Mmesro, The main problem with most Australian investors is that they are highly averse to political risk. They will gamble and accept lower yields from companies operating in Australia but reject those operating in Africa. Unfortunately, thanks to wars, unrest and corrupt governments, entire African continent is seen as unlikely investment opportunity. However, there are number of countries in Africa which have fairly stable governments and environments supportive of investment. According to recent analysis of 211 countries carried out by global insurance experts, investing in Sub-Saharan Africa is certainly becoming safer on declining political risks. Eritrea is now classified as medium political and security risk, similarly to Mozambique. Certainly, RIO nor BHP, Vale etc, had any problems of investing in Mozambique. Most analysts now agree that STB’s Colluli deposit will develop into most promising Tier 1 potash project in the world with a highly attractive economics (i.e. operating costs of around $100/tonne). They also agree that given the low capital cost relative to other potash mines (i.e. $500 -$700M vs. $1.5 - $2.5B) and the potential to utilise an open pit operation, STB will definitely be a takeover target for majors. Unfortunately, as much as I would like this company to go into production to realise market cap of +$5 - $10 Billion, the chance of this happening are extremely remote. I suppose I can only hope that any takeovers are delayed until at least completion of DFS by which time, STB’s share price will rise to >$10 (fingers crossed).
STB Price at posting:
$2.35 Sentiment: Hold Disclosure: Held
