Hartleys tips Goldphyre shares to triple as WA potash project unfolds
Salt Lake Potash (ASX: SO4), which is chaired by the mining magnate with the midas touch, Ian Middlemas, raised $5 million this week to advance its WA potash project.
In doing so, it effectively highlighted a new opportunity for investors who enjoyed the Salt Lake ride as its market capitalisation rose from $13 million last October to $42 million this week.
Following in Salt Lake’s footsteps is the lesser-known WA potash explorer Goldphyre Resources (ASX: GPH).
Goldphyre shares many a thing in common with Salt Lake. Both have WA sulphate of potash (SOP) projects called Lake Wells, with Goldphyre’s version located 500km north-east of Kalgoorlie, about 100km closer to Kalgoorlie than Salt Lake’s ground.
The projects would also appear to be of a very similar magnitude, with Salt Lake boasting a Resource of 85 million tonnes of SOP grading ~8.74kg/m3 while Goldphyre recently published a maiden exploration target of 79-123Mt grading 11.4-13.9kg/m3, on a like-for-like basis.
But there is one stark contrast: Salt Lake’s $42 million market capitalisation dwarfs Goldphyre’s value of just $7.5 million.
Observers would rightly point to the fact that Salt Lake has a JORC-compliant resource to its name while Goldphyre is talking the more preliminary exploration target.
However, they may also argue that this is where the opportunity lies, particularly given that Goldphyre says it is on track to publish a maiden JORC resource estimate by June this year.
The obvious theme here is that, should this resource figure reflect the existing exploration target, Goldphyre’s potash inventory will match or exceed that of Salt Lake, especially in the all-important grade department.
Broker Hartleys sees substantial upside in Goldphyre shares, setting a price target of 22c in its new research report on the company – triple its current price.
“Goldphyre has aspirations of being an SOP brine producer and is targeting a brine operation which can initially supply ~75-100,000tpa SOP into the domestic market,” Hartleys resources analyst Mike Millikan wrote in his report.
“Australia currently imports 100 per cent of its potassium fertiliser requirements and the low chloride and high sulphate content of SOP makes it an ideal and preferred form of potassium (fertiliser) for farmers.”
He said Hartleys’ 22c price target was based on the share market valuations of Goldphyre’s peers and modelling of a small-scale SOP operation.
“We maintain our speculative buy recommendation on Goldphyre with a 12-month price target of 22c per share (up from 11c),” Millikan wrote.
“The company appears cheap on peer metrics and should continue to be re-rated as the project is de-risked.”
Salt Lake Potash (ASX: SO4), which is chaired by the mining magnate with the midas touch, Ian Middlemas, raised $5 million this week to advance its WA potash project.
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