Junior Potash Reality Check:With BHP sowing the seeds now of getting into the potash
business and a projection of producing around 8 million tonnes a year from it's Saskatchewan mines, the market for junior Potash stocks with their property in Canada is dead. But for investors who wants to invest in a junior, there's still hope. Allana resources has a property in Ethiopia that has a potential Potash resource amount of over 1 BILLION tonnes (AAA is the ticker symbol) - they already have 43-101 compliant resource amounts of over 100 million tonnes on only 7% of their property. Drilling is currently under way to expand this amount (results to follow in February). They already have a strategic Chinese partner plus many many other positives - just do a little research, you will be amazed and is trading so low. Also, they will have potentially the lowest CapEx cost globally (it will cost them much less than half a billion to develope their mine). Many analysts have a 12 month target price of over $1 on the stock (currently at only 36 cents)
Here's a recent post I put on the AAA board: there's also two links at bottom to a recent CEO interview (Dec 10th 2009)
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Great news for AAA, see this article:
https://www.forexyard.com/en/news/ANALYSIS-BHP-plan-signals-major-shift-in-potash-industry-2010-01-20T225607Z
The reason that it's great news if it's not obvious to some (see my last two posts) is because the Canadian Juniors with their property in Canada is almost certain not to get financing anymore with this type of announcement by BHP.
This makes AAA the clear winner in the junior space.
Why? Simply because of the CapEx costs and their eventual yearly cost of production. Even with potash prices around a level of $300 a metric tonne, they will still make a lot of money considering how little it will cost them to produce 1 million tonne a year. Remember, their energy costs will be very low since they have the ability to use geothermal energy, labour costs will be lower, shipping costs to Asia will be lower, government taxes will be lower, etc when you compare to Canadian projects.
Companies such as Amazon mining (slow release fertilizers not needed with potash prices low, farmers will buy potash instead), KCL, API, etc will suffer as a result of BHP. AAA on the other hand will actually benefit due to the fact that investors looking at investing in a junior will see AAA as a clear winner in the group since they can make money at lower potash prices. Also, remember once they complete one mine and start making profits they can easily double or triple their production given the amount of near surface resource they have.
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CEO interview part1:
https://www.youtube.com/watch?v=q5VtxqNg_zU
Part2:
https://www.youtube.com/watch?v=9jTeEPn1A68&feature=related