We've all here spent an anxious couple of years waiting and wondering on KPC - easy prey to the naysayers, and to the doubt in us all.
On the eve of the Company's return to the bourse however, for balance, I think it may be worthwhile reminding ourselves of the very real potential that remains within the story, which has indeed been advancing 'in absentia' of its shareholders these past two years.
...And yes, to commend and thank Mme Cheung and her associates for getting us back to this point. It plainly hasn't been an easy task, requiring patience, persistence and a substantial financial & intellectual commitment on her/their part. Not to mention no doubt several small forests of paperwork. And all in the face of some pretty tough criticism from cheesed-off shareholders.
You begin to see the scale of the vision (and how well-connected these people are) when you consider the various Memoranda of Understanding and Agreements entered into by the Company in preparation for its return.
For a start, there is the MoU between KPC, the Ministry of Industry and New Technologies of Kazakhstan (MINT) and the Sino-Agri Mining Investment Co. Ltd, a company incorporated in the PRC (Sino-Agri), in respect of the establishment of a large-scale fertiliser industry in Kazakhstan.
According to the KPC Prospectus (Section 14:8), "...on 7 September 2013, the MINT, KPC and Sino-Agri entered into an MoU pursuant to which KPC and Sino-Agri expressed their collective intent to create a large-scale fertiliser industry in Kazakhstan and to provide funding in the amount of not less than US$1 billion for the construction of fertiliser plants in Kazakhstan."
US$1 billion is certainly an eye-watering number!
But then, Sino-Agri has already formally agreed to fund, by way of 100m Convertible Notes in KPC (the issue of which we shareholders have already approved), the US$150m acquisition of the Satimola Project ...should that proceed, of course. US$150,000,000 a mere snip!
Meanwhile, we find the Company also already has in place an MoU with NFC (the China Nonferrous Metal Industry's Foreign Engineering and Construction Company Limited, a PRC state-controlled listed company) in respect of the construction of two concentrators for the Zhilyanskoye Project.
From the Prospectus (Section 14:7): "...On 2 August 2013, the Company entered into an MoU with NFC pursuant to which the parties agreed to work together in good faith and to reach preliminary agreement on the engineering, procurement and construction by NFC of a 1,200kt/y concentrator for potassium chloride and a 1,00kt/y concentrator for multi nutrient polyhalite fertiliser for the Zhilyanskoye Project."
Taken as a piece, these all in my view point to some pretty big strategic plans.
We know Sino-Agri is a subsidiary of CNAMPC Group (the China National Agricultural Means of Production Group Corporation). If that name sounds familiar, it's because back in May 2012, the then-Fortis announced an MoU with CNAMPGC Holding Company Limited which, even then, was "...dispatching a mining design and production team to the Zhilyanskoe and Chelkar sites in Kazakhstan to work with FMJ to develop appropriate plans for both sites." (Announcement 22 May 2012).
CNAMPC Group, we were told, "...is a China based enterprise with nationwide operations and is the leader in the area of production, trading, sales and distribution of chemical fertilisers and other agricultural related products. CNAMPC Group has the largest distribution network in China which covers more than 1,200 counties as well as operating potash mining and production facilities in Laos and China."
Add in the fact that the latest $9m was raised at a hefty premium to the last sale price, and that the free-float of shares remains probably just as tight today as in the old Fortis days (the Chinese presumably not being sellers any time soon) ...and KPC shareholders might have actual cause for optimism.
We'll soon see.
Good fortune to us all.
KPC Price at posting:
$1.00 Sentiment: Hold Disclosure: Held
