RE: impartial analyst
There are Chinese walls at these firms that separate the business side of firms from the analyst side.
I think you are starting to clutch at straws if you are ignoring independent analysts and saying they are wrong and you are right.
I have been saying some very similar things as these analysts 6 months previous to these reports.
When you run the numbers on Wpx it just doesn't work. This is going to be a $4.1 B project. The interest alone(if they got financing, which I don't think they will) would add $100 per Ton to their opex.
$108 is their opex. Add in $60 for transport , another $60 for royalties to landowners, province and federal. That brings you to $228. Now add in $100 for interest and your at $328 per ton.
Don't forget that any loans would not be interest only, they would require capital repayment, so add another 30 per ton onto that. That leaves about $42 per ton that still has taxes to be paid out of. This is at current potash prices.
What happens if Potash falls to $350 a ton.
How is shareholder values insured if they raise 30% equity. 3 BILLION SHARES!
The only winners IMHO will be management.
I advice you to go back and look at the financial statements for the last 2 years. Management have run through an awful amount of money. $110 Million spent so far.
Krn's management spent about $45 m less getting to the same point.
In fact, they are further along because they have cleared the mine and plant site, drilled their water wells and their disposal well plus hired most of their engineering staff and site crew. All for tens of million less than Wpx has.
Check out the fee's paid to themselves, the rent, the vehicles. Look at how much they spent on corporate travel the last 2 years and compare it to what allana or Karnalyte spent.
It's incredible.
Wpx management have invested a lot of your money in companies where they are directors. Do you believe you have any chance of seeing that money back?
I know you say, why would the Chinese invest $31 million if they had no plans to help build it?
But I say there are political machinations going on that you and I are not privy to.
Maybe they feel that they can use this as leverage in negotiations to push Canpotex down $5 per ton, who knows.
If they import 6 Million tons, well there is their $30 Million back in the first year.
Now they have a seat on the board and have inside knowledge to what is going on.
Here is what I do know as a fact.
Wpx IR told me about 5 months ago in no uncertain terms that they were not looking for an offtake, and were not looking for an imvestment like krn received.
and trust me, I covered this question from a million angles.
She told me that they knew the interest rates would be RIDDICULOUS on a $3.3 B mine and thats why they didnt want to sell 20% because it would be a drop in the ocean.
So what are they now on a $4.1B mine?
They didn't want a smaller offtake. They wanted someone to come in and take the whole thing.
So why the huge change in direction?
Why did China Blue walk away a year ago? A year ago wpx were looking for a partner to come in with a large sum and take the entire production as an offtake.
China blue walked away from that, and now they are back. Can we assume that china blue didn't like wpx's terms? I think we can.
Now all of a sudden Wpx is out of cash and they suddenly like china blues offer.
I just can't see any value for shareholders in this. I like the way Smartinvest has been trading this, but as a long term hold, I think this is going to .25 cent next year.
I like Krn because I can see how the numbers work. They already have a large portion of the cash they will need.
I can see how my shareholder value can be maintained.
They can use the cash generated from phase 1 to largely pay for phase 2, and same for phase 3.
Plus they have a management team that has built and ran potash mines before.
I love Aaa because it is in the $600m club as well and has they best location for shipping to Europe and Asia.
It also has a very good management team that has been careful with shareholders money.
presuming: 30% equity - 70% debt
KRN - Capex $600 Million.
Aaa capex =$ 630 Milliion
WPX - Capex $4 200 Million
AAA/KRN 30% = $180 Million
WPX 30% = $1250 Million =
KRN $180 - $75 = $105 million needed.
AAA $190 - $25 = $165 million needed.
WPX $1250 - $32 = $1218 Million needed.