TRH - Transit Holdings

[sleeper88]

nq6,

I've been a follower of this stock since 07, back in the good old days of the iron ore boom. I bought and sold the majority of my position, but held a small parcel of shares.

I recently topped up for a couple of reasons:

1. BHP has openly stated it wants to be a "major player" in the potash industry in the next decade

See here
http://www.resourceinvestor.com/News/2009/6/Pages/Potash-juniors-Prime-BHP-takeover-targets.aspx

2. Potash is on un substitutable product in fertilizers + increasing hungry mouths to feed.
3. TRH is (so far) unknown to the wider market, hence its low market cap.
4. Scoping study close to finalisation
5. Monti and his links with Forrest?

Potential price catalysts IMO:
1. finalisation of tenements
2. Scoping study results (soon)
3. ramp up of exploration
4. JORC
5. possible name change? (pure speculation, something like Transit Potash, Citadel Potash)

See these two slides from their US June presentation

 

[mosem]

TRH

TRH is on it's way, 2.3 billion tonnes of Potash Sylvinite in Utah.

 

[exberliner1]

Re: TRH

TRH is on it's way, 2.3 billion tonnes of Potash Sylvinite in Utah.

It most certainly is. The Bureau of Land Management in Utah has already released the confirmation of TRH's access on their web site.

Tomorrow before the market opens we will get the official confirmation from TRH. Plus TRH issued a detailed ANN last week giving their plans for all the potash and RM produced a report suggesting a short term target of AU$2.18 - both on the company's website if you want a read.

Might be an idea to have TRH on your watchlist tomorrow as there will be trading opportunities galore.

I would expect TRH to follow in the tradition of STB, FMJ and ELM, after all 2.3bn tonnes of potash is quite a lot.

Also worth pointing out that TRH is not somewhere dodgy like Eritrea with all the political risk that ensues.

TRH is in the USA, in Utah and the USA as I am sure you are all aware imports 85% of its annual potash use.

TRH will have a ready market sat there awaiting the first delivery.

Personally speaking I can justify a mkt cap in the $100mn - $200mn range as things stand but sadly there are only 45mn shares in issue and no quoted options, so it is not that easy to acquire a position in large size without chasing.

$0.725 at last Friday's close (pre-trading halt).

I wonder what multiple of that price we will reach this week.

And yes I bought some TRH back in March .... now where is my bag counting machine.

EB

 

[exberliner1]

This report if worth a read

http://www.transitholdings.com.au/reports/TRH_Taylor_Collison_Research_Note.pdf

TRH was up 12.5% today but with only 50mn shares still has a market cap at a fraction of other potash plays.

Some important ANNs are due any day now as the report explains.

I own lots of this stock and have held since March 2011.

Any comments would be appreciated.

EB

 

[exberliner1]

Simple calaculations give us the following approximate numbers post CR and using today's close:

Mkt cap 67mn X 0.62 = $41.54mn

Of which

Cash = $11.5mn or 17.2c per share

RAD 22.7mn shares at 21c = 4.76mn or 7.1c per share

So cash and RAD are worth 24.3c per share leaving 37.7c per share for EV.

EV is thus $25.3mn

This is still far too cheap.

--

Taking an EV of $50mn as a more reasonable EV in the pre drill stage we would get the following:

EV $50mn = 74.6c per share + cash & RAD (24.3) would give us a fair SP of 74.6 + 24.3 = 98.9c or about 60% higher than where we are now.

Once drilling starts and then once we are awaiting results I would expect the SP to run higher still.

--

For my part I send a big thumbs up to the management of TRH for being able to raise $9.5mn in the current difficult stock market at a price almost double of where we were only 3 months ago.

In a market like we have atm the large gains will only be had by being on board in special situations and from where I sit they don't come more special than TRH.

EB

 

[exberliner1]

With regard to today's EGM ANN:

I have no problems with the director's options.

They have various conditions attached to them which quite cleverly align their redemption with shareholders interests, as the market price has to be well above the strike price before they can be cashed in.

They are not boring old plain vanilla options.

The point on paying wages by share options also saves money now in 2011 as this allows TRH to pay some pretty effective people lower wages in cash is also valid

The options also will not vest for quite a long time as well so they have both share price and time constraints attached.

As to issuing 21 881 250 shares instead of 17mn - I say good as we'll raise even more cash which shows how much demand there is for TRH's shares at 56c.

Personally I will vote yes to all resolutions if I can do so from outside Australia.

I will have to do my EV calculations again at some point to take into account the extra cash of $ 2 733 500 represented by the extra 4 881 250 shares.

Even then we will only have about 67mn shares in issue and by the end of July an extra $12.25mn in cash with drilling about to start on a huge potash target in August.

To raise all that cash in the current market while still keeping the register tight is a work of financial alchemy imo.

To me this makes TRH even more attractive.

EB

 

[exberliner1]

So we issued 6.6mn shares not the 6 881 250 envisaged, we really need to do new EV calcs in that case, one for where we stand now and another for where we stand after the EGM and an issue of a further 15mn shares.

It would appear the the total issue is now 21.6mn shares and not 17mn as originally discussed in ANNs.

So currently things looks like this

Existing cash on balance sheet $2.9mn ($3.3mn minus $400k for this quarter.

New cash following issue of 6.6mn shares at $0.56
$ 3696 000

So cash on balance sheet as at the end of the quarter will be $ 6 596 000

RAD shares: 22.7mn at $0.20 = 4 540 000

Number of shares in issue now 52 765 474

So as we stand right now we get

Cash and RAD shares value = $ 11 136 000

Value per share represented by RAD and cash = $0.21

Current share price $0.56

So EV is $0.35 X 52 765 474 = $18 467 915

So those selling their newly acquired shares today are placing an EV value on TRH of $18.4mn .... what an absolute bargain for those buying them

--

Post EGM and another 15mn shares issued at $0.56

Number of shares in issue will be 67 765 474

Cash on balance sheet won't have changed much as we will not have started drilling by July - drilling is scheduled for August.

So new cash will be $ 14 996 000

On the basis that RAD is atill at $0.20 we get the following

Cash and RAD shares are worth $19 536 000

New number of shares in issue 67 765 474

Cash and RAD shares per TRH share = $0.29

EV thus $0.27c per share or $ 18 296 678

--

Bearing in mind the size of the deposit and the existence of Sylvinite in the existing historic bore holes this has to be the one of the most undervalued stocks on the market.

TRH is also unusual because it is not just sitting on a huge resource - they are actually doing something with it.

Also bear in mind that my EV calculations are very conservative as I have not included the 12.7mn RAD options as we are at the strike price and not above it. These options should be worth a few million in time once RAD's share price recovers.

If anyone disagrees with my numbers do tell.

Otherwise I hope I have illustrated some of the value in the company behind the current smoke and mirrors that always come into play during and post a capraising.

EB

 

[Gringotts Bank]

Another 10c tomorrow wouldn't be out of the question. Tends to gap strongly especially when MMAs are converged as they are now. Robots are accumulating, I believe.

 

[Chasero]

I've been watching TRH and I still am holding out.

It literally zoomed from 80c to $1.30 in light speed! I'm a bit skeptical, as I'm worried soem billionaire is going to dump it all!

 

[ob1kinobi]

I've been watching TRH and I still am holding out.

It literally zoomed from 80c to $1.30 in light speed! I'm a bit skeptical, as I'm worried soem billionaire is going to dump it all!

Indeed, looks as though someone didn't like the announcement and dumped there holdings.