The operating expenses would be $114 per ton. The current market price is $300 per ton and will certainly go up. The capex for both would be at most $4 billion. The output would be at least 5 million tons per year. The life of the mines would be at least thirty years.
Figure it out. $4 billion divided by 150 million tons [5 million per year for 30 years] = capex of $27 per ton. $114 p/t opex + $27 p/t capex = $141 p/t total cost. That's less than half the current market price for potash and about 1/3 of the expected market price in a couple of years. Furthermore, Sichuan would own a secure supply and could even sell some of what it didn't need in China.
Sichuan is a multi multi billion dollar giant. It could and should secure the Holbrook Basin potash. That would hurt both Uralkali and Potash Corp. and make Sichuan King of China as far as potash is concerned.
I just called Sichuan and told them they could have Prospect for $500 million and Passport for $650 million. That would be $4.40 per share for Passport. They told me they would get back to me by Monday. I said, No counter offers. Take it or leave it.
What do you think?
Quote from PGX's press release:
"Prospect Global Resources Inc. (“Company” or “Prospect”) reports that in response to the recent announcement of its agreement to extinguish senior secured debt, Sichuan Chemical Industry Holding (Group) Co., Ltd. ("Sichuan Chemical") has responded with its endorsement and support. Xiaojun Chen, Chairman of Sichuan Chemical’s Board of Directors, stated, “We believe this is one of the final steps in making the mine a reality. We continue to be some of the most long term supporters of the Holbrook Project. The fundamentals of the project with the recent permitting success have only improved over time. As such, Sichuan Chemical believes in its partnership with Prospect Global Resources and we believe 2014 will be its best year yet.”"
I cannot believe that Prospect would be able to survive and move to mining and not Passport. If, as the above suggests, things are looking rosy for Prospect, they are looking rosy for Passport too.
Maybe I am just grasping at straws. Or not.
Well, I don't think that I would want to smell your nose after where it has been--roflmao.
Here's a passage from Oculus' pr:
"The medical device approval by the Mexican Ministry of Health is for the care of keloid and hypertrophic scars. In preparation for a commercial launch in the summer of 2014, More Pharma, in concert with Oculus, plans to conduct an additional clinical study in the first half of 2014..."
Looks like a competitor to me. I don't know what "...the care of..." means. My understanding is that RXII hopes to reduce keloids and hypertrophic scars. I can't find any specificity about what Oculus does. If it does reduce those kind of scars, it would be a big threat. As a gel, it is almost bound to be a lot cheaper than RXII.
Maxkonaet says: "My revised share value is $0.17."
How about sharing your reasoning so we can evaluate your evaluation?
My share value is $3.43 per share. Here's how I get it: 3,000,0000 ounces at a net of $400 per ounce divided by 350,000,000 shares.
I realize that I am being overly conservative but that's okay. There are certainly more than 3,000,000 recoverable ounces and the net will clearly be more than $400 per ounce but I believe in conservative estimates.
tall little boy,
Ask yourself one question: Why would a savvy billionaire investor like Honig keep buying this stock just to hold up its market price? Answer: He wouldn't. If Honig did not think he would make money with his buys, he would sell or at least just hold and hope for the best. No sane person would pour money into a stock unless he thought that the money would grow. If Honig thought that the only way to maintain the market price on this stock is for him to buy more, he would just write off his investment.
Tall little boy, you might have just fallen off the turnip truck but Honig didn't.
The more important question would be, Is anybody buying here?
People who are under water often hold to get even. However, people are much more anxious to buy when a stock is high than when it is low.
The reason this stock is so low is that we have holders but not buyers. That includes me.
"Wonder how they feel about Passport Potash?"
So do I. My hunch is that they are just waiting to see how the world market shakes out.
Long run, I think it'll be okay. Short term? Not so much.
My take is that without the concession from Karlsson, they were dead for sure. Nobody could take on the company when it owed $148,000,000 to one party. The new debt at least makes it possible to find a white knight.
If the company pulls out of this, so do the shareholders. Dropping to pinks or not at this point doesn't matter. It fell like a rock to practically nothing while listed anyway.
They now have a chance. They had no chance before. I hope they make it.
Great post!! As you point out, since most and maybe all preferred holders are already 10% owners there is little if any dilution potential from the preferred.
Also, the 7% dividends on the preferred are paid in further preferred not in cash. Therefore there has likely been no (or very little) dilutive potential from the dividends, and no cash bleed.
I am now satisfied that there are about 14 million shares outstanding including the common underlying the options and warrants. Forget about the preferred. That would give a current market cap of about $40 million--a far cry from the $100 million+ I was using.
I now feel MUCH better about this stock It seems fairly priced at the current market cap.
Thanks hugely and I am embarrassed for not catching the stuff you pointed out.
By the way, one of the main benefits (especially for Prospect) of consolidation between Prospect and Passport is that it dissolves the checkeboarding problem. If just one entity owned what is currently the Prospect and Passport land packages, there would be no problem about avoiding mining on other people's land because it is checkerboarded with yours.
All of this assumes that interest in Holbrook Basin potash arises at all.
I am more optimistic than I was before the good news from Prospect about debt extinguishment.
Your post is not clear. If you are talking about African potash, you are likely talking about Allana. It's potash is, indeed, shallow but there are other challenges, including remoteness, political instability, and lack of infrastructure.
If you are talking about the Holbrook Basin, which you seem to be doing later in your post, maybe this will help. Prospect does have a lot of its land package (or, better, its mineral deposits) beneath the Petrified Forest National Park. Whether or not it will be allowed to work that area remains to be seen. Arizona is quite mining friendly, U.S. Interior Dept. on National Park land maybe not so much. It is estimated that even if Prospect is eventually permitted to mine beneath the Petrified Forest National Park, permission to do so will take at least five years obtain.
It is also important to note that much of Prospect's core land package outside the Park is checkerboarded with Passport. That is there are sections of Passport land occurring in a checkerboard fashion with Prospect, in the heart of Prospect's land package. Somehow that would have to be dealt with before Prospect could mine. Passport's core land package is consolidated and solidly within Passport's domain. The sections that are,checkerboarded with Prospect are outliers and not in Passport's core. It thus appears that Passport could mine and simply bypass its sections that checkerboard with Prospect.
It is Passport that has a deal with the Hopi Tribe to work its private (not reservation) land. Passport has no interests on or under the Petrified Forest National Park.
We have gone through this before but there are newbies, such as apricusbio, that still don't get it. Here, again, is the deal. This is a public service announcement.
Go to the Q3 10Q. It can be found among the sec filings from the RXI website. You will find that the balance sheet lists common shares as 11.5 million. If you then look at the table and accompanying explanation on page 11, you will find that there are an additional 26.5 million common underlying the derivatives (mostly the convertible preferreds.) that gives a total common of 38 million. At the current market price per share of $2.85, we get a market cap of $108.3 million.
The $34 million market cap I gave in an earlier post today was overstated because I had not factored in the rather drastic recent price drop. At any rate, the current market cap is well over $100 million when we take I to account all the common, including that underlying the preferred. By the way, the convertible preferreds ( by far the build of the derivatives) are convertible at any time and any price without requirement of further monetary payment to the company.
Well, if somebody wants out and Honig wants in for more, I go with Honig. There are all sorts of reasons to sell, including year end tax loss capture, and all kinds of sellers, including frustrated people who have no special knowledge or position but just want to leave. Then there are insiders with huge stakes who keep buying more.
I go with the latter. You do what you want.
P.S. What's a Steuvin?
Dunno why he is doing it but I like it. Honig is a very sharp guy and is a director of the company.
I think a small, or a large, position in this company at this price would be a good purchase.
If you include all the common underlying the derivatives, especially the common underlying the convertible preferreds, you get about $134,000,000 market cap, maybe a bit less since the market price per share has dropped recently.
There are approximately 39,000,000 shares when the common underlying the derivates are added to the common.
See the most recent 10Q and read it carefully. We have discussed this here before.
Prospect owed $148,000,000 to Karlsson which it obviously could not pay. Karlsson let them off the hook at $.17 on the dollar, leaving a debt of $25,000,000 to Karlsson. There are other debts but that is the major one. They have until March 2014 to come up w/ the money.
Many people, including the spokesman for Passport, have been saying that a consolidation of the Basin would be the best for everybody. For one thing, Prospect and Passport have intertwined land holdings. It occurs more in Prospects core holdings but, still, affects Passport some. The elephant in the room had been the huge debt of Prospect. Nobody would even consider them, or consider including them in a consolidation, with that huge debt. Now that the debt matter is eased a lot, all kinds of possibilities open up.
There would be no overlapping land problems with a combined company. Prospects need for direct rail would be solved. A large outfit could take both and, if it seemed appropriate, leave one for much later development.
A total purchase price of $400,000,000 for both ($460,000,000 including taking on the combined debt) would be an absolute steal. That would be an immediate $1+ a share for Passport.
Well, for the first time in quite a while I see a way out of the slump. Good luck to all longs.