Sallysfolly,I can't make a forecast for the year end price...

Sallysfolly,


I can't make a forecast for the year end price without knowing the new decisions made by the management.

It is not about the share price but about the market cap. If we could forecast the market cap of year end, then we can divide it to the number of shares (inc.options) and find out the share price.

If the statement in Patersons's research note is true; (that was what I was wishing on my graphic above);

"ELM will immediately begin a second phase of drilling to test step out targets at Kola. This may include testing the potential for a large unified sylvinite deposit between Kola and Dougou. ELM is assessing the option of drilling this southern area"

then ELM may be able prove up to 1bt KCl at high grade sylvinite layers plus carnallite layers.

The value of the deposit asset will be very much related with the grade and recovery rate of the KCl. Recovery rate may go up to 75% with different mining techniques. That can be done initially conventional underground mining techniques with room and pillar method which could extract 30-50%, then the solution mining techniques can follow for the removal of remaining KCl from the pillars. All those things will be depended on the data available for feasibility study (assay results and seismic survey data) and the experience of the company who is going to that. The capex and opex cost per tonne will be another important factor on the value fo asset. There are a lot variables. I mean, it is all about the feasibility study.

The market cap will also be effected positively by the high food prices and increasing ethanol usage which will fuel the price of potash up to $600 till end of year.

If we assume ELM can prove up to 1bt gross KCl tonnage and $600 p/t potash price then we can expect a market cap above $1.2b

That would give us a share price around $7.

However it would also be doubtfull if ELM would be able to reach to the end of this year without a friendly or hostile takeover bid as all major miners are looking to buy potash deposits atm.

I am sorry I can't make the details of calculation for this $1.2 market cap here now as I am seriously tired of this research. (A calculation can be made by yourself or others by using PotashOne takeover by K+S/Germany at $450m for its 27mt measured and 80mt indicated recoverable resources).

I have already started another deep research on another sector for new investment opportunities and finding new stocks. ELM is OK for me. I will most probably wait till end of this year on this stock without selling it.