asset rich cash poor, page-4

FERTILISER minerals prices are really on the nose at present. Falling world food prices don't augur well for farmers' capacity to spend on fertiliser over the coming year. The latest indicator of the squeeze being put on potash and phosphate producers is that Israel Chemicals, one of the global biggies, is reported to be planning large-scale layoffs.

But this does not seem to have discouraged the potash and phosphate hunters too much.

Kazakhstan Potash Corp (KPC) is certainly pushing on; on Thursday we received the prospectus for a $54 million raising at $1.80 a share, although it is clearly working with a net: the minimum is set at just $9m.

Previously known as Fortis Mining, and in trading suspension since November 2011, KPC is run by a Hong Kong businesswoman who styles herself as "Madam Freada Kwan Cheung", billed as having great contacts within China, although biographical details available are wafer-thin.

The company owns projects in Kazakhstan. Its most advanced, Zhilyanskoye, has a resource of one billion tonnes which, while it sounds a lot, is not huge by deep underground potash project standards: BHP Billiton (BHP) has 5.3 billion tonnes at its Jansen deposit in Saskatchewan and there would certainly be questions about whether that would be economic at today's prices.

KPC will clearly target the China market, into which Russia's potash miner Uralkali has been making large inroads. Beijing is now trying to screw down the price they pay to the large North American producers.

There is certainly an alternative, and cheaper one at that, to mining these very deep potash deposits and that is by evaporating solutions from brine lakes. Just by chance, Australia is well placed in that regard. Last month, Geoscience Australia issued a report indicating Australia has considerable potential in this regard and not only for potash: it names lithium and borates as viable targets.

One of the biggest deposits, Lake Chandler in Western Australia, is owned by Activex (AIV) but is stalled by the low global potash price. (While it's big, it's still well short of the largest potash in brine resource: the Dead Sea.)

Meanwhile, Reward Minerals (RWD) reports it has received "highly encouraging" potash brine analyses in the Telfer-Lake Disappointment area of WA. (Your correspondent hesitated to mention RWD as, at least at one stage, its share register contained a core of true believers who produced robust email invective at anything other than glowing references to their little "multi-bagger".)

Reward also has a 15 per cent stake in the Karinga Lakes project near the Lasseter Highway in the Northern Territory where Rum Jungle Resources (RUM) is targeting a chain of dry salt lakes.

There is also an at present unlisted player, Australian Salt Lake Potash, picking up various projects in Australia's hinterland.

It is of vital economic importance that some of these projects be found viable.

As RWD's website points out, Australia spends $200m a year importing potash. Moreover, the brine lakes produce the higher-valued form, known as sulphate of potash. Activex notes there is a large local market in the WA wheatbelt.

While Canada is a world powerhouse in potash, it now imports phosphate with its one remaining mine closing. Fertoz (FTZ), which listed in September with plans to fill the gap from developing production in British Columbia, has added another project just across the border in Idaho. Idaho has three operating phosphate processing plants, two within 35km of the new FTZ ground.


It’s in the drawer one day we might need that LOL