if i were the md of rio., page-19

People should quantify their investment decisions, and not leave them to emotions of frustration, fear and panic. This is my calculation:

NPV of deposit using the most conservative parameters of $550 potash price, 1mtpa production, 25yrs production, 10% discount, assuming 100% debt financing is $1,600m.

50/50 share = $800m.

Further risk discount of 50% = $400m. (A toss of the coin probability).

That is about $3 per share.

Scope to increase production (2mtpa to 10mtpa) and potential for potash price increases. My price target is $5, which gives me a 10-bagger.

I see takeover as the most likely outcome. Remember CHN gold deposit in Eritrea was sold to the Chinese. Most likely candidate for a takeover is SinoChem. Chinese already controlled the tenement north of STB, and the cost of infrastructure for both projects will further reduce the overall cost of the joint development.