NMDC is likely to seek extension of its exclusivity agreement with Australia's Minemakers to acquire 50% stake in the latter's Wonarah phosphate deposits by another 2-3 months.
"The due-diligence is not yet complete, so NMDC is looking to seek extension of the exclusivity period by another 2-3 months. A formal proposal (for extension of the dates) is likely to be sent this week," a source close to the development said.
The exclusivity agreement is slated to end mid-February, Minemakers had said on January 31, while noting that "negotiations with NMDC on forming a JV to develop Wonarah deposits have proceeded more slowly than had been anticipated".
The Australian firm had also said that discussions with other potential parties have also been initiated for the project.
Expressing hope that Minemakers would agree to extend the dates, the source said that due diligence is likely to be completed in next few weeks.
"The due diligence is expected to be over in the next couple of weeks. Preliminarily, the reserves look world class," the source said, while adding that the process is taking time as the Indian firm does not have exposure to the fertiliser sector.
In June, 2011, NMDC had signed an MoU with Minemakers to acquire 50% stake in Wonarah deposits, which are considered as one of the largest under-developed phosphate reserves in Australia, with an estimated resource of 1.26 billion tonnes at 12% phosphate.
As per the MoU, the asset would be be transferred to an equal stake joint venture.
The Indian miner would also be making payments for the initial costs incurred on the reserves by Minemakers, when it will proceed to acquire the stake, the source said.
According to a preliminary study, Wonarah deposits can have two types of fertiliser production facility -- 1.4 million tonnes per annum (MTPA) of Superphosphoric acid with 70% phosphate concentrate by the Improved Hard Process (IHP) or 2 MTPA of DAP/MAP via conventional Wet Acid Process (WAP).
Production of fertiliser through the IHP Process is estimated to require a capital cost of AUD 1.6 billion, while the WAP process route would need AUD 2.3 billion, the source said.
Last week NMDC Chairman N K Nanda had said that the company is in the process of acquiring two coking coal projects in Russia and Australia and an iron ore mine in Brazil for over $500 million, besides Wonarah deposits of Minemakers.