RE: re: BHP Friend or FoeFreind or Foe?...There is a case for both...
If we look at this from a strategic angle...we must understand that BHP will have purchasing M & A Guidelines...The Board will want at a minimum an NI Resource Estimate Completed as well as a Bankable Feasibility Study. BHP can wait until the end of 2011 for our Feasibility Study and the completion of Phase 2 Drilling in the south and east of our land. By years end I would suspect we have also purchased and drilled on either the Samarian Block or the Nova Lands.
BHP is the largest miner in the world....and so has responsibilities to their share holders...period. Making money for the long term is their goal...as it should be. What else do we know? When we look at the bid for Potash Corp. as I laid out in a previous post...the offer was $3 Billion Dollars for each producing million tonnes of KCL. If Allana gets to production and produces 2 million tonnes of KCL as planned, then the offer would have to be near $6 Billion dollars / 200 million shares of AAA = $30 per share (based on the potash corp. bid which was a low ball offer) The offer was based on 10 times Earnings Per Share of Potash Corp.
So, if BHP or another major want into our basin it is more likely going to take a run at us after the NI Resource Estimate hoping to get us for pounds in the ground...or after the completion of the Bankable Feasibility Study by years end which will outline the mine life and cost for capex, and model for Open Pit and/or Solution Mining..
A majors offer will not be $30 per share because we will still have to build the mine and ramp up over 2 years.
So what will AAA be worth at the end of 2011? Lets review
why Allana is unique..and
why a major will have to pay a premium? How much of a premium is yet to be determined...or we may get to production and be the ones to capitalize on the 10 to 15 times earnings per share instead of a major that buys us out too early...Shallowest Deposit of Potash in the World 50 - 150 meters
50% SOP which gains a 40% premium to MOP
Likely purchase of
Samarian Block or the Nova Land...likely will double our resource estimate over time.
Support of Ethiopian Government, Liberty Metals, Spprott Asset Mgt. China Minerals and World Bank.
Ethiopian Domestic Market for some of our production for the 4 million hectares of farm land being developed
Low Cost Opex, Open Pit and Solution Mining with Solar Evaporation Ponds
Projected
Total Capex of $800 million for Mine(s) one third the cost of deep deposits in Sask or Russia.
Potential for
Offtake Agreements to finance the complete $800 million Capex with a $100 per tonne discount for 4 years and prevent any share dilution...to remain at
200 million shares outstanding at time of production.
Allana owns
3 large sections of land in Argentina next to the Rio Colorado Mine being built this year..Marafil has discovered next to our property shallow potash at 200 meters deep and over a 14 km zone. Potential initial drilling starting in 2011.
Two other things come to mind...we are slated to be in production in the next 2 years.
and the demand for KCL is going to increase year on year for the next 15 years.
To feed this growing fertilizer demand is is still estimated than approximately two million tonnes of potash are currently required each and every year. This is equivalent to one new mine coming on-stream each year's which is not yet happening. In spite of such upward-trending demand, potash is still being significantly under-utilized in many countries due to poor farm credits and poor supply.
In fact, market experts estimate that the world's leading emerging economies (Brazil, Russia, India, and China) alone will require an additional 28 million tonnes of potash annually to maximize fertilizer application rates.
This is the equivalent of around 14 new potash mines. (taken from Western Potash Website)
You can not produce 18 BILLION more gallons of Ethanol in the next 7 years without some serious revisions to the current voluntary fertilizer applications by farmers and large scale companies. Where is all the Ethanol going to come from??
Production of Biofuels (billion gallons) FAO (Aug 2009)
| United States | Brazil | European Union | Rest of World | World |
| Ethanol | Biodiesel | Ethanol | Biodiesel | Ethanol | Biodiesel | Ethanol | Biodiesel | Ethanol | Biodiesel |
| 2009 | 10.4 | 0.4 | 6.3 | 0.3 | 1.5 | 2.5 | 2.9 | 1.8 | 21.1 | 5.0 |
| 2018 | 16.7 | 1.4 | 13.9 | 0.8 | 3.7 | 4.8 | 4.9 | 4.6 | 39.2 | 11.6 |