Last month I posted that the correction in the TSP (triple superphosphate) price that began last year had slowed and that the phosphate price had jumped higher after flat lining for a number of months.
This month, the TSP price correction slowed further, down 1.8% at $537 for March after a 3.8% decline in February.
More importantly, the phosphate price strengthened further with a 7% gain in March following a 7.5% gain in Feb and a combined 15% gain now off the January price. At some point that could feed through to the TSP price so that could stabilise and/or climb in the next few months.
With a 15% jump in the phosphate price, the value of our phosphate deposit has increased substantially in the last two months and, unlike other fertiliser prices, the phosphate price is now above last year's high. The July to Sep 2022 average was $320/t, the peak monthly average last year was $320, the Jan-March ave was $322.50 and for March it's now up to $345/t. Very surprising to see phosphate pushing into new highs but very positive for MNB!
Phosphate is the only fertiliser that stopped correcting in price at the start of this year. All others are still correcting, mostly due to ammonia based fertilisers still correcting with the price of gas. Phosphate has gone against the trend and increased 15% in the last two months.
The TSP price is now $537.50 and that is 27% higher than the DFS base case assumption of $422. If the TSP price falls further to settle at 20% above the base case $422/t, the NPV of MNB's 85% share increases from the base case after tax NPV of US$203 to US$261 which is A$390mill. If all options get exercised, a mc of $390mill would require a sp of 43c. If not all of the options get exercised, that would lift the sp target a little with the reduced dilution of the share base.
The way that the phosphate price is rising again (see below for chart), if the TSP price levels off soon, then 43c is starting to look like a conservative near term valuation for MNB's phosphate project.43c for that but what about the green ammonia??
I'm tipping a new sp high in the 21-30c range next month and 40c plus by the end of the year and that would still leave this stock very undervalued on the green ammonia so I wouldn't be at all surprised to see much higher prices by then as that GA project progresses.
You have to like this chart as a shareholder of a phosphate company under development.
