Just bought another 20 000 on the tsx today at .44. that's 20 000 less tradable until we reach about 3.50 -4.00.
I am comforted when our share depreciation has been met with low volume. That tells me this share depression is more because:
1. People are "scared of africa" well what i mean is the revolutions that have passed and examples of african governments exercising their power against the encouragement of investment eg: south boulder mines and centamin (gold) in egypt.
2. Tax loss selling
3. There has been a shift to hold more cash in your portfolio. The "riskier" or small cap plays get beaten down more.
4. The uncertainty of potash prices going forward.
5. the pp at .80cents
6. the aquisition of nova is not immediately accretive which dillutes us all.
My response to these points:
1. explained already
2. just natural
3. with the uncertainty and some people believe that we will fall into another recession. -one of the only valid points. But, we are definately in a much better position than in 2008.
4. True, but if we are one of the lowest cost producers... especially if we can ship from mekele, I believe it would reduce our opex by 10-20%. Plus, we could ship more than 1 million tonnes per year..,, If there is a contract that goes direct, we are talking a 20-30% decrease in opex. Which with the Capex and Opex would probably be the most economical potash investment in the world.
5, The pp was a good idea for the long term. I think the extra cash will give us a better bargaining chip in the future, and ensures we dont run out of time before we burn through the cash until a deal is made.
6. If you are a long term holder, you will especialy love the nova deal. This could definately be a good thing as it attracts potential takeouts because we are now probably close to twice as large. We could support a 5mtpy operation for decades, and that is only sylvinite. do the math at a opex of probably half of what it is on our pea. (because of 5mtpy instead of 1 and assuming direct rail at that point). probably cost about 2 billion total for Capex. Now do the math at about 500 mil shares outstanding at a price of 450 to 500 per tonne. We did not even think about extracting the carnalite at the same time which would improve the economics again. Oh ya... it also seems like we forgot argentina property. oh and we also have after the BFS about .14 cents per share in cash...
Like i said before this is a great risk/reward opportunity!