John Chu is managing director of institutional equity research in the Agri-Industry for AltaCorp Capital. John has a long history of equity research at Mackie Research, Scotia Capital and HSBC Capital. John is a CFA with an Economics degree from Queens and an MBA from the Richard Ivey School at University of Western Ontario.
Potash Investing News: John, thank you for taking the time to speak with me this morning. You have been an analyst for over a decade and following agricultural stocks since early 2005. Can you give me a brief overview of how the industry has changed in that time?
John Chu: We’ve seen the agricultural sector really explode onto the scene in the last four or five years. I think investors are starting to believe in the long term secular theme that is agriculture right now. At the very heart of it is a simple investment theme. People need to eat. This is the one common theme that a lot of investors truly understand now.
So we’re starting to see a lot more investments into this sector, whether it’s from investors, governments or corporations, than we’ve ever seen before. In our opinion, no longer is it an old economy sector. We’re seeing investors looking for new opportunities; companies that have some kind of competitive advantage whether it’s cost or on the technology side, location or even a niche market which is why IC Potash is of interest.
Full Interview Here
PIN: As an aside, are sovereign wealth funds a big part of governments acting in this market? Is that something you have seen a lot of?
PIN: For IC Potash, you have a one year target of $2.50, significantly higher than the
.80 range they are trading in and the 52 week high of $1.26. What market conditions are holding the company back?
PIN: ICP’s Ocha project is projected to produce potassium sulphate or SOP vs the more common raw potash or MOP. How much does this contribute to ICP’s chance of success?
PIN: Going back to the sovereign wealth funds, are they looking at the SOP market as well or are they focusing on the MOP market?
PIN: Is the situation in Syria impacting SOP prices?
PIN: In April of 2012, ICP received an investment and off-take agreement from Yara International ASA of Norway. What constraints will this relationship remove for the company?
PIN: In New Mexico, where the Ocha project is located, there is what is called the “Secretary’s Potash Area” or SPA. What is this and what does it mean for ICP?
PIN: What can investors expect from the upcoming bankable feasibility study?
PIN: You’re not expecting a change to the resource?
PIN: What do you see as milestones between here and production in 2016 that will be catalysts to move towards the target price?