Re: STB - South Boulder Mines
Some food for thought guys taken from "The Australian"
May 05, 2008
BACK in December, somewhat ahead of the rest of the crowd, we started to talk about investing in fertiliser components -- potash and phosphate -- as the world needs more and more food.
The latest development in this story is the announcement from China last week that it will clamp down on exporting fertiliser. With food prices rising 21 per cent in the first three months, the Beijing bosses are trying to make sure fertiliser prices don't rise and hurt its farmers due to supply problems at home.
Potash Corp of Saskatchewan is now one of the top five companies listed on the Toronto exchange -- its shares have risen by around 50 per cent so far this year. Ten days ago, Denver-based Intrepid Potash listed on the New York Stock Exchange and its shares shot up 58 per cent on the first day of trading. It has a market cap of $US3.3 billion. The second-largest producer in the world is a Fortune 500 company, Mosaic Co, valued at $US54 billion.
Potash prices have nearly tripled in the past two years, so it's worth keeping an eye on the local start-ups -- but with the caveat that they are only taking the first step on a very long journey to production.
Orocobre (ORE) has a lithium project in Argentina, but potash could be a lucrative by-product. First sampling has begun. Reward Minerals (RWD) has reached agreement with the Martu people in Western Australia for the development of the Lake Disappointment potash project, while South Boulder Mines (STB) has acquired three potash and phosphate properties in that state.
Another caveat: a warning from Merrill Lynch economist David Wolf that potash may just be another bubble. One sobering fact he cites is that the combined valuations for three North American producers -- Potash Inc, Mosaic and Toronto-listed Agrium -- is bigger than all the potash sold in the world for the past 100 years.