Next catalyst for world's leading SOP project The release of the Prefeasibility Study (PFS) was a material de-risking event for IC Potash.
With the PFS complete, negotiations with potential strategic marketing equity partners, distributers and/or end users can set in motion potential term sheets which are the pathway to monetizing the plan and create credit enhancement facilities to finance this massive resource into production. ICP is well positioned for strategic partnerships with global trading, fertilizer and mining companies.
This is the next catalyst.
The PFS provides for improved economics in almost all of the relevant metrics including lower opex and capex, and higher total production. Production is targeted for a 2015 start-up with a project life of 40 years beginning at a production rate of 568,000 short tons per annum of SOP plus 275,000 short tons per annum of potassium magnesium sulphate (SOPM). Opex per ton of production is $147, which is well below the industry norm (near $400 per ton) and even the lower cost producers (above $200 per ton). The prefeasibility computes a $1.3 billion after-tax NPV and a 26% IRR.
Development capex totals $706 million, which is low relative to most junior potash projects. ICP’s project does not require the same large scale of production as many of the other leading junior potash projects (i.e. Western Potash requires $2.8 billion for its project).
Many analysts continue to prefer SOP over MOP juniors, and as one of only two players in the space, continue to really like the ICP story.
ICP's asset is huge, potentially providing multi million tons of product into a market where 60% of capacity comes from players with over triple the opcosts.
Given this, and the scarcity of low cost assets, analysts believe this project gets built, unlike the vast majority of MOP projects.
ICP currently trades at less than 0.25 x NAV based on the most recent analyst research report which had a $4.16 per share NAV calculation using a 12% discount rate.
IC Potash has 7 analysts with strong buy ratings and targets as high as $2.50.