Broker report - Aust Potash Ltd

Patersons has a 28pp analyst's report out Friday on APC with a BUY recommendation, published by the ASX. Let me commend the ASX free service on small-caps to all. Join here: https://www.asx.com.au/prices/asx-research-scheme.htm. I cant see how to link to the report, so join and gain it all.

IMHO, Patersons' enthusiasm for APC is misplaced.

Many advantages deemed to be enjoyed by APC apply equally to KLL - evaporation rates, modern design, obliging jurisdiction. ready financing etc.

One major difference: KLL will be producing 18-30 months before APC. Patersons points to existing domestic demand for 90,000t of SOP, which KLL will have already scooped up, though I do expect this to grow on improved supply from KLL, who will have had a long enough lead time in the market to displace imports, learn about its customers and establish a brand. If APC wants in, it will have to do so on price.

APC needs a large capital raise for the DFS ~$208m capex, generously estimated to be funded $40% equity, 60% debt. Current MC is $37m, so holders can expect to pony up a big lick of cash or be diluted. Meanwhile, Beyondie is fully-funded and under construction - not sitting at FEED as Patersons has it. Sharemarket hiccups cannot stop KLL, though may affect APC.

APC enjoys a modest transport distance advantage over KLL. The alleged backloading advantage KLL has using IPL's empty explosives trucks coming back from Mt Newman will wash out over time. IPL aren't stupid.

Anyway, I commend the report to anyone with the time to look deeper. KLL remains my call as the best placed of the emerging WA SOP producers.

Ash