Investment thesis
* Survivor owner-operator. 40ish mill. Outstanding. After several years of delay. Lots of skin in the game. Endured trial by fire when Potash prices collapsed. Taking compensation in stock... Door opening director.
* Glauconite mined in Brazil near farmer location aka super green sand is better than Potash and could replace Brazilian farmers import from Canada, Russia, at same prices as Potash.
* lots of it there, enough to supply 100% Brazil for 50 years.
* Green, organic, more nutritious compared to salinated, chlorine packed alternative. Simpler to apply (once only compared to several times with Potash).
* 2 billion usd NVP (8%) over ~40is mill m cap, 40 mill outstanding.
* already sold “samples” to nearby farmers. Brazilian farmers are large operations, orders could explode if farmers observe same superior performance in studies.
* internal cash flow, existing cash funded plan to ramp up to 100, 160 k; 5 mill; 25 mill ton per year, @ ~ 30ish$ per ton profit.
* comparable trade at x,00,000,000 mil cap,
* risk: Brazil (not exactly role model for governance, politics, labor relations), vested interests (there’s a business around importing Potash and they will not lose sales without a fight), one man show, farmers conservative nature and reluctance to change (oh boy that’s a biggy), speed & execution risk which can lead to more dilution; capital allocation risk: what will the owner do with profits when and if they roll in? We hope to see very large distribution of profits. Sensitive to Potash global prices.
* Catalyst: one pilot farmer already reordered at a significant scale for the next order. First sign of adoption? Social proof will be a strong adoption factor in this market.
What we are watching for: signs of pick up in orders. This is the big fat difficult unexpected variable. The rest should be relatively simple to execute.
We like the exposure to Commodities via the business and if it works it could be a good hedge against inflation.
