With all the fuss about potash, where’s the love for phosphate?

Rising food prices have turned the conversation in many mining circles to potash, and potash juniors have benefited as they’ve been some of the best performers in Toronto over the last month.

But there is another mineable nutrient that is just as vital as potash is to increasing agricultural yields that hasn’t grabbed as much attention.

Currently phosphate accounts for 25% of all the nutrients that go into the ground compared to 16% that potash represents.

While both nutrients lag nitrogen — which makes up 61% — investors may be wondering why they haven’t heard more about phosphate mines.

Perhaps one of the key reasons that phosphate hasn’t generated the same amount of buzz as potash is that there is just so much of it.

The largest store of the mineral lies in Morocco, which is estimated to have roughly 80% of the global supply and could supply markets at the current demand levels for hundred and hundreds of years.

But according to Stonegate Agricom’s (ST-T) president and chief executive Mark Ashcroft, recent events have thrust the safety of that supply into doubt.

Egypt and Tunisia, both significant phosphate exporters in their own right, have had to shut down shipments of the nutrient because of political strife. And there is risk of such unrest spreading to fellow North African countries.

“Let me put it this way,” Ashcroft says, “No government, be it democratically elected or otherwise, is more than two square meals away from anarchy.”

Ashcroft’s comment highlights an ironic development underlying much of the strife in North Africa and other developing parts of the world: higher food prices are leading to social unrest, which puts pressure on price as both demand for nutrients surges and restraints on supply emerge.

“There’s a lot of phosphate out there, but can you get it out of the ground?” he asks rhetorically. “The key to our story is that we’re here to de-risk assets.”

Currently those assets are composed of the Montaro project situated 250-km east of Lima in Peru, and Paris Hills in Idaho.

Both projects are currently being advanced simultaneously with feasibility studies slated to be in by the end of 2012. If one project should distinguish itself from the other, however, Ashcroft says the company won’t hesitate to shift more capital behind it.

Montaro would appear to have the best chance of taking the lead.

The project is made up of three parallel phosphate zones that were once the floor of ancient sea (this is the case with roughly 70% of the phosphate deposits in the world) that stretch over a mapped 22 km strike length.

Thus far, the zones have a combined measured and indicated resource of 39.5 million tonnes grading 10% P2O5 for 4 million tonnes of contained P2O5. The project has another 376.3 million tonnes in the inferred category grading 9% P2O5 for 33.9 million tonnes of the nutrient.

But where the project really gets interesting is on the tonnage that it may yet yield.

While not part of its resource estimate, geological mapping along with surface mineralization showing widths similar to the resource zone has led Stonegate issue a conceptual, non-compliant estimate of 425 to 435 million tonnes grading between 9 and 9.5% P2O5 in what it calls the “East” section and another 280 to 290 million tonnes with the same grade in the “Far East” section.

“It’s not hard to see this becoming a billion plus tonne project,” Ashcroft says. “When a deposit gets that big, it becomes strategic and that’s where Montaro could start to separate itself from other projects.”

Moving north to Idaho, Paris Hills came on to the company’s radar after management reasoned that historical near-surface phosphate mines may well have significant mineralization laying beneath them.

The real-estate was definitely right as the project sits just 72 km south of active phosphate mine run by Agrium (AGU-T, AGU-N), Monsanto (MON-N) and Simplot.

Drilling began in September of last year and confirmed Stonegate’s hypothesis as the company struck very high grades at greater depths.

Highlights from the program included 6.4 metres grading 19.68% P2O5, 3.35 metres grading 31.87% P2O5 and 2.29 metres grading 31.33% P2O5. The intercepts occurred at depths between 130 metres and 315 metres.

The high grades in the drill results are significant because the process of phosphate production involves producing an enriched concentrate that generally will grade above 28% P2O5. That means that the higher the grade a deposit contains, the less cost involved in bringing it up to a marketable grade concentrate.

As for cost structures at a future mine, while prefeasibility studies aren’t due on either projects until the end of this year, Ashcroft points to a pre-feasibility study done on Montaro in 2001 that estimated phosphate production costs of US$27 per tonne.

He says, using today’s metrics, the cost would likely be three times that, putting it in the US$70 to US$80 range.

Given that the current price for P2O5 concentrate is in the US$150 to US$160 range, and trending higher, the projects will likely offer investors comfortable margins when and if they get into production.

In the meantime, Stonegate is taking comfort in a recent investment by one of the world’s largest fertilizer miners, Mosaic (MOS-N).

Last year the company paid US$660 million for a 60% stake in Vale’s (VALE-N) Vale Bayovar phosphate project. That works out to paying roughly two and half times more than what it would have cost Mosaic to develop an equivalent mine on its own. The reason for the premium according to Ashcroft? Security of supply.

“The issue comes down to whether or not your company can offer a secure jurisdiction and a steady supply to the end users,” Ashcroft says.