potash explores comparison

This is just some data I have collated for selected potash explorers. It is very apparent that STB is significantly undervalued.

1. Potash One
• Capex: $2,781M
• Operating costs $111/tonne FOB
• IRR before tax 22.7%
• Production rate 2.86Mtpa
• Mine life 40 yrs
• Resources ~1065Mt @ 24 – 26% KCL (~265Mt contained potash)
• NPV $5.51B based on 10% discount rate
Note: Potash One was taken over by German fertilizer company K&S for $432M in December 2010

2. Allana Potash
• Capex: $796M
• Operating costs $90.5/tonne FOB (includes transport and port handling)
• IRR before tax 36.8%
• Production rate 1Mtpa
• Mine life +30 yrs
• Resources ~1270Mt @ 18.7 – 20% potash (~245Mt contained potash)
• NPV $1.85B based on 12% discount rate
• Market cap C$235M

3. Western Potash
• Capex: $2,800M
• Operating costs $62/tonne + $29/t for taxes and royalties + $40 - $45 for transport & port handling
• IRR before tax 22.7%
• Production rate 2.8Mtpa
• Mine life +40 yrs
• Resources ~945Mt @30.3% of KCL (~285Mt contained potash)
• NPV $4.14B based on 10% discount rate
• Market Cap ~$190M

4. South Boulder Mines
• Capex: $740M
• Operating costs $?/tonne
• IRR before tax 40.6%
• Production rate 1Mtpa
• Mine life +17 yrs
• Resources ~564Mt at 18% - 20% potash for 105Mt contained potash. Target resources of 1250 – 1750Mt @ 18-20%KCL (~250 – 350Mt contained potash)
• NPV $1.33B based on 12% discount rate
• Market Cap ~A$138M
Using Allana Potash as most comparable example but taking into account shorter transport distance to the port one may expect STB operating costs to be in the order of $75 - $85/t FOB.

Note that the production costs globally range from a low of ~70/t to as high as $200/t. Some examples include:
• Potash Corp ~$75/t
• Agrium ~$90/t
• Mosaic ~$140/t
• Interprid ~$160/t
• K&S ~$210/t