RE:take out target.I agree, GSFC made it clear they are too broke to finance the project, and I assume too broke to service the off-take agreement. They're looking for partners to both finance and develop/run the business which makes them nothing more than just another shareholder, so forget developing the project alone or a JV. And if you were to believe certain affidavits from litigation, GSFC would have all but burned KRN's name among Big Potash, so DEFINITELY forget a JV.
I agree that a takeover offer is probably the most realistic scenario, as in light of the above KRN does not have the wherewithal for either a JV or develop the project on standalone basis. Could be all cash or all stock or a mix. I don't really care personally, just about the value of the deal.
That is only possible if my thesis that GSFC is too broke to service the offtake is correct. If not, they'd likely look to continue running the board, considering the stated strategic purpose of their investment in KRN and past history. No way we get ANY deal done with anybody if that happens.
HOWEVER, in the event of a full blown sale of the bidness, GSFC wouldn't let it go for $2. Their average investment cost is $2.85 and they're not offloading at a loss at peak potash prices when the last time potash prices were favorable they invested at $8.15 per share, for an implied market cap at the time of 225M or ~$5 per share at current share count. They are also greedgoblins, so if a takeover deal ever happens it's gotta be for a lot more consideration than $2. Plus, $2 a share is an absolute joke of a steal compared to the actual intrinsinc value of the asset.
Even at $225m it's very cheap for a project that can make almost $2b in revenue a year in production at current prices. Assuming a total $3b financing for all 3 phases and an EV/Rev of 3 (Nutrien right now is >3), had the deal been financed as expected 5 years ago and not a penny of the debt repaid, the equity stub today would be worth $2.4B on the market. The difference in total cost to the acquirer is a drop in the bucket at $225m for the equity, it implies a total investment cost of $3.25b instead of $3.1b for a project with a fair market value of $5.5b. This value is actually less than intrinsinc value estimated from the NPV calcs of the OLD technical report (that had like $400 average potash prices). $2.4B capex + $3.4B NPV = $5.8B total value in then-today's dollars. There is a LOT of wiggle room between $3.25b and $5.8b, increased opex can't make up for $2.5b in value, and just the $3b capex assumption is already really conservative compared to the intial $2.25b estimate. If anything with the current potash outlook, you'd expect NPV to go UP not down.