HMI - AGR - HFR - what's it worth?

HMI compared to AGR – (refer to page 5 of the presentation)
http://www.asx.com.au/asxpdf/20150625/pdf/42zdkwxpgt7fdb.pdf

- Brazil is undeniably the biggest market in the world for fertilizer and as such a Brazilian fertilizer play is the holy grail of mining plays.
- potash imports are much higher than phosphate imports as a % of total use, which tells me a potash project is much more valuable than a phosphate project. Lets not forget that AGR wasted a bunch of money drilling dusters on their potash project.
- AGR has JORC of 70 Million tonnes of Phosphate, but crucially the grade is only 4.2% which is low. Granted they can still produce a quality product, but the processing costs are higher as the grade goes lower.
- AGR market cap of $40 mil I think reflects more the concept of a fertilizer producer based in Brazil, and the enormous cost advantages that they would have over non-Brazil based companies, rather than the actual fundamentals of the company itself.

HMI has both Phosphate and potash. Granted the phosphate is small, but it is high grade, so the opposite of AGR. But with Ag/ fertilizer, small = low cost start up, which is crucial, especially in a market hungry for product.

HMI and HFR – (refer to page 1 exploration target)
http://www.asx.com.au/asxpdf/20130227/pdf/42d9jvz8kw43l2.pdf

In terms of Highfield comparisons, they released an exploration target (similar to what HMI is about to release back in Feb 2013). They were targeting Sylvinite at 14-22% KCI at depths of 500-800 metres (irrespective of where the resource is now at, this is a comparison of their same stage valuation). At those grades they were targeting around 44-70 Million tonnes of KCI, so possibly bigger than what HMI will have and also shallower. HMI has high grade intercepts at Sergi of up to 39% KCI, so i think HMIs higher grade is some offset for the greater depth.

- HFR has larger, shallower exploration target.
- HMI has smaller, deeper, but higher grade and most importantly, in the back yard of the worlds largest potash importer, and down the road from a processing plant run by Vale and set to run out of Potash in 2017/18.
Lack of shopping costs + cheaper up front CAPEX give HMI a big advantage, and more than make up for the depth and smaller overall target.

At the time of this HFR estimate, it had 200 million shares on issue, and was 25c (so $50 mil mc). By July of that year, it had reached 60c, or $120 mil mc. (Remember that in April 2013, the junior exploration world crumbled and crashed, and most exploration stocks collapsed to shell valuations, and so no doubt this would have weighed on HFRs price a bit. Granted these 2 are not direct comparisons (HFR is now a much larger project and highly economic due to various factors), but

HMI market cap
HMIs advantages, as discussed above surely mean that at the very least it should be valued at maybe 30-50% of HFRs valuation back then.)

This would equate to a market cap of $36-$60 million. Current market cap of $8mil is crazy cheap. It won’t last, and this estimate will be the first catalyst in a long line of catalysts, meaning that in 6 months, it may well be getting closer to the $50mil mc level. Or more??

1 last thing
Anyone heard of Coventry Res (CYY)?

2c to 11c in 5 weeks!

Illustrates that small resources with good stories are making some traction.

Remember to DYOR