Millennial Potash: Updated Resource Estimate up 275% with Further Growth Potential

Key Concepts

• Potash (Pesh)
• Millennial Potash
• Bono Project (Gabon)
• Resource Estimate
• Preliminary Economic Assessment (PA)
• Net Present Value (NPV)
• Critical Mineral List (US)
• US International Development Finance Corporation (DFC)
• Feasibility Study
• Mergers & Acquisitions (M&A)
• Insider Buying
• Upward Trend Channel

Company Update: Millennial Potash on Commodity TV

This update provides a comprehensive overview of Millennial Potash, highlighting its recent successes, future prospects, and the strategic importance of potash.

1. Millennial Potash's Performance and Market Position

• Stock Performance: Millennial Potash has experienced a significant run, with its stock price increasing nearly tenfold in the last 18 months.
• Potash Demand: Potash is in high demand due to its critical role in food security for major economies like the USA, China, and BRICS countries.
• Bono Project (Gabon): The company's Bono project in Gabon positions it to hold the largest potash resources in Africa. This project benefits from top-tier infrastructure and strong government support from Gabon.

2. Enhanced Resource Estimate and Project Economics

• Resource Increase: A recent resource estimate shows substantial growth:
  • Measured and Indicated (M&I) resources are up by 275%.
  • Inferred resources have increased by 210%.
• Resource Confidence: The measured category now constitutes 11% of total resources (up from nil), and M&I resources represent 41% (up from 36%), indicating a significant improvement in resource confidence.
• Tonnage and Grade: Tonnage has increased substantially, while grades have remained largely unchanged, leading to higher overall resources with consistent quality.
• Production Profile: The increased resources are expected to support a higher production profile than initially estimated in the 2024 Preliminary Economic Assessment (PA), further improving project economics.
• PA Highlights: The PA reported an after-tax NPV at a 10% discount rate of $1.1 billion USD. This valuation is based on a long-term potash price of $387 per ton, compared to the current spot price of $352 per ton.

3. Strategic Importance and Government Support

• US Critical Mineral Status: The US government has added potash to its critical mineral list, alongside silver and uranium. This move aims to reduce reliance on imports from Russia and Belarus.
• DFC Commitment: Earlier in the year, the US International Development Finance Corporation (DFC) committed $3 million USD to the Bono project to support its development.
• African Supply to US/Brazil: The Bono project is strategically positioned to become the first African mine supplying potash to the US. Brazil is also a key market, as it imports approximately 95% of its potash from Canada, Russia, and Belarus.

4. Next Steps and Funding

• Development Pipeline: The next crucial steps include a phase three drill program, followed by a resource update. This will precede a feasibility study scheduled for next year.
• Financial Position: Millennial Potash is well-funded to complete the feasibility study, with approximately $15 million Canadian dollars in cash and the DFC commitment.
• Potential Outcomes: The completion of the feasibility study is expected to lead to a construction decision or a potential M&A situation, both of which are viewed as positive for shareholders and the share price.

5. Market Dynamics and Competitive Landscape

• Potash Price Trend: Potash prices have risen 25% year-on-year to $352 per ton.
• Supply Pressures: Persistent supply disruptions from Russia and Belarus, coupled with US-Canada trade risks and delays in new capacity, are contributing to these pressures.
• BHP's Jansen Project: BHP's Jansen project has revised its start target to mid-2027, with an increased capital expenditure (capex) of well over $7 billion USD, up from the previous estimate of $5.7 billion USD.

6. Management and Shareholder Value

• Insider Ownership: Management and insiders collectively own over 40% of Millennial Potash's equity, and this ownership is reportedly increasing. Insider buying has been observed in the last four weeks.
• Management Track Record: The management team has a proven track record of successful M&A exits, including:
  • Millennial Lithium in 2022 for $490 million.
  • Alena Potash in 2015 for $170 million.
  • Potash One in 2011 for $430 million.

7. Share Price Outlook

• Current Trend: The stock is in a solid upward trend channel, currently trading around $5 Canadian dollars.
• Long-Term Projection: Longer-term projections suggest a potential price of $6.5 to $7 Canadian dollars. A merger scenario could lead to even higher valuations.

Disclaimer: The speaker is a shareholder of Millennial Potash. The discussed share is part of the SRC mining special situation certificate. The SRC team may also become shareholders.

Conclusion/Synthesis

Millennial Potash is presented as a company with significant upside potential, driven by its strategic Bono project in Gabon, strong resource growth, and favorable market conditions for potash. The company's financial health, experienced management team with a history of successful exits, and government support position it well for future development and shareholder value creation. The upcoming feasibility study is a key catalyst that could lead to a construction decision or an attractive M&A opportunity.