RE:RE:Re, Re,Re,Re,Re: mineral rightsblackwood2002 wrote: Northmark, I would agree on valuation of roughly 450mm as Pot 1 was almost identical to milestone in most aspects. I would venture to guess that would be a floor price balpark given FS of WPX puts it as one of the cheapest if not the cheapest cost per ton to mine on the planet at around $67/t to mine. Potash corp is almost 2x that cost ! The best thing going for WPX is despite recent softening prices they can operate and be profitable even if potash dropped to $200/T . So if a supply war breaks out and prices drop most majors would be forced to cut capacity (as pot has done recently) otherwise they just hemmorage cash out the door. This is a huge + for prospective buyers of WPX. Rio would certantly benefit to buy us up and mothball there 405 until global demand caught up while in production in 2016 with milestone and making better margin than anyone else. Whoever the potential buyer or debt financier who comes in their risk is greatly diminished with payback at 5-8 yrs with pot prices 350-450 range. I would suspect WPX mgt is banking on the cometitive advantage of its cost structure, water rights, etc which no other brownfield JR can reasonably compete with in a safe juristiction. For that reason I believe the 450mm is a floor and any buyout would push that number higher. As you said, we have enough cash to ride it out for a few years so no hurry in taking a crapy offer and walk away. This is mgt's meal ticket and I'm sure they are not keen to make peanuts on their 7-9 years of work. They own 26% to cash in !! Not to walk away at some lowball offer. Hopefully we hear something sooner than later! GLTA
sorry, but their are major inaccuracies in this post.
while I agree with the valuation in a buyout scenario of between $300-$450 M
there is no way Wpx can be profitable at $300, let alone $200
Wpx has an opex of $108.76 plus transport costs of $59 brings them up to $167.76(see their feas below)
While they do have decent opex figures they are nowhere near the cheapest on the planet as you claimed.
Wpx has an identical mine plan to K&S so it is reasonable to assume they will have the same costs of $4.1Billion to construct their mine. They will have to raise money though equity and debt. The interest and capital repayment alone will add $150 per ton on to that figure of $167.76.
bottom line is that no new mine in sask is getting built or will survive on less than $400 per ton.
Management owns nowhere near the 26% they you quoted.
if memory serves me right! they own less than 2% of the outstanding shares, maybe even less than 1%.
the 26% that you quoted refers to insiders! which is principally made up of the Chinese investment of 20% and the rest is mostly Zimtu capital which is the company that has been paying/sponsoring most of the recent analyst reports/pumps.
please do some proper research before stating "facts".
I attached a link below to a well researched cost break down by a poster called jerichoj from last year.
Key Highlights of Study
Initial CAPEX1
$2.91B CAD
Deferred CAPEX2
$0.39B CAD
Contingency and Escalation included in CAPEX
$0.55B CAD
OPEX3
$62.28 CAD/t at full production capacity
Sustaining CAPEX
Wellfield =$28.49 CAD/t, Plant & Site =$17.99 CAD/t at full production capacity
Rail and Port Cost4
$59.00 CAD/t
Accuracy of Study
+15% to -10%
Read more at https://www.stockhouse.com/companies/bullboard/t.wpx/western-potash-corp#Kft5oIdb8ttx8CC3.99