Chris Temple Artile -- Encanto to hit 2016 "Home Run"Many of you were speculating a few weeks ago whether or not Encanto was the stock named by Chris Temple as the company that would be a "Home Run" for 2016. I received an email from Gary yesterday confirming with the text of the article. My personal opinion is that this article doesn't mean much; however, I agree with most of what is in here. Apologies for any bad formatting.
Anyhow, Enjoy.
srpat
Chris Temple – December 2015 National Investor Newsletter During anything resembling a normal market for resources--let alone a bull market--news that an
insider of a company (who already owns one of the largest single positions) would single-handedly buy a
private placement at DOUBLE the current market price would draw gasps, if not buying. But these days,
such news instead draws yawns.
Such a thing did just happen where
Encanto Potash is concerned. Following this last week's
purchase by Hamad Al-Wazzan, who took down the roughly C$1 million deal at C12 cents/share, the
Kuwaiti investor is now the single-largest
reporting shareholder of Encanto, with an 8.7%stake in its
common shares. And were he ultimately to 1. exercise his options and 2. convert a debenture he holds,
he'd have a bit shy of 14%of the company. (NOTE: I say "reporting" above as there are believed to be
other large stakes in Encanto on the part of a couple other investors, including Frank Giustra, which are
held in separate entities so as to
not have to be reported.)
I have long advocated sticking with this company for much this reason: that the savvy, well-heeled
investors in it would keep this company moving forward out of their own pockets if necessary until they
hopefully one day hit pay dirt. I suggested several months ago in sending you a
separate e-mail just
concerning Encanto that that day could be drawing nearer; yet after some action in the company's shares
at that time, they have fallen back once again to the C6 cent/share area, as resource weakness,
ambivalence overall and (tragically perhaps, where this case is concerned) impatient investors just don't
want to wait any longer.
But I am leading off these company updates with Encanto because if I had to pick just one company currently on my list that stands the best chance of being THE "home run" of 2016, it's this one. Back in October, Encanto entered into a Memorandum of Understanding (MOU) with MMTC
Limited, India's second-largest company with a market cap of around $60 billion. In layman's terms,
MMTC is a wholly-owned part of the Indian government; kind of like a "crown corporation" if you will.
The news release from
MMTC is on their web site at
https://mmtclimited.gov.in/contents/view/5/110.
Encanto's reporting of this news is on its own site at
https://www.encantopotash.com/english/news/default.aspx?item=121 The market pretty much ignored this. After all,
companies enter MOU's every day. But
governments--and de facto government agencies--
don't. And what is staggering among the implications of
this MOU is that India in effect replaced a smaller (but still substantial) entity that had been in some talks
with Encanto previously
with MMTC.
To the consternation of some of the company's private / retail shareholders, the company has not
been a big promoter of its own story / stock.
That is even more now a matter of necessity/good sense. What appears to be coming together here--painfully slow as this process has been for various reasons--is
a deal in the end which will see the lion's share of future production of Encanto's Muskowekwan Potash
Project go to India in what will hopefully soon be a nailed-down deal brokered with MMTC.
When you piece together what has been made publicly known to date, a rather
delicious deal
appears to be nearing. Many elements particularly that modern-day progressive national leaders just love
to glom on to are all at play here. We would have a major emerging market nation, India, taking better
care of its farmers specifically and people generally in tying up future fertilizer supplies. We would have
a new government in Canada in the position, if it helps push this, of being able to announce early on a big
deal
outside of the energy and mining sectors. A nice twist to the whole story is that a deal between
Encanto and MMTC
also will be of benefit to Canada's First Nations citizens; specifically, the
Muskowekwan First Nations (also, as a tribal entity, a significant shareholder of Encanto.)
In short, we are talking about a company here in Encanto (based just on the Muskowekwan asset
and its massive NI 43-101 compliant resource) that has the ability to generate revenue of roughly $1
billion a year
for over a half century. It has management and money behind it unlike most any other
junior resource explorer you'll find. It appears very close now to a definitive agreement with a quasigovernmental
entity to help feed the planet's biggest population.
And its market cap as I write this is about C$20 million.