WITH $10 million in the bank, Rum Jungle Resources is poised to transition from an explorer to a fertiliser mineral producer, with a focus on the Northern Territory.

The transition is being led by newly appointed managing director Chris Tziolis, and is the second major transition for the company, which listed on the ASX in 2007 as Rum Jungle Uranium.

Although the company was originally focused on uranium exploration, it now has a portfolio of phosphate projects and potash projects (with one also prospective for lithium).

According to Mr Tziolis, the defining moment that led the company to shift its focus from uranium was the discovery of the Barrow Creek phosphate resource. This deposit, together with the Arganara deposit, forms the company’s key focus – the Ammaroo project in the Northern Territory.

“As a junior explorer, you can’t guarantee you’re going to find what you’re looking for,” Mr Tziolis said.

“There was a realisation fairly early that the Ammaroo area could be fairly significant for phosphate. The first hole was drilled for phosphate in late 2010 and through subsequent exploration programs and corporate activity – including the takeover of Central Australian Phosphate – we have grown that out to be a very large phosphate resource and the hub of what I think to be a significant phosphate province as well.


“There is a lot of exploration potential out there.” The Ammaroo project hosts a combined resource of 1.08 billion tonnes of phosphorus pentoxide grading 14 per cent phosphorus pentoxide, at a cut-off of 10 per cent. Mr Tziolis said the project could become an enabler of a potential fertiliser industry in the Northern Territory.

“We think the potential is there – we just need to get the economic settings right,” he said. “Agriculture is a key component of developing northern Australia…and we have the opportunity to put these industries together and service our own markets to a large degree, and compete with the imports.”

Mr Tziolis said there was still a lot of work to be done to achieve this, and one of the challenges in the process would be the high cost of doing business in Australia.

“Although we are a stable OECD country and have geological advantages, going forward, there are five issues that will determine our competiveness in Australia: the cost and productivity of labour, the cost of energy, access to transport infrastructure, the cost of regulation, and the cost of taxation,” he said.

“We are very high on the costs of labour, very low on productivity of labour, our energy costs are increasing, our costs of regulation and environmental controls are also increasing and we aren’t exactly low on the tax scale.

“To grow these industries in Australia, particularly northern Australia, we need to work on our global competitiveness. Lowering the cost and increasing productivity of labour would be beneficial and it appears that this is now starting to head in the right direction as the mining and oil and gas construction boom starts to unwind, but we are always going to be comparatively high compared to our overseas competitors when it comes to labour costs. Our challenge is to bring those costs back closer to what you would experience in the US and Canada.

“The government and industry both have a role to play in the cost of energy, the costs of regulation and the costs of taxation to ensure that we can attract that global and mobile capital. That’s our challenge.”

While progressing Ammaroo, Rum Jungle is also undertaking a scoping study of its major potash project, Karinga Lakes. The project covers a chain of dry salt lakes along the Lasseter Highway between Alice Springs and Uluru. Rum Jungle is investigating the subsurface potassium and magnesium-rich brines in the dry playa lakes.

The water-soluble potassium-bearing mineral salts at the project, loosely grouped under the name potash, include potassium sulfate or SOP (sulfate of potash, which is usually a manufactured product) and potassium magnesium sulfate (schoenite or leonite).

“While the price of muriate of potash [MOP] has declined in recent month, the price of SOP globally has maintained its level,” Mr Tziolis said. “SOP is a relatively small market of about 7 million tonnes globally each year compared to closer to 45 million tonnes of MOP. It services niche markets, and some markets are more mature than others. For example, the US is quite a mature SOP market, as is China.

“The opportunities to develop markets in places like Australia, South East Asia, India and Brazil are certainly there. “Some of the salt lakes around Australia, particularly through the Amadeus Basin, which includes Karinga, seem to have quite a significant potassium and sulphate of resources in the brines. How you could bring them to bear over a period of time would be the strategic challenge, and I think Karinga offers the opportunity to perhaps be the first of this type of operation in Australia to get off the ground on a relatively small scale in order to develop a regional market.”

Mr Tziolis said in order for the SOP operation to be successful, in addition to the brine resources, the company would need sources of fresh water for flotation, gas, transport infrastructure and access to markets. As such, Karinga Lakes’ proximity to highways and the central railway line gave it a distinct advantage over more remote projects.

“A good scoping study will leave as many questions as it answers, and that will be the case here,” he said. “There isn’t a lot of expertise in these sorts of projects in Australia. There are really only three operations like it in the world – there’s the Great Salt Lake in the US; there’s one in the Atacama Desert in Chile; and there’s the big operation in China. That’s really it in terms of producing SOP from salt lake brines.”

Rum Jungle has engaged Chinese-state owned China International Chemical Consulting Corporation to bring their expertise in SOP to the Karinga Lakes project.

Mr Tziolis said it was important that Rum Jungle had two development options, and as such would accelerate Karinga Lakes development to provide an alternate company start up option to Ammaroo.

“This is something that most juniors don’t have – they are usually a one trick pony,” he said. “I think you need a couple of different paths that you can proceed down to create value for the shareholder, which is why we want to accelerate our knowledge of Karinga Lakes and how we can commercialise it.

That means we should be able to get to a point where we can make different decisions, depending on how things play out.” As it progresses the studies at Ammaroo and Karinga Lakes, Rum Jungle will look for either a joint venture partner or the opportunity to sell its portfolio.

“As we come into September we will spend a bit of money completing these studies, but will certainly slow down after that. It will lead us into an important process where, armed with the information that the studies will provide, we have the opportunity to more formally talk with some of the global industry players that we have been informally engaging with.

What’s attractive about Rum Jungle is that it’s a diversified fertiliser mineral play around phosphate and potash – but not just normal potash, sulfate potash which trades at a far higher price, albeit in a smaller market.

“They are exciting projects, and I think in the last part of this year we have the opportunity to package these projects up, put a decent information memorandum together, and talk formally to these parties that have shown interest from across the world, and secure the funding to progress at least one of these projects.”