Primed To Build a World-Class Potash Mine We are initiating coverage on Western Potash Corp. (TSX: CCE) due to its attractive risk/reward profile. The company’s Milestone Project is one of the most attractive greenfield (in-development) potash projects in the western world. The complete 20-page research report is available in English and German, whereas the below represents only an excerpt of its key findings:
Milestone vs. Legacy: How These Regional Peers Match-Up
Comparable industry transactions provide a useful valuation benchmark for junior potash developers. In particular, we believe that the $434 million CAD acquisition of the Legacy Potash Project by the German fertilizer manufacturer K+S in November 2010 offers the most relevant comparison. For context, Legacy and Milestone are geologically similar in size, grade, and amenability to solution-extraction mining. Most other logistical metrics, as well as the availability of necessary project infrastructure, are likewise similar. K+S is currently developing Legacy into a mine and is on schedule to start production in 2016. With an update of its feasibilty study in 2013, K+S has increased Legacy’s CAPEX to $4.1 billion CAD, thus the numbers in below ta- ble, which represent initial feasibility economics of both projects, are even worse for K+S now putting Mile- stone in an even better light.
In order for WPX to gain up to a comparable market capitalization of $434 million CAD, its stock must rise to $1.95 CAD; an appreciation of 457% from its current share price of $0.35 CAD.
The above represents an excerpt of a research report which also includes a look into the fundamentals of the potash market and its rosy outlook. The 20-page PDF can be downloaded via the following links:
English:www.rockstone-research.de/research/RockstoneWPX19FEB2014english.pdf
German:www.rockstone-research.de/research/RockstoneWPX19FEB2014deutsch.pdf
Yesterday on February 19, Verde Potash PLC reported to receive more than $100 million USD to develop its Cerrado Verde Potash Project into a mine. The funds are provided by the Brazilian Government via the Brazilian Development Bank and/or FINEP (Financing Agency for Studies & Projects). This latest transaction strengthens our confidence that the depressed state of the potash market is history - we anticipate the potash price to start recovering now. Our research report on Western Potash Corp. also includes a look into the fundamentals of the potash market and why we expect it to become one of the most profitable markets for investors to participate via advanced-staged exploration and development projects that are ready to be brought into production once a price recovery has become obvious. Verde's stock has tripled its market value in the last 7 days only rising strongly from around $0.30 CAD to more than $1 CAD on the TSX. We are confident that similar appreciation will occur with Western Potash as well, whereas its stock has been successfully breaking out of a triangle price formation lately - which is a bullish sign:
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Disclaimer
Neither Rockstone Research Ltd. nor the author was remunerated by Western Potash Corp. to produce or publish this content. However, the author holds shares of Western Potash Corp. (TSX.V: WPX, FSE: AHE) and may sell those any time without notice. Please read the full disclaimer inside the research report and on www.rockstone-research.com as none of this content is to be construed as an “investment advice”.