Mr. Chris Castle reports

CHATHAM ADVISES PROPOSED SALE OF SUBSIDIARY AVENIR MAKATEA PTY LTD

Chatham Rock Phosphate Ltd. has signed a non-binding framework agreement with Melbourne-based Australian company Austure Pty. Ltd. that involves the sale of the wholly owned Australian subsidiary Avenir Makatea Pty. Ltd. for consideration of $1.4-million (Australian), composed of $900,000 (Australian) in cash over a 24-month period and the company taking a 20-per-cent shareholding in a dicalcium phosphate and monocalcium phosphate manufacturing plant to be established through an Austure subsidiary company. The parties have agreed to work together to negotiate and sign a binding formal definitive agreement regarding the sale.

This agreement advances the Korella North mine with a local market for its mined rock phosphate, which will be supplied to this revolutionary manufacturing plant to be built in Cloncurry by the Austure subsidiary company.

Austure has developed a unique technology that enables a manufacturing plant to produce both dicalcium phosphate and monocalcium phosphate. This unique DCP/MCP technology was developed in Melbourne by Monash alumni chemists, of which one is a principal of Austure.

Both DCP and MCP are utilized in lick blocks that provide cattle with supplemental phosphorus, which is essential for healthy cattle in the phosphorus-deficient northern Queensland and other northern Australian states. Currently, all 50,000 tonnes per year of DCP/MCP utilized in Australia is imported.

The technology utilizes a novel green process where electricity is used to generate phosphoric acid from rock phosphate. The phosphoric acid is then used to manufacture downstream products such as fertiliser and feed phosphate. The electricity can be generated from renewable resources in a private off-grid plant.

The technology utilizes tailings-grade rock phosphate as low as 16 per cent in concentration of P2O5 while, at the same time, avoiding generation of the toxic phosphor-gypsum waste. The lower quality of the Korella North mine fits with the supply criteria for the proposed plant.

Background

Since 2021, Chatham Rock's wholly owned Australian subsidiary, Avenir Makatea Pty. Ltd., through its subsidiary Korella MCP Pty. Ltd., has been investigating the establishment of a 30,000-tonne-per-year DCP/MCP plant in Cloncurry to utilize phosphate from its Korella deposits.

In the feasibility studies for such a plant, Chatham always faced two considerable issues.

First, the issue was a matter of scale. At 30,000 tpy, the proposed plant was too small for economical production. Most plants had to be 100,000 tpy and also based near a seaport. The second issue was the dependence on utilization of sulphuric acid in the manufacturing process. With the supply of sulphuric acid in the northwest mineral province a major unknown, this provided an unacceptable risk to a conventional DCP/MCP manufacturing plant proposed to be located in Cloncurry.

As a local supply of sulphuric acid is not a prerequisite for this new DCP/MCP manufacturing technology, it is feasible for the plant to be located in Cloncurry, with proximity to the DCP/MCP market. This is expected to undercut the imported competitors because of the savings in transport costs.

This new system can be established in modules of 5,000 tpy of DCP equivalent calcium phosphate. This allows rapid commencement of the plant with a low capital expenditure hurdle yet permits gradual expansion at its own determined pace. The new jointly owned company will be licensed to utilize the technology (currently being patented).

At the same time, the newly jointly owned Austure subsidiary company will establish its competitive position in the lick block market by offering imported high-quality DCP/MCP sourced from affiliated plants of the Melbourne-based technology partner.

With the framework agreement signed, the next stage is the execution of a memorandum of understanding later this month and all the related documents by the end of December, 2025.

We seek Safe Harbor.