Thanks for that information.But on another note with "immense...

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Freeman02

167 Posts.

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30/10/21

23:01

Post #: 57207282
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Originally posted by CatalystDriven: ↑

Historical drill results should ALWAYS be taken with a pinch of salt, as the cross referencing can be messy at best, "did these holes even get drilled?" - I personally hate investing in the historical data plays as I just cant trust them in most cases.

What the gold standard is of historical drill hole data is if a mine was constructed and production taken place, with historical drill data adjacent as mine extensions to the existing producing mine, that were drilled by the same drillers for the purpose of a mine extension. Which is the case for SHP. If you ready below, you can see that the Russian data classed much of the deposit as a reserve - Not inferred. Insteady classing it as a resource with confidence worthy of mining as an extension of the existing mine.

The Russian data or classification system isn't to be laughed at either, as highlighted below, as some see it as equal or superior to the Australian classification system.

Importantly with historical data, validating potash deposits is very friendly. These potash seams have been there for tens of thousands of years. They are thick and cover a large land mass of square metres. They arent like twinning historical gold hole data to validate a resource.

JORC only requires 2 holes per project to update it back to required JORC for feasibility studies. As for the rest of your concerns.. This will take a decent time - 18-24 months for scoping studies and feasibility studies for the 4 projects.

Then permitting, then funding, then construction, then production. Its not a short story, but one with immense upside.

Hope that helps!

And another excerpt:

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Thanks for that information.

But on another note with "immense upside" and "too good to be true", do your really think the brokers which are touting prices targets in excess of $1 are realisitc?
- Funding as you said needed to complete these studies which are going to take at least 2-3 years (if it goes perfectly) is going to come in the form of equity.
- Then come forth FID in which more equity will be required further the number of share on issues.

Though I can now see thanks to your analysis that upgrading these resources is lighter in its risk. The need for equity along with the risks and time I mention before hand in my post will make investors, especially institutional investors demand a significant expected return given the risk they are taking. For individual investors, if you have enough risk appetite to allocate a substantial amount of your portfolio to this stock, than go for it.

As I come from a finance background, I have also noted people were criticising the brokers for using a discount rate "higher" than the industry standard. The discount rate is essentially a combination of inflation and the expected return on the best available alternative investment with a similar risk profile and investment horizon. Given investment options for companies of this size and stage are difficult to compare along with the greater risk, a higher discount rate than 10% is needed, let alone some holders arguing to cut it down to 8%. An 8% discount rate are for companies who are substantially advanced in their developmental activities with the production horizon in sight in the medium term.

I think the brokers are painting overly optimisitc valuation model which will is extremely sensitive in its inputs, especially given the life of this project, increasing the discount rate will substantially reduce the NPV. Combined with the rising SOI needed to advance, I think a price target of $1 is highly unrealisitc in the timeframe holders are expecting it to be reached.

SHP Price at posting: 17.0¢ Sentiment: None Disclosure: Not Held
3 Upvote

0 Great analysis

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