Majormac.......
You wrote -"Anyway, if too much potash supply poured into market, do you think KRN can survive and be brought into production? Zero hope for KRN too if that is the case."
Here is where you are wrong on the above statement.
You see Krn's high grade carnalyte deposit allows for the manufacture of high purity granular potash pellets which exceed the industry standard.
They have less than 1% sodium which is about 2% less sodium then bulky irregular shaped compacted granular product. The low sodium content makes it particularly good for growing rice.
Krn's granular pellets are smooth and spherical and are perfect for direct application or for bulk blending. Coincidentally, that is exactly why GFSC invested in Karnalyte. GFSC is building a Bulk Blending facility and because Krn's high quality potash does not need any further processing to be blended nice and neatly with other fertilizers.
Wpx's industry standard granular product would need a lot more processing at a facility of it was to be blended.
Basically, if you have ever opened a bag of lawn fertilizer, and you see all these pretty white spherical pellets, well that is what the pellets from Krn's process looks like.
On the other hand, if you have ever had any gravel or crush rock delivered to your house, then you will know what wpx's rough lumpy granulated product will look like.
One is perfect for machine application by farmers, the other less so.
Other companies could produce a similar high quality, low sodium spherical product like Krn from their Sylvinite deposits, but unfortunately they can't do it as cheaply as Krn so it would be cost prohibitive .
You need a high quality carnalyte deposit and a high quality experienced potash solution mining management team just like Krn has to make it work.
Krn can achieve a premium for their product and in an environment where there is oversupply, the best product will do better than the rest.
its like the analyst below says.........
Echoing financial concerns for Western, Salman Partners analyst Andrea Rubakovic says she continues to prefer Karnalyte out of the Saskatchewan potash juniors because of Wynyard’s “relatively low” start-up cost of $600 million.
“We continue to believe that in the current financing environment only the best quality potash assets, of those with a unique appeal to strategic investors, have the potential of being financed through to production,” she writes. Rubakovic has a 40¢ target and recommends a sell on Western.
Just so you are aware, Krn is anything but identical to any of its neighbouring projects.
The first thing you need to realize is that carnallite is way more deliquescent mineral than sylvinite, so it preferentially dissolves way quicker. That means that the Kcl and the mag are dissolved and come up leaving the vast majority of the salt in the ground. Hence no salt piles.
Because of its deliquescence, it is a real problem in conventional mining because it will make the area mined unstable if it comes into contact with the smallest amount of moisture.
No wonder the conventional mines hate it. But it is a chemical engineers dream(and that's exactly what CEO Robin Phiney is) for solution mining.
This means that Krn can put a pipe in the ground and 18 hours later the potash comes to the surface. With sylvinite you have to pump salt out for months before you get a useable brine.
In part, its because their is so little impurities that come up in the Brine it gets potash that is 99.5% pure which exceeds the industry standards by a long ways. In fact it is such a high grade that they it will be in great demand on the industrial market.
Krn has a seam of carnalyte that is 16 STOREYS HIGH, yes that high, and their reserves and resource only covers 20% of their property. They have shot 2D imaging and they can see that the seam is continuous throughout the property.
Imagine that, 16 STOREYS HIGH! And it is continuous throughout the property.
Now you mentioned the OPEX.
Krn's opex is $129 per ton for the 625k facility and $125 for the 2.125M phase 3 facility.
Krn has wisely put all the costs into their OPEX and not tried to "place" opex expenses in things called "sustaining capex" like some companies do.
Wpx through its creative labelling has a combined opex of $108
As to Krn' s opex , I pasted a portion of a report on Krn below.
Krn has been extremely conservative in their feasibility with their capex.
"The feasibility study appears conservative with an opportunity to lower operating costs substantially. The brine saturation has been assumed to be around 9% KCl leading to the US$130 per tonne operating cost estimate.
However, there is potential to increase this concentration by several percent by tweaking water temperature, residence time and surface area.
This could lead to a material decrease in operating costs. As a rough guide, every 1% increase implies around a 10% increase in production and a 10% decrease in operating costs.
Accordingly, a 4% increase in concentration to 13% may reduce operating costs by over US$50 per tonne."
This sort of efficiency is something that I believe is very unique to Carnallite mining .
Deliquescent is a great word. I love using it.
"Mom, my crystal light is very deliquescent" . I love it!
The other great point about the Magnesium by product is that because it is 99.5% pure like the Kcl it is perfect for making high quality Hydromagnesite which is in big demand in the pulp and paper industry as well as paints.
And here is the kicker, it retails for as high as $1800 per ton.
And this is Krn's "waste product".
In my estimation Krn is a Ten bagger from here, yes you heard me right a Ten bagger!
And several analysts agree with me.
I only own 2 stocks, Aaa and Krn.
Both these mines are at the $600 m mark for construction.
$600m is a manageable figure for the purpose of debt and equity.
The dilution of existing shareholders won't be that great, and the interest payments on the debt won't be high.
Now compare that to the $4.2 Billion that the BMO analyst believes wpx will need to build their milestone mine.
Wowzers!
Both Krn and Aaa have excellent management teams. Aaa will have one of the lowest opex's world wide, and it is my belief that Krn will have the lowest in Canada.
I should also mention that aaa is in a perfect location from the perspective of shipping product to Asia, Africa or Europe.
I think both are 10 baggers!