Bold claims stating management has even more expertise then BHP...

Bold claims stating management has even more expertise then BHP @Tipton

"I believe comparisons are a waste of time because there are none". Yes there are none because Ohmgebirge project has one of the lowest grades of potash ore in Europe. Though the size of the ore tonneage is attractive, the grades of Omgebirge are 13.14% K2O (note in potash, 15% K2O is already considered low). By comparison, the big potash majors in Europe of much higher grades than SHP and significantly more ore body.

I believe many holders will have a little understanding on why the low grade at Ohmgebirge is signficant and why its a potential negative so let me explain. So let's start with the final product, which is 60% K2O. It is common for potash producers in Canada in Russian to report K2O grades on their ore bodies (SHP has done it too). Here is the JORC Inferred Resource for Ombgebirge.

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To convert K2O into into KCl, the conversion formula is K2O = 0.6317 x KCl. Hence KCl grade will equal K2O/0.6317. So for SHP this equates to around 20.64% of KCl grade which is what they have in the chart above.
Typically as per the Baltic and Vancouver FOB Potash, the final produce has 60% K2O. Hence to determine the amount of ore we need to extract and process to obtain one tonne of produce, we divide 0.6 by the K2O grade. In this case the SHP this yields 4.567 tonnes of ore which needs to be extracted to produce one tonne of product. By comparison, Jansen exhibits a K2O grade nearly double in magnitude of SHP numbers.


Hence, BHP needed to extract 0.6/0.249 = 2.41 tonnes of ore to produce 1 tonne of potash. This is significant and many of the potash majors in Europe do not need to extract the same amount of ore as SHP needs to. This unfavourable conversion ratio has significant implications for costs and operating costs, risks and leverage for SHP. Most notably, a low grade will mean significant quantites of tailings and waste must be disposed which I believe will pose a serious environment concerns and cost to the company. Something in which the Germans are likely to take seriously which also might add additional costs onto the OPEX.



Indeed when BHP stressed other projects were small, they are talking about final production capacity which is impacted by grade. The majority of the attractive ore bodies of potash in Europe have been taken. Though this may provide SHP some merit as being attractive in terms of its ore size, it is far from attractive in terms of ore grade which is a significant consideration in these projects.

A link if you want to know more:
https://kuchling.com/19-potash-ore-grades-check-the-units/