Good Entry Point for ICP
ICP has entered into a de-risked phase of development, thereby becoming orphaned as speculators have exited their positions in the stock. At this stage, we should see more longer term, stable investors enter into a position and greater value created through feasibility study, EIS, engineering, construction and ultimately production. As such, we view limited downside as the project achieves more development milestones.
In Figure 1, we see Potash One entered an orphan stage following the release of its prefeasibility study in June 2009 for about four months before the share price started to trend higher. We suspect ICP’s share price performance should start to follow a similar path since the release of its PFS last November.
We View a Good Entry Point for ICP: In the wake of a positive PFS, we can see that the stock has trended downwards by ~26%, well below the $1.10-1.20 range where it was trading prior to mid-November, and at
.90 level, ICP is trading at ~0.40x to its project NAV.
We view that the stock may be oversold at this point.
Given the achievement of positive milestones, upcoming catalysts to advance the Ochoa project with significant project de-risking to date, and weak price levels, we view that now would be a good opportunity to take a position in ICP.