RE:RE:RE:RE:Winners of the 1st phase of the poolwshaw14, thiking outside the box?? A JV is a form of dillution as future profit will be share with the partner. Regarding offtakes, to my knowledge, no potash importers have made upfront cash payments to a junior when they signed offtake agreements. If you have an example, please feel free to share with the board.
Regarding the price of potash, I posted several time an estimation that I did about the future share price of Allana once they reach production (see below) based on the parameters of the feasability study. Back in mid-2013, I was predicting Allana will be trading at $1.82 in 2016 (full production) with the price of potash at $456 and a S/O of 450 million shares. Given Allana won't likely hit full production until later in 2016 (given the recent delays), that the price of potash will likely be lower than $450 and that the S/O will likely be higher than 450 million shares given the low SP to do the financing, I don't see how one could make the argument that Allana will be trading over $1.50 in 2013. If you have a logic, please share with the board.
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Here a repost of the estimation I did a few months ago of the SP once we will hit production (based on the FS study). There is a lot of upside at the current SP.
Here how I calculated the share price (all the parameters come from the FS and it is based on 1 MTPY and no railway):
First, some theory about earnings per share (EPS):
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Definition of 'Earnings Per Share - EPS' The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
Calculated as:
EPS = (net income – preferred dividends) / weighted average number of common shares When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.
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From the equation above:
1-
Net income is also known as “
Profit After Tax”. Profit After Tax is the concept used in the FS.
2- Although we do not have a
dividend, the FS conceptualized the “
Government Free-Carried Interest” (aka the 5% royalty) as a dividends (p.190 of the FS))
3-
Average outstanding shares. (I use 4 different scenarios, ranging from 300 m shares to 450 m shares). I add 3 million shares every year for compensation (new options)
| Data below are taken from the FS (p. 222 of the PDF) |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| Profit After Tax | 61,310,600 | 185,104,960 | 283,890,250 | 293,149,580 | 301,127,333 | 308,447,899 |
| Government Free-Carried Interest | 3,065,530 | 9,255,248 | 14,194,512 | 14,657,479 | 15,056,367 | 15,422,395 |
| Price of potash | 456 | 465 | 475 | 484 | 494 | 504 |
| Profit After Tax (net income) minus Government Free-Carried Interest (dividend) |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| | 58,245,070 | 175,849,712 | 269,695,738 | 278,492,101 | 286,070,966 | 293,025,504 |
| Number of shares (Different scenarios) (3 million options add every year) |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| # shares (scenario #1) | 300,000,000 | 303,000,000 | 306,000,000 | 309,000,000 | 312,000,000 | 315,000,000 |
| # shares (scenario #2) | 350,000,000 | 353,000,000 | 356,000,000 | 359,000,000 | 362,000,000 | 365,000,000 |
| # shares (scenario #3) | 400,000,000 | 403,000,000 | 406,000,000 | 409,000,000 | 412,000,000 | 415,000,000 |
| # shares (scenario #4) | 450,000,000 | 453,000,000 | 456,000,000 | 459,000,000 | 462,000,000 | 465,000,000 |
Earnings per shares according to the different scenarios =
Profit After Tax (net income) minus Government Free-Carried Interest (dividend) / number of shares |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| Earning per share (scenario #1) | 0.19 | 0.58 | 0.88 | 0.90 | 0.92 | 0.93 |
| Earning per share (scenario #2) | 0.17 | 0.50 | 0.76 | 0.78 | 0.79 | 0.80 |
| Earning per share (scenario #3) | 0.15 | 0.44 | 0.66 | 0.68 | 0.69 | 0.71 |
| Earning per share (scenario #4) | 0.13 | 0.39 | 0.59 | 0.61 | 0.62 | 0.63 |
Now, if we apply the average P/E ratio in the industry (14.08) (see below for calculation (P/E ratio from March 25, 2013))
| | P/E ratio |
| AGU | 10.3 |
| POT | 16.5 |
| ICL | 13.5 |
| IPI | 16.3 |
| MOS | 13.8 |
| Average | 14.08 |
We get the following share prices (estimates may vary due to rounding):
Share prices according to the different scenarios =
Earnings per shares * P/E ratio |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| Share price (scenario #1 = 300 m shares) | 2.73 | 8.17 | 12.41 | 12.69 | 12.91 | 13.10 |
| Share price (scenario #2 = 350 m shares) | 2.34 | 7.01 | 10.67 | 10.92 | 11.13 | 11.30 |
| Share price (scenario #3 = 400 m shares) | 2.05 | 6.14 | 9.35 | 9.59 | 9.78 | 9.94 |
| Share price (scenario #4 = 450 m shares) | 1.82 | 5.47 | 8.33 | 8.54 | 8.72 | 8.87 |
Read more at
https://www.stockhouse.com/companies/bullboard/t.aaa/allana-potash-corp#zxrbOXgLAxH3rtZl.99