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They are definitely going to enrich themselves through this entity but if they are finding the deals and packaging them I think it is the way of the wild. Yesterday's release commented on the sulphuric acid issue but not in detail:
"Sulphuric acid for conversion of phosphate concentrate to
fertilizer is available from Doe Run Corporation at La Oroya, approximately 75 km from Sincos, and at
chemical production facilities in Lima."
Bottom line for me is that I am going to play it just due to the scarcity of competing plays. Everyone has certain risks they accept and certain risks they view as too high. I look at Mag Industries and think the country risk and lack of focus is too high. That doesn't make it a bad play but I would probably get shaken out on the fist down move because I don't fundamentally believe.
RE: Sprott
These folks have done funds for a bit but seem to be changing their tune a little bit and attempting an Endeavour type listing. I did chuckle a little at the MSA/PSA but that is the way this works. Sprott is a brand to a lot of us investors much as Coke, Pepsi, or Molson. The team of Sprott, Embry, and Bambrough is well recognized in the industry (understatement) and to a lesser extent Sinclair and Lyons is as well. These people get deals passed to them all the time and my gut feel is that they are tired of strictly working with other equities and have seen some deposits they think can be managed better than the incumbents. Based on their success at picking equities it probably pays to give them a pass here. Of course they are going to get enriched first but the pig closest to the trough gets fattest. I have no problem with that. The key to long term will be how fat they allow the rest to get.
Balanced out my Lara with a position in SCP.TO. Not necessarily a cheap stock and the leverage to fertilizer is weak but it covers my bases on this particular deal.
Retrace of the move from $.93 to $2.26
.382=$1.75
.500=$1.60
.618=$1.44
Confluence of support at $1.60 as the resistance area of the October breakout. 50 Day MA is $1.68 which was close today. With all that said ISX looks pretty volatile so it could retrace all the move. Seasonal trends argue not but the herd is spooked so who knows.
Added a little more ISX.V
Doing a picture perfect retrace, so far anyway.
The deal is definitely not clear but you can kind of piece it together from the two different releases. I do believe you are correct that it is 10% or half of the equity in NewCo. I am also assuming the NSR buyback is Sprott's option and it would be a no-brainer to buy back at 0.5% NPV. How much of the $2M in payments goes to Lara is another question. I attributed all of this to Lara and that is unlikely to be the case so the value of the deal needs to be adjusted down. The biggest portion of this is clearly the shares in NewCo and one has to guess how much this could be worth. Once production comes could the company be worth $500M? $1B? It is hard to say as that is so far away. Clearly their could be substantial value in those shares which could quite easily be a multiple of Lara's current market cap. All of this without even discussing the other projects in their stable which at a glance do look promising. Fertilizer juniors are hard to come by so I added a little bit of this guy as it is a better way to play than through Sprott (IMO) but I would rather invest in NewCo to be honest. It doesn't seem like that opportunity is going to come as early as I would like though.
Not LC but I took a look at LRA
and came up with some plusses:
+Project generator model (gives many opps for success)
+low market cap (lots of room for appreciation)
+tight share structure (tends to lead to large directional moves)
+Sprott gives vote of approval (huge IMO. Spent a fair amount of time in the uranium space and when they showed up in a particular stock it was consistently a good sign.)
+Resource size had a historical inferred size of 61 million tonnes. I think Anglo's share of their BHP venture right now is 105 million tonnes. Clearly this is not apples to apples but should give you a rough idea of valuation. ALM is currently valued at $135M (which is low IMO) and LRA is valued at around C$18M. Other factors like deposit location and historic vs. NI 43-101 should be considered.
and some minuses:
-Project generator model (they tend to JV properties and can get much less value from them than if they developed.)
-Not a pure play (phosphate is a small part of the whole this can be good too if you are looking for diversification but I am looking for leverage and diversify by stock selection.)
-The deal. Sprott gets 100% of the deposit if they meet the terms (and they will if the deposit is feasible.) They also have to foot the exploration bill, pay LRA $2M, create a listed venture to house the resource and give LRA 10% of the shares, and a 0.5% NSR (which can be purchased back by Sprott at production time.) (The news release quotes higher numbers than mine which are directly from Lara's site. I think the higher numbers are likely for the Mantaro Group as a whole while the lower numbers are Lara's share of that haul since they are only a part of the group.)
So what might the deal be worth to Lara? Here is a stab:
*$2M in payments
*10% of the shares of NewCo (for a starting point let's use Anglo's current market cap - $135M - but keep in mind that this is a hugely variable part of the equation) or $13.5M
*2% NSR which can be purchased for 0.5% of NPV. I am not a financial wizard so I am going to wing this one by looking at NSR buybacks I have seen before. Typically the buyback is only 1% and is in the range $1M on smaller projects. If that holds true here the value to Lara is around $500K ($2M for 2% - Lara gets 0.5%). This again is pretty widely variable.
So all these back of the napkins calculations add up to about $16M if the projects gets the green light. The good thing about this setup is that does not cost Lara a dime as it appears Sprott covers all costs from here. Not a bad deal for a company currently valued at $18M with a bunch of other projects and JV's. It would have been better IMO is they would have done a 75%-25% deal but it looks like they are more interested in cashing this one out.
I will be more interested in NewCo when it is spun but for now it appears the only way to play this deposit is via Lara. Anybody care to correct or inject new numbers?
Thanks for PM. My membership does not allow private replies unfortunately.
Very nice. I took a small position. It is always good to see Sprott involved.
Dunno who but I took a little of the offer down in two accounts. Probably premature but I can keep buying if they keep selling.
Agreed. Those who spotted the imbalance and bought BLR are now seeing the advantage stripped away. I am not pleased.
It will take a lot of money to get this thing off the ground if that is truly the desire. I doubt they get there before being bought but who knows?
FOS BOT Deal
Still pretty quiet
I think a technical correction could happen at any time but there still are very few people who know this story so the chance of a top of any importance is pretty low. Never impossible but pretty improbable I think. You mention the U story but this is exactly where it was when I took an interest. You had Cameco, Denison, Strathmore, JNR Resources, NCR, and UEX. That was it. I believe a couple of the other early plays were forming but not public yet. Discussion was hard to find. You could place even money on them all and sit back and enjoy the fun. Boy did that change in the last few years. I wonder if this sector will play out the same way. I actually took a run at fertilizers two years ago after reading some various articles but was too early. I played with Spur, Atacama, and a little company called Erin Ventures back then and didn't make a dime. There was a lot of money to be made elsewhere so I didn't give it another thought until the sector was mentioned by a good friend last year. I wish I had kept up a little closer as last year was really the year to get in on these little babies. Still, this summer afforded some good entries and I think it will continue on into the spring with the requisite hiccups along the way.
RWD.AX doing nicely tonight. I leave the markets in the capable hands of our Aussie brothers...
David Pescod's Late Edition
Not always on target but who is...
"With the big news out of Ucore today, it’s a pretty excited
Scott Koyich was here on the phone. The public relations
agent to the stars is excited because Ucore is one of
his clients. We have to credit Koyich with some of the best
stock picks over the last year because of his selection of
Anglo Minerals. To get his take on the world today he believes
that “management behind Anglo is currently working
on increasing shareholder value,” that’s his quote.
We must admit that rumors out there suggests that
because of high potash prices they might well be trying
to sell the company. The question is, how much it might
be worth. These days potash assets are good things to
have."
Trade the suckers...
I have done a lot of that kind of thing in the past. I was reasonably early into the uranium sector and learned the waves pretty well and traded quite a bit. I got surprised on several occasions though and was separated from a good stock way too early. In looking at the valuations of the few juniors in this sector it looks like a similar move is in the offing. I am inclined to try and hold these a little more long term. Specifically a company like Anglo really looks like it is sitting on the motherlode astutely picked up when nobody cared about potash. BHP has recognized the resource clearly. So what is just the known resource worth as it gets closer to production? Do we attribute any blue sky exploration value? Clearly there is a lot of property that has not been explored. What is hidden there? BHP will take them out before they realize full potential but for a company like BHP it is better to wait until the resource is more sure and that could be at a market cap closer to $1B. Then there is Baltic/Phoscan, who also seem to have cherry picked a prime property next to a major. Not yet in bed with a big partner but seems likely to happen. Consolidating the asset is good even if the split to Baltic is weak. ISX also is an interesting punt with a big land position but maybe a bit less credibility. Still, what might they have on that property? Clearly more speculative but could be a great play with execution and some favorable geology.
The market is definitely a bit heated right now and could correct sharply once all the buyers are fully moved to one side of the ship but supply/demand fundamentals do not look likely to be brought in balance any time real soon. Add to that an inflationary back drop that puts a little extra wind in the sales and you have to think the potential is great. Something can always go wrong but the setup here is very nice indeed. Those who can trade will do so I am sure but I am more inclined to allow plenty of leash on this trade. Then again I usually sing a different tune come spring.
A technical correction is definitely warranted but the underlying strength in these issues could surprise everyone. What are the market caps of these little guys right now. Look at the potential resources or claim size in prospective areas. Now look at the underlying fundamentals. These things should run into the Spring with sharp corrections along the way. Anybody poke holes in that theory?
Baltic or Phoscan?
I think that the reasoning for the distribution of shares in Baltic/Phoscan was the fact that Baltic has run and Phoscan has not. If you pull up a ratio chart of the two it is pretty clear. With that said, this deal seems to punish those who invested rightly in the stronger of the two companies. Until management can show me that this is not the case my shares will vote no to the merger.
ISX APPS US$1.02
Quietly trying to add some Reward in Oz tonight.
No comments on the ALM.V move?
Very good, very good. This is a pretty quiet bull market from all accounts I can make. POT, MOS, and AGU boards get a bit chatty at times but the junior boards are pretty quiet. I suspect that will change pretty soon but it almost seems like investors are looking at the charts wrong side up right now.
BOT a little Atacama
Still not sure about this one as a fert play but the recent volume while basing makes me think something is up. I do like the Lundin factor...
Atacama - no
I have been watching but decided to go into RWD.AX instead. Still may do Atacama but gut tells me they don't get included in this group yet.
I like these silent moves. It tells you we are still early in the bull before there is much awareness of this part of the sector. With these market caps as low as they are the potential returns here in the longs term could surprise some. The best time to buy them is when they are quiet. Buy silence, sell noise.
Umm, its on.
Surprising strength coming into ALM.V and BLR.V. RWD.AX was up big last night. I suppose this could be games but I don't think so. ISX.V is the laggard. That is OK, I am patient.
I like silence accompanying moves like these.
Atacama has been working on the Nitrate angle for a bit. I was in some of these stocks several years back (i.e. way too early) and Atacama has advanced the Iodine factor greatly through some nastiness with their business partner (now out of the picture) but the other aspects of the business have been mostly stalled. Spur seems to also be telling about the same story they were three years ago but the share price has slid pretty heavily. Another fave back then was Erin Ventures who had a Borate deposit (they thought anyway) in Slovakia or some other Eastern European locale who has since nationalized the deposit if I am reading the legal brief correctly. None of the juniors have made great progress in that time but POT, HF.TO, and AGU have done wonderfully.
One has to get the right horses at the right time. I think the time for juniors is here.
Atacama
I like the Lundin name. They get things done but you have to make sure the company in question has their focus. I haven't bought any Atacama in this round as it is more of a pure Iodine play for now. The ultimate Nitrate and Sulphide story is not clear yet.
Spur does look tired here but based on cash on hand, market cap, and their prospects there is close to zero positive development priced in. Maybe that is right maybe it is not but I think the upside is a lot more than the downside. It is more of a lottery ticket play though. The others appear to really have the goods for juniors. Reward might be the best of the bunch due to localized supply situation.
I agree on the rebound.
I have a nice stake and like the risk reward here. Added RWD via IB on Sunday night (PST.) Already have BLR.V, ALM.V, SVU.V, and ISX.V. Curious how many here actually own Reward. Also, has anybody talked about Atacama? They don't qualify yet but are headed this way and being a Lundin company is a big plus in my eyes.
That email tells you that they are into the regulatory process already. They would have no reason to be so careful if they were only worried about the current private investors. I have been exposed to a couple of companies going public and know the process is very difficult and you just walk on eggshells until it is done. Then of course it is anything goes once you are listed on the CDNX (AKA the Wild, Wild West board.)
AP reply (how to say something with nothing at all)
Dear XXXXXX,
Thank you for your expression of interest in Athabasca Potash Inc.("API").
The company is a Saskatchewan based private company and has over 2 million
acres of lands granted or pending for potash exploration permits located in
Saskatchewan's potash basin. As we speak, the company is focusing on
expanding its exploration program to identify possible potash mine
locations.
In regards to your question about if there is a public listing planned, it
is something API would need to and always consider as a mineral exploration
company. However we cannot make comment in regards to the potential timing
of a public offering. At this time Athabasca Potash Inc. remains a private
company focused on Saskatchewan potash exploration. The management would
send out a notice to all existing shareholders of Athabasca Potash Inc.
should there be an Initial Public Offering.
Best Regards,
Kevan T. Bender
Athabasca Potash Inc.
198-311 4th Ave N
Saskatoon, SK S7K 2L8
Tel (306) 933-4298
Fax (306) 374-7579
Email: kbender@athabascapotash.ca
Athabasca Potash
Well, I know that 49 North Resources owns a slug of private shares. It would appear that they are setting up to go public but they don't seem interested in publicity.
Qs about Athabasca Potash and Reward Minerals
I have read a couple pages of posts but don't have board search capability so forgive is this has been discussed previously. Is Athabasca Potash headed for a public listing? Is there a US OTC symbol for Reward? I cannot find one and am interested in buying but only have cash available in TDAmeritrade accounts which don't allow Aussie issues. I do have an IB account that can buy direct but it is fully utilized (sadly.)
TIA
Thanks. I have noticed that they (Baltic) adopted a shareholder rights plan which from my back of the napkin calculations is a very good idea. The current market is not in the mood to take on the risk of even having their money in Money Market accounts much less a speculative junior with a long (but promising) path ahead of it. Unless we melt here the punters will come back and buy these juniors from the less risk averse for multiples of their summer lows. If we melt down I am worried about a lot of other things beyond my account balance.
Q about Baltic and Phoscan
I have only done beginning DD on these but it appears that Phoscan and Baltic are basically a play on the same deposit. Baltic has a lower share count and market cap from my SEDAR research and has two other properties (say what you will about them) to boot. The MC and SO numbers don't appear to be even close. Am I missing something? If not why would anyone buy Phoscan?
TIA