Well I hope the target is conservative. I think it pays to be slightly conservative with exploration targets so that companies under promise and beat expectations. Lets go Fishing for Whales.
IT has taken a stock tip-sheet to puff a little life back in the Australian potash sector. In recent months, the potash sector has been suffering in parallel with the rare earths companies: that is, while the price of the products (potash and rare earth oxides respectively) have been climbing impressively, shares in the exploration companies have been falling in line with the general retreat in resources stocks.
But Transit Holdings (ASX:TRH) - and soon to be renamed Potash Minerals - has seen its share price being given something of a fillip. On Monday the shares rose by 10.3 per cent and on Friday by 12.1 per cent, having reached an intraday high of A$1.065. That contrasted with a much more modest 15c exactly a year ago. When queried by the Australian Securities Exchange about the rise (and Fridays high volume), the company responded that it had been featured in a newsletter specializing in covering small resources stocks.
In addition, analysts have been visiting the project site in the Utah section of the Paradox Basin. One comment circulated by a Sydney brokerage specialising in mining juniors told clients the analyst was impressed by the project, that Utah was more pro-mining than neighbouring Colorado, and that its location in San Juan County was a plus because, compared to Grand County, it was "more pro-development as it has less going for it". The analyst is expecting the four holes to be drilled to provide a JORC-compliant resource by January.
But the other Australian potash stocks have not fared so well of late - notwithstanding that in each case the story continues to build and potash prices keep rising (and with the possibility of supply squeezes).
It's just the stock market blues, mainly. How else to explain Aguia Resources (ASX:AGR) dropping from A$1.56 in March to 40.5c in August (and closing at 64c on Friday)? South Boulder Mines (ASX:STB) has been the potash market darling down under, but that hasn't prevented its price falling from A$6.25 on March 1 to A$2.41 now. And Elemental Minerals (ASX:ELM) staged an impressive climb from 39c a year ago to A$3.00 on April 1, but has since eased to A$1.50 now. Even Fortis Mining (ASX:FMJ) which had run spectacularly from 21c in December to A$3.98 in early March on the back of acquiring potash projects in Kazakhstan has now retreated to A$1.06, while the other newcomer Potash West (ASX:PWN) dropped over two months from 31c to 15c.
It can only be the market generally. At some stage, investors will realize that fertilizer demand is a story that cannot be lumped in with iron ore, coal or zinc.
TRH Price at posting:
$1.02 Sentiment: None Disclosure: Held
