Emerging African phosphate producer Kropz’s share price on the LSE fell by 60% on Thursday after the company announced that the start of production at its 74%-owned Elandsfontein mine, in South Africa, will be delayed.

The Aim-listed company reported to shareholders that test work had confirmed that the Elandsfontein orebody was complex with regard to particle size distribution and grade variability.

“The provisional conclusion from the test work is that a reverse flotation modification to the current circuit will produce saleable product, but at lower grade than originally targeted by the company.

“Therefore, and as a direct consequence of the prevailing depressed phosphate rock prices, an alternate process modification is being considered to deliver the required process efficiencies at viable economic returns,” it said in a statement.

Kropz determined that it would need additional time, to at least the end of the current calendar year, to conduct further test work, engineering design and associated financial modelling to define the alternative process.

This would result in a delay in the time required to bring Elandsfontein into production.

The company noted that while it was still too early to determine the exact impact on costs and commissioning dates, it felt that it would be prudent to recognise an impairment on the value of the assets at Elandsfontein.

An impairment of about $49-million would, therefore, be accounted for in the company’s interim results for the six months ended June 30.

Meanwhile, the appeal against Elandsfontein’s existing integrated water use licence, which had been set to be heard by the Water Tribunal on September 11, had been postponed at the request of the appellant.

Also, work is continuing on preliminary plans for the development of the Hinda phosphate deposit in the Democratic Republic of Congo.

Kropz’s share price on the LSE fell to 6p a share on Thursday morning, down 60% compared with Wednesday’s close of 15p a share. The share price recovered to 9p a share later on Thursday.