RE: RE: Financial post Retiring young- you are without doubt my favorite poster on stockhouse .
I love your volume related posts.
Today $186,000 of shares traded on krn versus $36,000 on wpx.
I hope wpx gets a buyout sooner rather than later, because as much as I enjoy your posts, I would prefer to see you make money as lose it. Any takeout will be at a premium to the current sp. not 10 times it.
i really wish you all could work out the numbers and compare to krn(the mag byproduct is worth close to $100 million as a stand alone product).
Wpx will have close to(IMHO) $100 added to their costs because they will have to structure a very generous royalty deal to get into production . It is the only way they can make it work(IMHO). I spoke with wpx IR and she admitted that the interest payments were way to high on a $3.3 Billion build to make it feasible.
she said they were looking at other options and the only thing that I can figure that makes sense is a royalty deal like the gold companies do. If u do the math after these royalties/opex/taxes/transport/sustaining capex and government royalties are added together you could be looking at a total cost per ton of $320 to $350 per ton.
that leaves $70 - $100 per ton profit and at full production(and it will take 10 years to reach that) that is a healthy profit of $200- 300 if potash prices don't fall any further.
but if they do fall below $400 it won't be shareholders that are winning, it will be whatever entity that signed the royalty agreement and fronted the bulk of the $3.3 billion. And if they include any debt interest in that , you can expect the total costs per ton to increase substantially .