Ann: Quarterly Activities Report and Appendix 5B, page-3

The other thread has lost its way. It's meant to be for media info. Let's try and get any other discussion off that thread.
I mentioned the TSP price as one reason why I am particularly bullish right now. For any newcomers or others that didn't see those posts, the following shows what I was referring to. 60 years of monthly data on the price of phosphate and TSP is too much to post but is freely available on the World Bank website. Anyone can download the data to a spreadsheet and plot the same graph as I plotted below. It shows the ratio of the TSP price to phosphate price on monthly pricing. I only plotted the last 20 years to keep it more relevant and the spreadsheet calculations show a ratio of 3.6 over 20 years of monthly data and 3.9 over 60 years. That shows that it's normal for the TSP price to trade at between 3 and 4 times the prevailing phosphate price.
In 2009 during the GFC, the ratio very briefly dipped below 1. I.e. the TSP price briefly traded below the price of phosphate at the time. Around a year later, the ratio recovered to the point that the TSP price was three times the phosphate price. The TSP price is currently just above the phosphate price. This is only the second time in 20 years that the ratio fell below 2. At the very least we should expect the TSP price ratio to move back above 2.5 by next year. 3-3.5 times the phosphate price is more likely within a year with a potential to overshoot to 4 as occurred in 2009/2010.
For the record, in 2009/2010, the ratio recovered to 3-4 mostly through a sharp drop in the phosphate price during the GFC rather than a sharp increase in the TSP price. In 2009 when the ratio was at its lowest point, the TSP price was $295 and phosphate rock was $450. One year later when the ratio hit 4.1, the phosphate price collapsed to $90 during the GFC but the TSP price went against the trend and increased to $372 - an increase of $77 or 26% during the GFC when almost all asset classes and resources were collapsing. One year later, the TSP price increased further (along with a strong post GFC recovery in the phosphate price) to $535/t for a total 81% increase in the TSP price over two years.
The phosphate price was most recently $347.50 in September. TSP was at $461. While I expect the ratio to quickly revert to its mean, I don't expect to see the TSP price triple from here to do that. More likely IMO, we see a combination of a correction in the phosphate price and an increase in the TSP price both 12 and 24 months out. If the phosphate price corrects by 50% to $174/t, the TSP price would still need to increase to $626 or 36% from the current level to bring the ratio back to its 20 year average of 3.6. That's IF the phosphate price halves. Otherwise the TSP price could rally much harder if phosphate prices hold firm.
The DFS base case TSP price of $422 gives MNB's 85% share of the project a NPV of US$202mill. The announced capex reduction of US$10mill increases the NPV to US$212.
The DFS also allowed US$28mill capex in year 7 for doubling the plant capacity. That can now be done for up to around US$3mill. The saving of US$25mill discounted at the 10% per year rate should add around $US$13mill to the NPV, bringing it up to US$225mill at the base case TSP price. That ignores the flagged savings in operating costs from producing the beneficiated phosphate rock fertiliser in place of the previous product which required MAP as an expensive input. There are also significant savings for transport from the new, closer processing site.
Ignoring those savings, the after tax NPV of US$225mill is equivalent to A$355mill. That's at a TSP price of $422. The current price is $461 and rising - and as explained above, I think the TSP is likely to go much higher by the time we start producing next year.
A 20% increase in the TSP price off the base case (only another 10% from the current price), increases the NPV by 28% (table below).
The NPV at current pricing would be around A$408mill. Fully diluted for all outstanding options, that equates to 47c per share. That's five fold upside from the current sp on a project expected to be in production next year - not in 5 ,6 or 7 years.
Very good times ahead IMO. Then there's the green ammonia and P4 projects.


Ratio of TSP price to phosphate rock price from World Bank monthly data. Green circle shows the only other time in 20 years that the ratio fell below 2 and how quickly it recovered to the mean.