Shaw and Partners rates ((APC)) as Buy (1) -
Industry consensus points to demand for sulphate of potash to have mid-single digit growth over the coming decades as arable land per capita reduces. Australian Potash Ltd is strategically placed to provide for emerging Asian markets, according to Shaw and Partners, which are driving global growth.
The company's 100%-owned Lake Wells project is intended to produce premium quality sulphate of potash with realised prices of US$380 per tonne. Shaw and Partners forecast this project could total post-tax net present value of $252m and an internal rate of return of 17%.
According to the broker, the project represents 170,000 tonnes per annum with a 35 year lifespan, and total capital expenditure of -$292m.
The Buy rating and target price of $0.32 are retained.
This report was published on May 19, 2021.
Target price is $0.32 Current Price is $0.13 Difference: $0.19
If APC meets the Shaw and Partners target it will return approximately 146% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
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