BACK in December, somewhat ahead of the rest of the crowd, we started to talk about investing in fertiliser components -- potash and phosphate -- as the world needs more and more food.
The latest development in this story is the announcement from China last week that it will clamp down on exporting fertiliser. With food prices rising 21 per cent in the first three months, the Beijing bosses are trying to make sure fertiliser prices don't rise and hurt its farmers due to supply problems at home.
Potash Corp of Saskatchewan is now one of the top five companies listed on the Toronto exchange -- its shares have risen by around 50 per cent so far this year. Ten days ago, Denver-based Intrepid Potash listed on the New York Stock Exchange and its shares shot up 58 per cent on the first day of trading. It has a market cap of $US3.3 billion. The second-largest producer in the world is a Fortune 500 company, Mosaic Co, valued at $US54 billion.
Potash prices have nearly tripled in the past two years, so it's worth keeping an eye on the local start-ups -- but with the caveat that they are only taking the first step on a very long journey to production.
Orocobre (ORE) has a lithium project in Argentina, but potash could be a lucrative by-product. First sampling has begun. Reward Minerals (RWD) has reached agreement with the Martu people in Western Australia for the development of the Lake Disappointment potash project, while South Boulder Mines (STB) has acquired three potash and phosphate properties in that state.
Another caveat: a warning from Merrill Lynch economist David Wolf that potash may just be another bubble. One sobering fact he cites is that the combined valuations for three North American producers -- Potash Inc, Mosaic and Toronto-listed Agrium -- is bigger than all the potash sold in the world for the past 100 years.
Coal seam gas stocks explode
INVESTORS suddenly couldn't get enough of coal seam gas shares following BG Group's $12.9 billion bid for Origin Energy (ORG).
One of the last stocks out of the gate as the buy orders flooded in was Icon Energy (ICN), which got as high as 9.9c on Friday -- double the most recent low in January.
If all the projects planned for Gladstone to turn CSG into liquefied natural gas go ahead, then there is going to be a frantic rush to increase the amount of gas available. That's where Icon comes in.
We hear that at least a dozen different parties are chatting to the Brisbane junior. And their enthusiasm level is apparently very high.
That may seem a luxurious position to be in.
Yes and no. It will take somewhere north of $300 million to bring Icon's project into production. The company is worth about $26 million; moreover, it spent nearly $1.3 million in the March quarter and had just $634,000 left on March 31.
That's obviously short of the $300 million that is going to be needed. Apparently the options being wrestled with are selling half of the project or climbing up to the high board and diving in alone.
Previously the company reported a resource of up to 1.25 trillion cubic feet of gas at its Surat Basin project and that could be worth up to $3.7 billion. Now, Icon says that is very conservative and one director is talking of having gas worth $7.5 billion.
Serial offenders true to form
MNM Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
