties to process its rock phosphate.
Avenira plans to start prefeasibility work for stage two of the project before the end of 2017, with the expanded plant expected to be fully commissioned in stages within 12-18 months of funding.
The plan is part of the company’s application for a full exploitation, or large mine permit, which it said would ensure an extended project tender, of up to 20 years, with further renewals allowed.
Avenira will launch a non-renounceable entitlement offer “within the next five months” to raise between $7 million and $13 million, with shares to be offered at less than 10c – the final price to be decided with reference to the 30-day volume-weighted average price.
The entitlements offer will be underwritten to $4.2 million by major shareholders Agrifos Partners and Groupe Mimran affiliate Tablo Corporation.
Funds raised through the entitlement offer will be used to repay bridge loans of US$1.4 million and $2.16 million recently provided by the two shareholders respectively for the stage one works.
Avenira chairman Chris Pointon said the company was grateful for the confidence shown by the major shareholders.
“It will allow management to proceed with work on stage one and to properly prepare for discussions with other potential equity partners.”
Funds raised from a recently launched A$2.5 million share purchase plan will also be used for the new development, the company added, having offered 27.8 million shares at 8.4c each in April.
Avenira shares were unchanged at 7.6c in morning trade, valuing the company at $43.5 million. The company started April with $3.7 million in cash.
