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HI picstloup, glad to hear that the recent bid talk has recouped much of your SXX losses, I remember your balanced and rational view of events re the SXX takeover. Sadly, an awful lot of others blamed anyone but themselves. Events subsequent to the SXX demise illustrate how far from ever being able to fund the development of the mine they were. My cautionary words then still underestimated that gulf by some distance. In this takeover bid Woodsmith is almost irrelevant, BHP want AAL 's copper and maybe additional iron ore , but I wouldn't be surprised if ,when the bid (or another from elsewhere) succeeds, that a partnership for woodsmith or even the whole thing is up for sale again.
From today's FT:
Who are Anglo American’s possible suitors?
https://archive.ph/Rohha
4 years ago I had a nearly £50k loss in Sirius/Woodsmith. Not life-altering, but depressing. I put all the take-over money, and a lot more, into Anglo. With the Thungela bonus, it has put me significantly into profit (roughly the same as the previous loss).
Woodsmith is an amazing resource. It is taking longer to bring to production than the inept Sirius team hoped, but rewards will come to those with patience. I'll certainly invest my profits in the AAL take-over on whoever finally gets Woodsmith.
Gertfrobe, who lost possibly the same as me on Sirius, spent the next two years digging up every negative story about Anglo s/he could find to post here. A really sad waste of energy.
The completion timelines at the Woodsmith mine have changed, primarily because the decision was taken when Anglo took control to avoid the cost incurred with multiple tunnel boring machines and focus on the slower but cheaper single TBM option.
There was a big piece on Woodsmith in the FT last November. Read it again today. That said the company hopes to get to $380 per tonne (due to the sustainability/organic premium) but that there are issues to achieving that. The other polyhalite producers in Boulby said they are lucky to get to $260 for their product because there's no market for it.
BUT, they are producing in limited quantities and AAL (and SXX previously) have signed a number of quite hefty offtake agreements. Quoting from that piece in the FT, BHP's CCO, Vandita Pant, said: "Crop production went up 50 per cent since 2000 and farmed land has only gone up 3 per cent [per capita]. To meet another 35 per cent increase [by 2050], we need to increase productivity even further. The key becomes crop yields.”
In that piece the FT described BHP as "another mining company that has entered the fertiliser business." So you sense BHP considers Woodsmith a hugely attractive feature to AAL's portfolio. And that's before you even get to the copper.
In essence, AAL (or whoever takes it over) must create that missing market for polyhalite, almost from scratch. But if they do then analysts have estimated the mine value at £13 billion (more than a third of current market cap) but if they fail to achieve that, then it is estimated to be worth c£1bn. So this is not a share without a fair dollop of risk - but the fact the world's biggest miner is prepared to take that risk is hugely encouraging to me...
RR
“Anglo’s completion timeline has been a little more realistic“
What about the new owners?
I
Gertfrobe. Sirius Minerals went bust four years ago and sold the project to Anglo, so quoting the former is pretty irrelevant. Anglo’s completion timeline has been a little more realistic. I’ll be happy if it’s up and running in a couple of years.
There is a lot of value here. Even if Anglo remains independent , it can’t go back to the inbred arrogance and complacency that has characterised successive Boards and managements. A break-up will yield at least £35 per share. And that’s the minimum third party offer that can be accepted.
The crystal ball used in planning this money pit needs a service.
“Fertiliser development company Sirius Minerals has unveiled the findings from the definitive feasibility study (DFS) for its North Yorkshire polyhalite project in UK, and expressed its plan to produce 20 million tonnes per annum of potash, with initial production of ten million tonnes per year.
The company expects to produce its first product in 2021, followed by the end of fit out and ramp-up with a ten million tonne per year rate expected in 2023”
Had aspirations to reach 20+ million tonnes.
OR
I seem to remember from back in the sirius minerals period that once completed it was said that Woodsmith would be worth 20bln
Not sure AAL is worth much more than claimed to be honest so sold out and bought into BHP. Agree the potash mine is what they are really after and would sell diamond mines and possibly steelmaking coal division. Good luck if You decide to stay in AAL for higher price, but there are limits on how much BHP are willing to pay.
AIUI, potash is much more work than polyhalite. The price is high due to Ukraine’s war with Russia.
OR
Potash is approx £1000/tonne
A 50kg bag of standard polysulphate is priced at around £16 in India. That’d be £320 per tonne.
I think the company could be looking at a profit of £100 per tonne (I think this was a figure mentioned back in the Sirius Minerals days). At 10 million tonnes per year, that’d be £1billion.
Shareholders tend not to like capital expenditure. Like politicians, they look only at short term wins and capital expenditure isn’t popular as it reduces dividends in the short term. Without spending, there wouldn’t be any mines.
So, if the mine was to make £1 billion per year profit, what would it be worth?
OR
BHP already owns Jansen Potash see
https://www.bhp.com/what-we-do/global-locations/canada/jansen
It's another mega-investment with production expected to start in " late 2026" , whether BHP want two mega fert producers is an interesting question. There is little doubt that world demand for fertilisers is increasing, despite a stabilising population growth and price projections are for low single figures growth per annum.
Nitrogent fertiliser is approx £300-350/tonne at the moment
https://ahdb.org.uk/news/nitrogen-fertiliser-prices-fell-in-march-grain-market-daily
10m tonnes production at say £250/tonne thats £2.5billion revenue
With dire forecasts about global agricultural soil viability, I think Woodsmith has the potential to be a huge money maker for decades to come. As a division of a traditional mining company, it probably is a bit off-the-wall, but I think it would be a mistake to dispose of it, especially given that the project is relatively close to completion. Instead, pump more money in to getting it completed and into production.
I am sure it will be a cash cow but is a big capital budget item and when they advertised for a partner for Woodsmith I think it put them in play for the copper assets. It looks like the copper will pay for Woodsmith and sell AAL now as valuable assets.
Well how long will it take until that phase?
From reports over the weekend BHP would just cancel or sell off this so I get the feeling too much is being placed on it, even from Anglo management.
If this is/will be the cash cow everyone in Anglo seem to think why wouldn't other miners want it?
At moment it seems like a money pit unfortunately
What value would Woodsmith have when it’s producing 10 million tonnes per year?
OR