A paradigm shift?3 Feb 2019 09:45
Milo
Like you I failed to sell out a few months ago. Last July I was one of the few predicting a sizeable dilution at stage 2.
Where I disagree with you is in your predictions for 10 and more years ahead - IMO you are UNDER estimating profits
Way back 10 years or so fertilisers were selling at high prices and CF decided to go looking for a potash mine - he came across the Yorkshire moors where there was potash but underneath it was a very thick seam of polyhalite - so his first thought was to build a chemical works to get high priced potassium sulphate from the polyhalite - second thought was to sell the polyhalite as a low grade, cheap fertiliser (made profitable by low production costs) and so began all those crop tests designed to prove the product.
At stage 1 financing and as recently as the November 2018 investor presentation Poly4 was valued as the sum of the parts - the potassium content was worth so much a ton, ditto the sulphur, magnesium and calcium content - and then take off a discount because this is a "new and disruptive" product So we get TorPs at $150 ton and the money men backing the project projecting at £125 a ton.
Then Boulby mine changed to digging the deeper polyhalite layer - but this was to be marketed as a niche, speciality fertiliser for chlorine intolerant crops.
IMO the last few months people are beginning to look at polyhalite in a different way - we have a paradigm shift.
Crop trial after crop trial shows that just mixing one part of Poly4 with three parts M,of P gives better results than just plain M of P.
You have two products at the same price. One is better than the other. Which do you buy? So why sell Poly4 at a big discount?
Evidence for change of viewpoint?
1) ICL marketing polysulphate averywhere and not just as a niche "substitute" product
2) ADM now heavily marketing Poly4 as an "enhancement" (NOT new and disruptive)
3) Polynatura now changed from turning their polyhalite into S of P into selling a Poly4 type product (75% presold)
All the forward projections for Sirius profits are based on selling at between $100 and $200 a ton - with a "base" case of $190 a ton. If I am correct will be selling at $250 a ton by the time we get to 20mtpa.
Try putting that into your profit projections!
Of course ADM will be doing OK buying from us at $150 and selling at $250 - not just Gina with a good deal
all comments welcome
Verde
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