Junior potash stocks surge
Shares in Passport Potash and Allana Potash climbed rapidly on Wednesday with no obvious catalyst but, one analyst notes that actual potash prices continue to climb higher in Southeast Asia and Brazil."
Author: Kip Keen
Posted: Thursday , 21 Jul 2011
VANCOUVER, BC -
Though there was no obvious news as a catalyst, the shareprice of two junior potash companies, Allana Resources (TSX-V: AAA) and Passport Potash (TSX-V: PPI), surged Wednesday on heavy trading volumes.
Passport Potash jumped 25 percent to C.75 and Allana Potash climbed 13 percent to C$1.59. In terms of stock with the highest trading volumes on the Toronto Venture Exchange, Allana and Passport respectively held the number one and three spots with share volumes of 4.8 million and 3.3 million.
"I don't see any special news accounting for the strength of junior potash companies today," Patricia Mohr, Scotia Capital's vice-president of economics and a commodity market specialist said in an email. "However, there was an equity research upgrade today for Allana Potash (by Fraser Mackenzie) and actual potash prices continue to climb higher in Southeast Asia and Brazil."
Of course, when potash prices are strong, so too is interest in potash explorers. Allana, especially, has been in the sights of investors eager to capitalize on squeezed potash markets that, as Mohr pointed out, would appear to be here to stay for the rest of the year, at least when it comes to Canpotex. Allana holds a sizeable potash resource at its Danakhil project in Ethiopia with measured and indicated mineral resources at 673 Million tonnes @ 18.65 percent potassium chloride.
Passport, on the other hand, is at an earlier stage of development. A relative newcomer to the potash game, it acquired its flagship Holbrook project in Arizona late last year. It has suggested, however, based on historic calculations published by the Arizona Geological Survey, that there are some 2.5 billion tons of potash in the Holbrook basin.
But the question of whether these, and other potash deposits held by juniors, such as Western Potash's Milestone project in Saskatchewan, or IC Potash's Ochao project in New Mexico, will be developed is very open. Analysts have noted that only a select few potash deposits will meet the criteria of majors or other project financiers: That they be huge and low cost and offer advantages over the projects already out there.