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Korab Resources to be granted GeolSec mineral lease

Korab Resources (ASX: KOR) has been notified that the GeolSec mineral lease is ready to be granted.

GeolSec mining lease which contains the GeolSec phosphate deposit is located near Darwin in the Northern Territory offering some of the best logistics of any phosphate project in Australia.

Korab intends to develop the GeolSec phosphate deposit as a supplier of organic phosphate fertiliser based on ground-up rock phosphate.

Following the completion of the $2 million Share Purchase Plan (SPP) in September 2009 which has closed oversubscribed after 16 days, the project is fully funded to production.

Andrej Karpinski, Executive Chairman, said part of the funds raised under this SPP will be used to cover the start-up costs and the working capital requirements of the GeolSec project making the project fully funded to production.

The company has also received a number of expression of interest from third parties located in Australia, China and India who are very keen to provide funding for the development of the project in exchange for a minority interest in the phosphate operations.

Continued market research and the associated marketing drive has indentified new areas of potential demand for GeolSec organic products.

Korab has advised that in addition to strong local demand in the Northern Territory, the company has received trade enquiries from Western Australia, NSW, India, China and Indonesia suggesting substantial additional demand which in aggregate exceeds GeolSec's annual production capacity.

The company said the project has the potential to generate pre-tax profit of 33 cents per share over 3 years.

Disclosure: The author holds no positions in the company