IRR comparison (AAA vs WPX) Ferti, you are right. If I am POT (or Yara), I wonder which company is more attractive?
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According to WPX feasibility study, their IRR is at 18.6% using potash price at $450. They include figures for "10% Decrease in Potash Price", which give a IRR of 16.5%.
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According to Allana feasibility study, they have an IRR of 32.9% using potash price of $430... and if the price of potash fell by 10% (380$), their IRR remains at 28.8%. The project is even economically viable with the price of potash at 344$ (page 194 of the FS, See below for full analysis as well as footnote 12).
"ALLANA’s Danakhil Potash Project would still be economically viable with a decrease in MOP prices by over 20 % or an increase in CAPEX by 20 % respectively. Confirming this, the IRR rates of each scenario as given herein are in a narrow range and never drop below a comfortable 25.4 % indicating that the project will be able to serve its debts at all times in any of these scenarios and even with higher associated risks.
