fed approval, page-9

Strange trading today with parcels of 70-75 shares going through every 2 minutes. Not a lot volume but looks like an algorithm accumulating on the offer as long the price doesn't deviate too much from vwap...

I would love to see $3 plus for my holding but I don't think we are going to get that sort of reaction. ELM have an EV of about 140 mill for the project (mkt cap less cash) for total potash contained of about 300 million. So we have about $0.45 for each tonne of potash.

Assuming POK come through with an initial 300 mt JORC @ 20% KCl, we have 60 million tonnes of contained potash. If one applyies a premium ($0.60) which is reflective of less sovereign risk to the valuation, I get a project EV of $36 million and a SP of about 55-60 cents (inc the value attributed to the RAD holding). So depending on the initial quantity for the JORC, the SP has the potential to re-rate accordingly, 600 mt comes to about $1.05. Now these multiples are based on an ELM share price which has halved vs 12 months ago. Prior that it was again almost double that when BHP was creating excitement in potash mkts with their takeover ambition for Potash Corp (~$3).

Having said all of that, I think the price reaction to the JORC may be well above these price targets as this essentially opens the door to future drilling increasing the quantity of potash contained as well as moving the resource to higher confidence categories (measured and indicated). This also brings the project on the map as an M&A target. I saw Intrepid recently raise 150 mill of debt. In my wildest dreams it would be to expand their Moab footprint by taking POK over but I quickly dispelled this thought as their mine life is already 100 yrs plus and they have a lot of committed capex at their existing projects (inc. Moab).

With regards to the ultimate target of of producing I think the model Intrepid uses 10 km away should be modelled by POK as it a much lower scale operation of 110,000 tones annually which would require much less capex than the 2 billion estimated by POK. 110k annual production at current prices is about 50 mill of revenue or a gross profit of 30 mill. So assuming 200 mill of capex, when mkt cap re-rates if we ever get to a JORC Of 3 bill, we can have a more manageable funding to get this project off the ground.

There are SO MANY MORE HURDLES to clear between now and then but these are things I hope management are thinking about day and night.

We got under 3 weeks until the end of the quarter so they better get the green light to drill before then.

GLA