incredibly stunning facts

There is an exceptional new presentation dated 30th September 2012 on ELM's website. Some of the key highlights for me are:

1. The lowest OPEX in the world $94 per tonne fob; (pg 7)

2. Drilling the HWS commencing October 2012; (pg 13)

3. The lowest CAPEX in the world of $660 per tonne assuming Infrastructure deal done of $530 million built into OPEX (pg 6 & 18). Expressions of interest already signed.

Secondly, the following article shows Indian govt controlled fertilizer company investing $1 bill+ into Western Potash.

So let's compare ELM and WPX:

WPX
Target Annual Production rate 2.8 Mt/yr
Life of Mine 40 years
Construction Start-up 2013
Mining Start-up 2016
Years to Full Secondary Production 6
Long Term Potash Price (FOB Gate) $511 US/tonne
Taxes and Royalties $28.90 CAD/tonne
OPEX $156 US/tonne incl royalties & freight
CAPEX $2.758 Billion CAD equals $1209 US/tonne
NPV (10) $4.14 Billion CAD
IRR 22.7%
Payback Period 5 Years

ELM
Target Annual Production rate 2 million tonnes Muriate
Life of Mine 23 years
Plant Start-­up Q3 2016
Potash Price (Brazil Cfr) $579/t MoP, average over LoM, 2012 US$
Total Initial Capex US$ 1.85bn of which Infrastructure Capex US$ 0.58bn equals $925 US/tonne, to be reduced to $660 US/tonne with Infrastructure deal.
NPV10 US$ 2.97bn (after tax)
IRR 29.3%
Opex FOB US$ 94/t MoP including royalties
Process Recovery 89.5%
Payback Period 3 years from production start-­up

Comment: ELM is far superior in my view and has massive upside. The DFS next year promises to be truly stunning by incorporating the HWS with the potential to increase grade by 50%. I think there is significant upside over the next 12 months. If the Indians are prepared to invest $1 billion into WPX, then ELM has to be on the radar of the Chinese, Uralkali and Vale, surely. The other thing to understand is that our OPEX is already number 1 yet these figures above don't include Shipping savings as we are closer to Brazil and Asia so it is quite obvious that the Indians haven't done their research like us. But I bet the Chinese have, maybe that is why they pulled out of WPX negotiations earlier this year. They didn't give their reasons but their due diligence was very positive. They said there was nothing wrong with WPX. Maybe they just realise, like us, that ELM is the sleeping giant of them all.

RCFL eyes bigger stake in Canadian potash project

By: Ajoy K Das
5th October 2012
KOLKATA (miningweekly.com) - India’s Rashtriya Chemicals and Fertilizers (RCFL) was considering increasing its investments and taking majority control in the proposed joint venture (JV) with Canada’s Western Potash to develop the $2.8-billion Milestone potash project, in Saskatchewan.

“A higher investment could be put on the table by RCFL to become the favored and majority partner of Western Potash in the Milestone project since the Canadian potash company had other suitors,” an official in the Indian Department of Chemicals and Fertilizers said.

“RCFL, in ongoing talks with Western Potash, has committed an investment of $1-billion. But this would make RCFL the junior partner in the JV. Western Potash has shown a willingness to part with a higher equity stake to foreign investors, and RCFL would follow this up, aiming to conclude a deal before current year-end,” the official said.

Last month, the Indian government announced a policy directive for the adoption of public-private partnerships (PPPs) between it and private fertiliser companies, aimed towards more aggressive fertiliser mineral asset acquisition overseas.

In line with this, RCFL would explore the option of consortium investments with private Indian fertiliser producers, in the Milestone project.

RCFL, which is majority-owned by the Indian government and among the country’s largest soil nutrient and industrial chemical producer, aimed to establish long-term security in fertiliser imports through an investment in the Canadian project, with buy-back conditions.

India was fully import-dependent in pottasic fertiliser and imported 4.69-million tons a year of potash, accounting for around 50% of the global trade in potash.

The Indian government was also considering the possibility of funding the higher investments by RCFL by leveraging the resources of a proposed $1-billion sovereign wealth fund (SWF), to be created specifically for the acquisition of foreign fertiliser mineral assets through PPP initiatives.

However, officials in the Department of Chemicals and Fertilizers cautioned that an SWF was still only on the drawing board and investments in the Milestone project should not be delayed until the fund was made operational, since foreign asset acquisitions were competitive and several Indian companies had lost out in the past owing to tardy investment decision-making.