The potash industry might be still a little drunk on Russian weirdness, but one of the hardest hit companies after the mid-year Uralkali crisis battered potash stocks looks like it has finally found ‘up’.
Karnalyte Resources (TSX:T.KRN
, Stock Forum
) bottomed out at $1.17 after falling from $5.50 during ‘the troubles’, but with the company announcing last week
that it had received a ‘Water Rights Licence to Use Ground Water and Approval to Operate Works’ for the source water well at their 100% owned Wynyard Carnallite Project, from the Saskatchewan Water Security Agency,” investors appear to have decided the bottom has come and gone.
"Karnalyte successfully tested a full production-capacity disposal well and a production-size source water well earlier this year, demonstrating sufficient source water deliverability for the first-phase production facility," said Robin Phinney, President and CEO of Karnalyte in a company statement. "Receipt of the WRL and ATO support an acceptable environmental footprint."
Shares in Karnalyte drifted upward over the last week before going on a $0.28 tear Monday, closing at $1.73 – 47% up from the low point a week earlier.
While volume was light (216k on the day), the indications are that some investors have determined it’s better to eat daily gains than be left waiting when others climb on in the days and weeks ahead.
In late November, JP Morgan analyst Jeffrey Zekauskas
said, “The endgame in potash industry dynamics appears now to have begun. Belarus wants a return to a price over volume dynamic for the potash industry, and the change of ownership of Uralkali is the crucial step for obtaining it.”
Uralkali is the Belarus company that decided to end their involvement in a potash syndicate mid-year that had long held pricing to a profitable level. That brought the potash industry globally into uncertainty as customers began to seek lower pricing. Canadian producers were hard hit.
Karnalyte describeds itself as being engaged in the exploration and development of high quality agricultural and industrial potash and magnesium products.
It “intends to develop and extract a carnallite - sylvite mineral deposit through a known solution mining process at competitive costs and with minimal environmental impacts. Using a staged approached to potash plant construction, the Corporation plans to operate a solution mining facility that will initially produce 625,000 tonnes of potash per year, increasing to 2.125 million tonnes of potash per year. Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan, comprising a total of 85,126 acres.”
FULL DISCLOSURE: Karnalyte Resources is a Stockhouse Publishing client, but has not paid for this article.