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Potash
nipper
post Posted: Jun 24 2018, 05:08 PM
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Lake Mackay potash .... ' million dollar opportunity' .... http://mobile.abc.net.au/news/2018-06-24/l...932?pfmredir=sm
Also on Landline (ABC)

QUOTE
Joining Agrimin in the SOP rush are the likes of Kalium Lakes, Reward Minerals, Salt Lake Potash and Australian Potash, all of which have put their feet on various salt lakes around
from a long time ago post.... Potash is one of those 'eternal bridesmaids'



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  mullokintyre  
 
triage
post Posted: Dec 4 2017, 09:43 PM
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In Reply To: wolverine's post @ Dec 4 2017, 09:26 PM

Okay, that arrangement with the revenue makes more sense. The way I was reading it made the deal with the Eritrean government seem overly generous. And yeah, so the big hurdle to get over is to line some customers up. The potash market looks a right mess at the moment, a buyer's market.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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wolverine
post Posted: Dec 4 2017, 09:26 PM
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In Reply To: triage's post @ Dec 4 2017, 08:59 PM

ffs my reply was deleted.

Grrr.

Off-takes are the key the rest will fall into place when they secure them. The optimised FEED is probably a prerequisite for signing the offtakes but that is my understanding from what I have read...not necessarily a fact.

The DNK pay for the govt stake but get dibs on the first revenues until paid back as I understand it.



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TOO MANY CHIEFS

NOT ENOUGH INDIANS

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triage
post Posted: Dec 4 2017, 08:59 PM
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In Reply To: triage's post @ Dec 3 2017, 06:01 PM

I'm still trying to get a handle on Danakali and its Colluli SOP project ... but the announcement today that Paul Donaldson, the current CEO and MD, who has led the company through all the development stages, is being benched and the head of marketing, an ex-Rio Tinto ex-DeBeers diamond salesman, Danny Goeman, is being installed as CEO. Given that they announced today that finalisation of the offtake agreeements is now put back to the March quarter of 2018 (back earlier this year the company was expecting to have nailed the offtake agreements months before now), and I can only guess that Mr Donaldson, who is a chemical engineer by training, has failed to close the offtake deals. That Mr Donaldson has taken the company from nothing to where it is now, and that he apparently holds 1.1% of DNK shares, probably means he has still a lot to contribute as a non-executive director (as long as he accepts that he no longer runs the show).

The problem with no confirmed offtake agreements is that without the offtake agreements in place it seems that they will not be able to organise a debt package, and it may also dampen any interest in investing in Danakali via the LSE, which will mean that they cannot begin construction of the project. But with MOP prices continuing to crash maybe customers are simply unwilling to make long term committments to a startup like Danakali.

I noticed that the Chinese investor, Well Efficient, has decreased their holding in DNK from just shy of 14% earlier this year to just shy of 8% currently. I also noticed that the Danakali website can be viewed english in english or in mandarin and that one of the non-executive directors is a Chinese national, presumably associated with Well Efficient though I can only find her linked to HK listed Yin He Holdings. It would appear that at least at one stage Danakali saw its future very much in the Chinese sphere. So I am curious whether the Chinese are coming or going with regards this project, and whether the company was looking towards Chinese money to get the project underway. That they are now looking to the LSE to raise some capital suggests that they have turned their attention perhaps away from China and more towards Europe (is the UK still part of Europe?).

Interesting that Mr Goeman has some significant form in negotiating with the Chinese. He was put up as Rio Tinto's lead iron ore negotiator with China after all the kerfuffle of Rio pulling out of a major deal with Chinalco and the arrests by China of Stern Hu and other Rio executives.

http://www.smh.com.au/business/rio-brings-...91211-koob.html



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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triage
post Posted: Dec 3 2017, 06:01 PM
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There are a number of Aussie tiddlers talking the talk about going into potash production, I'm not up to speed enough yet to work out whether any of them have a realistic shot or not.

But in the meantime, I came across this article about the Danakil project that is under development by Circum Minerals, a private company registered in Bermuda (but appears to have US links), just over the border in northern Ethiopia from Danakali's Colluli project, which is in southern Eritrea. It can get a little confusing: the name of the Australian company is Danakali (DNK) (with an "a" in the middle and a "i" at the end), their project is called Colluli and it is on the Eritrean / northern side of the border whilst there is a private company called Circum Minerals which has their own project called Danakil (no "i" at the end) which is over the border in Ethiopia just to the south of the Colluli project. Apparently the whole basin which contains these two projects is the Danakil Basin.

http://www.mining-technology.com/projects/...potash-project/

http://circumminerals.com/

http://www.danakali.com.au/

Circum's project may be a little further advanced towards development than the Colluli project, with Circum saying that it should be in production by 2021. I still cannot find anywhere where Danakali has given an estimate of when the Colluli project should start operating from: in a company video promo it says that once financing is bedded down the construction phase should take about 2 years, and elsewhere they say that financing is dependent in part on them bedding down the offtake agreements. Back earlier in 2017 Danakali management seemed to be suggesting that the offtake agreements should have been signed off on in the latter part of 2017 but in the latest presentation they seem to be shooting for the first half of 2018. My initial impression is that they are having some problems with the offtake agreements even though they say the interest that's been registered is for far more SOP than the project will be able to produce. I notice that in the DFS they use a SOP price of US$572 per tonne but I am not sure whether that is in the money or not, given how much MOP prices have plunged in recent years and SOP prices tend to track MOP prices (??).

Seeing how relatively close the two projects are to each other and in the same geological basin it is a tad surprising how different they seem to be. From 2021, Circum's project will not only produce 750,000 tonnes of SOP per year but also 2 million tonnes of MOP per year (you pay a hefty premium for SOP over MOP [SOP does not contain chloride whereas MOP does and not all plants react well to being fed chloride]). In contrast the Colluli project will for the first six years of production churn out about 472,000 tonnes per year of SOP but no MOP and after the second stage of the project kicks in total SOP production of about 944,000 tonnes per year of SOP (and again, no MOP). There are some fairly massive MOP projects coming on stream in Russia, and in Canada they are shuttering a number of existing MOP projects so bringing on additional MOP production is maybe not such an attractive idea but bringing a new SOP only project into production may be a different proposition.

A second difference between the two projects is that the potash from the Colluli project will be dry mined using open cut processes whereas the Circum project will work by pumping brine into the ore and dissolving the potash product ("solution mining techniques") and then using evaporation ponds to recover the raw material (seeing the Danikil Depression which is where these two projects are is rated as the hottest place on earth evaporation techniques make sense I suppose). Danakili reckon that the dry mining technique will be low cost whilst Circum say that the solution ming technique is low risk. Circum say they expect operating costs for their Danakil project to be US$112 per tonne of SOP but I see one investment sheet reckons that the opeating costs at Colluli wil be around US$200 per tonne so it would appear Colluli is at a sizeable disadvantage to Circum's project.

http://www.proactiveinvestors.com.au/compa...ion-182569.html

A third difference is a significant one I think. Danakali says that the capital intensity of module one (stage one) of the Colluli project is US$702 per tonne and that will drop to US$412 per tonne when they double up production levels with module two (stage 2). In comparison Circum claims the capital intensity of their Danakil project will be US$838 per tonne so on a project basis module one of Colluli gives slightly better bang per buck than Circum's project and six years later, when module 2 of Colluli goes into production, the capital intensity of Colluli as a project will twice that of Circum's project. But there is a catch. To get the Eritrean authorities to agree to the Colluli project going ahead Danakali agreed to hand over half the project to the Eritrean government but to still put up all of the project's capital expenditure (a similar arrangement was used in the two other major mining projects in Eritrea that have gone ahead of Colluli though the split in the other two was that the Eritrean government got 40%, not 50%, of each of the two other projects). So from the perspective of Danakili it effectively gets only half of what is produced even though it paid all of the capital expenditure, in other words for Danakali the capital intensity for module one would be US$1404 per tonne and even when module two comes on stream the capital intensity for Danakali would be US$824, which works out to be similar to the capital intensity of Circum's project (I think that is right but happy to be corrected???).

And just to finish up, another local SOP hopeful, Agrium, has this page on their website which gives some info about SOP. Apparently in 2015 60m tonnes of MOP was consumed and 5m tonnes of SOP was consumed, so when the Colluli project is in full production it will be providing a sizeable percentage of global SOP production (over 900k tonnes but in perhaps 8 or 8 years from now).

http://agrimin.com.au/what-is-sop/



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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triage
post Posted: Nov 29 2017, 04:53 PM
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In Reply To: wolverine's post @ Oct 10 2017, 08:07 PM

wolvie - I see you posted on hc about Danakali's latest presentation. Just a couple of basic questions for you:

Lots seem to be happening in the next 7 months but I cannot see that they give any indication of the timing for phase one of the Colluli project to go into production. They talk about mining, debt and power providers but no talk about who is going to build the processing plant. I guess they have some well credentialled managers on board so they might be intending to do the work inhouse but they still would need to start ordering the plant and equipment and I cannot find any indication of the timelines in that regard.

Also they talk about listing on the LSE in the next six months and to have bedded down debt arrangements in that timeframe but not their preferred debt to equity mix for the capex (which they give as about US$332m). Of course if they raise much / most of that money through the London listing that could be seen as a dilution of existing ASX shares (sort of).

They say they used conservative inputs for their IRR analysis, I wonder what SOP price they used (seeing Blacksheep's link suggests that SOP prices are currently under pressure). Perseus (PRU) recently put out a DFS report on a proposed gold mine in west Africa and using gold at US$1200 the IRR was 23% but using gold at US$1300 gave them an IRR of 30%. So an increase of US$100 or 8% in the product price improved the IRR by 30%. (as with most of these things garbage in garbage out).



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 


blacksheep
post Posted: Nov 23 2017, 08:21 AM
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World’s largest potash producer to report negative growth: analysts
Valentina Ruiz Leotaud | about 22 hours ago

QUOTE
“The company remains exposed to a weak pricing environment. Potash pricing remains under pressure due to elevated global inventories,” the document reads.

http://www.mining.com/worlds-largest-potas...rowth-analysts/



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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nipper
post Posted: Nov 18 2017, 08:53 AM
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Salt of the earth the goal for potash hopefuls
QUOTE
There is arguably nowhere in Australia more desolate or remote than Lake Mackay, in the north of the Gibson Desert on the Western Australia-Northern Territory border. Standing in the middle of the lake, its flat pearl-coloured salt-encrusted surface stretches to the horizon in every direction. Temperatures here regularly climb into the mid-40Cs.

It is also a long way from anywhere. The closest major centre is Alice Springs, some 650km away. It was from the shores of Lake Mackay that Australia's last nomads — the Pintupi Nine, the last indigenous group living a traditional desert existence — emerged from the wilderness just over 30 years ago, generating headlines around the world.

But the salt lake may be home to one of the world's biggest sulphate of potash (SOP) projects in just a few years, with ASX-listed Agrimin confident the lake can justify a $350 million development

It's a scene being played out across many of WA's inhospitable desert salt lakes. A mini-boom for the fertiliser has driven several local plays to assess the potential of combining the three factors that have long made the salt lakes so hostile — the hypersaline groundwater, the soaring temperatures and extreme evaporation rates — to underpin world-scale SOP projects capable of competing with rivals in China and Utah.

Joining Agrimin in the SOP rush are the likes of Kalium Lakes, Reward Minerals, Salt Lake Potash and Australian Potash, all of which have put their feet on various salt lakes around WA.

Their various plans revolve around extracting the super-salty brines beneath the lakes, evaporating off the water through a series of ponds and separating out the SOP. The SOP is particularly sought-after at the intensive end of the agricultural industry, with the fertiliser making a big difference to yields for crops such as fruit, vegetables and tobacco.

Potash enjoyed a brief moment in the sun a few years ago, when BHP was making its $40 billion takeover bid for Canada's Potash Corporation of Saskatchewan. But the market for the muriate of potash (MOP) produced by global majors such as Potash Corp has been in the doldrums in recent years following a breakdown of the Russian and Belarus cartel that previously controlled supply.

However, the fall in MOP prices has not been reflected in SOP prices, which have consistently held around $US500 per tonne. That is a price that should warrant the development of Australia's first potash operations, and end the nation's reliance on imported SOP.

"At that price, all the projects in Western Australia work, which is really exciting," Agrimin chief executive Mark Savich told The Weekend Australian. "If we're all getting $US500 a tonne we can all deliver into that price, the farmers are better off because SOP increases their yields and we're better off because we make money for shareholders."

The current crop of Australian potash hopefuls do carry technical risks unfamiliar to most who invest in the resources sector. Instead of geology or metallurgy, the potash projects will live or die based around their hydrogeological characteristics — basically, how well the lakes drain over time.

The marketing of SOP is also somewhat unusual in the commodities space. SOP is a premium product but buyers can easily opt for MOP, or even no fertiliser at all, if prices are too high.

Logistics are another key challenge. In the case of Agrimin, its base case involves trucking its output to Alice Springs before putting it on a train for a 1400km trip to Darwin. It is now looking at an alternative route to truck the output "only" 950km north to Wyndham, but would need to find a way to fund the upgrade of the dirt track that makes up most of the route.

Even the potash project closest to a port, Kalium Lakes' Beyondie, is facing a road journey of at least 700km.

The other key hurdle for many will be native title. Agrimin this month formally secured its historic native title mining agreement with the ­Kiwirrkurra people — which includes the surviving members of the Pintupi Nine — to give it new certainty over its plans.

Kalium Lakes has one of the two native title agreements it needs, while Australian Potash has not had any native title claim lodged over its project. But native title issues have effectively quarantined half of Reward Minerals' Lake Disappointment project, and a native title claim was recently lodged over a portion of Salt Lake Potash's Lake Wells project.

News of the native title agreement helped add further momentum to an Agrimin share price that had already been performing strongly in recent months. The stock, which was trading at less than 50c just over a month ago, is now trading at 85c following the native title breakthrough.

The remoteness of Lake Mackay hasn't perturbed the likes of boutique brokerage Argonaut, which included Agrimin in its latest annual list of the ASX's best undeveloped projects.

"The key is its scale; it compares with global SOP from brine producers and is larger than other potential Australian SOP developers," Argonaut wrote this week. "This should allow brine extraction via surface trenching and enable delivery of product to port towards the lower end of the industry cost curve despite the distances involved."

While Agrimin continues to push ahead with its ambitious plans for Lake Mackay, rival Kalium Lakes is taking a somewhat different tack. Kalium Lakes — which is 40 per cent-owned by Pilbara pastoralist and helicopter pilot Brent Smoothy — is going for a "smaller is better" approach, which it hopes will deliver a project sooner and at less start-up cost than its rivals.

The company's managing director, Brett Hazelden, is confident that Beyondie is the most deliverable of the potash projects vying for attention. "There's a logistical and grade advantage that we've got that we're always going to have," Mr Hazelden told The Weekend Australian. "It has to translate into capital costs being lower".
http://www.theaustralian.com.au/business/news

Agrimin (AMN), Kalium Lakes (KLL), Reward Minerals (RWD), Salt Lake Potash (SO4) and Australian Potash (APC) ... all of which have put their feet on various salt lakes around WA.

...and is RUM still active, in NT salt lakes? Changed name to Verdant Minerals (VRM), still doing quarterlies, hoping to get Ammaroo Phosphate off (out of) the ground - BFS, environmentals, etc.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
wolverine
post Posted: Oct 10 2017, 08:07 PM
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In Reply To: triage's post @ Aug 17 2017, 02:55 PM

Yo triage,

I am still around and I read most of your posts but I post a lot less as I decided to concentrate on other closer to my heart things.

DNK up again on pretty good volume implying that the off take agreements might be close (a leak maybe?) or anticipatory buying. Company pays all costs but gets to pay costs from production so 50:50 isn't so bad. When the govt ripped another 10% off them a while ago it knocked some confidence out of the stock price. The interest in purchasing the end products was very strong so once off takes are sorted funding should be straight forward assuming they don't get knocked off...but they will.

Same thing goes with XAM a bit of money going into the stock on volume. The market is slow to recognise good quality drill results when the company is a jurisdiction that isn't Australia it seems. Elephant hunting in elephant country.

I think I have a million WTF and NFI fpo's as well sadsmiley02.gif



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TOO MANY CHIEFS

NOT ENOUGH INDIANS

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triage
post Posted: Aug 17 2017, 02:55 PM
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In Reply To: wolverine's post @ Aug 16 2017, 10:22 PM

wolvie!!!! You're still around!!! When I read your post "DNK - that is all" I assumed that you were cryptically taking the piss, as is your want. Hmmm DNK = do not know ???? What's wolverine getting at???? I'm missing it again?!?! Better than my usual stock selection that no matter their company name they trade with the code WTF...

But no I played for spin but instead was bowled by a straight delivery. (I did get blacksheep's pun on taking potash companies with a grain of salt).

But wolvie, now you're talking: I like tier one mining projects, high quality, low costs, long life. Thanks for the pointer.

Eritrea hey? Maybe not so bad, though I see the local government gets 50% of the project and I'm assuming that the company gets to pay all the costs. Also I see that the largest shareholder, at 13%, is a "private Hong Kong investor" and I'm guessing that that so-called HK investor cannot speak Cantonese. My experience is that Chinese investors often don't believe in the win-win of modern business. The good news I suppose is that the People's Liberation Army now has a naval base just down the road at Djibouti just in case any of the locals get a tad too greedy.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
 


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