AltaCorp analyst $2.50 target on ICP with Outperfo
Advancements Continue at Ochoa
Two Groundwater Wells Completed:
IC Potash Corp. (ICP-T) announced
yesterday that two deep groundwater production wells used in the supply of water to
its Ochoa project have been completed. Water supplies will be sourced from the
Capitan Reef, a deep, underground brackish water table used in prior industrial
applications.
Pumping tests have now begun to satisfy the regulatory requirements set out by the
BLM and New Mexico Office of the State Engineer. The wells will be tested at full
capacity and testing data will be used to evaluate the planned usage of water in the
production process at Ochoa. Management notes that these milestones will enable
ICP to proceed towards its Bankable Feasibility Study (BFS), which is slated to be
released in July 2013 as well as its Environmental Impact Study.
Continued Progression Towards Production:
At this stage, Ochoa appears
well on track. In addition to recent announcements of a world-class team of experts
for its BFS and recent policy announcements from the state and federal governments
on resource development in New Mexico, we view that ICP is achieving key
milestones that will drive the Ochoa Project further towards production. We remain
an Outperform with a $2.50 target.
IC Potash Corp.
Federal Government to Promote the Development of
Potash Assets in New Mexico
Secretarial Order Drafted:
In a federal effort to expand and promote domestic
energy production, US Secretary of the Interior Ken Salazar announced a draft
Secretarial Order to promote the co-development of oil and gas and potash resources
within the Secretary’s Potash Area (SPA) i
n southeast New Mexico. The SPA is a
resource rich region of ~400k acres in southeast New Mexico, known for rich oil and
gas and potash deposits. The land is managed by the Bureau of Land Management
(BLM) and produces ~75% of the potash mined in the US. The Order had been in
committee stage (at the state level) for the past six months before the draft was
released last Thursday. The Order is designed to encourage regular, constructive
dialogue between industry and BLM. In addition, the draft Order identifies buffer
zones between oil and gas wells and potash mining operations in order to ensure
safety for mining operations and to conserve resources.
The draft Order will be open to a 30-day public comment period. The final Order is
expected later this year.
Positive Implications:
We view the announcement as positive for IC Potash,
given that the Ochoa project is located in the priority region in southeast New
Mexico. This landmark Order could result in any further regulatory hurdles such as
permitting moving ahead at a more rapid pace, thus potentially moving up the time to
production. We remain an Outperform with a $2.50 target.