So now that both companies have fairly similar market cap EPO with 75.12m while WPX 77.96m let's take a closer look at the two juniors. Hard to believe that WPX had dropped to these levels. I had own shares in both companies while I had sold all of my position in WPX and holding onto EPO; my comparisions are strictly from news that were reported by both companies.
PFS between the two are very comparable.
The Study reports that the resulting after-tax project Net Present Value (“NPV”) is $2.44B CAD, with an Internal Rate of Return (“IRR”) of 18.6 % assuming a nominal discount rate of 10%. On a before tax basis, the Project yields an NPV of $3.6B CAD and an IRR of 21%.
The Study confirms that the asset is of sufficient size and grade to support primary and secondary potash solution mining for more than forty years at an ultimate production rate of 2.8Mt/yr. The Study included detailed CAPEX and OPEX estimates with a production start up in 2016.
The PFS' Economic Model for the Project generated an Internal Rate of Return of 19.1% (20.4% before taxes) and a Net Present Value of $3.63 billion ($4.47 billion before taxes) yielding a Project payback period of 5.0 years. A list of assumptions used in the model are shown in Table 1:
The PFS confirms that the Project has significant positive economics and that the resource is of sufficient size as well as grade to support primary and secondary mining for over 50 years with Muriate of Potash production rate of 2.8 million tons per annum.
From the assessments same production per annum at 2.8million tons as we stand. EPO has a 50years life which can be increase to more if we look at the updated resources for both life and per annum tons. While WPX is fixed at 2.8million for 40years. Cost of building the mines EPO is sitting at 2.8billiion while WPX wants 3.5billions to build their mines. Cash on hand we have the upper hand with 10million of new money and we have no problems with generating cash for expenses while WPX is strap for cash and have even considering repricing their stock options to 50cents from 1dollar. In terms of projects WPX has a year a head of EPO with pending news of EIS and BFS. We have just begun the EIS application and havent looked at BFS until summer this year. From KRN EIS being approved I think WPX and EPO EIS will be accepted as well. EPO are in talk with India while WPX has hire on UBS for possible partnership. We are to begin production in 2017 while WPX have a date of 2016 but both of these dates are tentative until they have the cash to build the actual mine. In terms of land we have the leverage as well with our land being 100% freehold and have the other 2 properties we havent explored yet. We have to pay royaltities to our native partenrs while WPX will have to pay royalities to the province. Overall both companies are undervalued i guess primarily due to oversupply in potash right now and the drop in spot price from 550-600 to around 400-450 current market price. Just my two cents any further comments are greatly welcomed :D.