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Mosaic (MOS) Reaches Production Milestone at Esterhazy K3

Zacks Equity Research

The Mosaic Company MOS announced that it has reached a significant milestone in the development of multi-year mine project at Esterhazy K3. The company has commissioned the production hoist as of Dec 18 and also delivered the first bucket of potash to the Esterhazy K2 mill.

Per the company, the K3 production hoist’s commissioning aids in mitigating Esterhazy’s brine inflow costs and risk. The hoist is likely to move 60-ton skips, which are capable of lifting 10 million tons of potash per annum. Moreover, the move demonstrates commitment to the long-term sustainability of operations along with vision for the future of potash operations in Saskatchewan.

Mosaic expects Esterhazy operation to be the largest and most competitive underground potash mine in the world following the completion of K3. It also believes that the Esterhazy K3 project is the only new potash mine in the world that is on budget and schedule. The company expects the project to reach full operational capacity by 2024.

Notably, the project is expected to generate a higher return on invested capital compared with the cost of capital. At the same time, it will significantly lower costs and risks by eliminating brine management.  

Mosaic’s shares have gained 9.2% in the past six months, against the industry’s 9.8% decline.


In November, the company raised adjusted earnings per share (EPS) guidance for 2018, considering strong business performance and lower expected effective tax rate for the year. It expects adjusted EPS in the range of $1.80-$2.00, up from the previous view of $1.45-$1.80. It also expects adjusted EBITDA for 2018 in the range of $1.90-$2 billion, up from the previous view of $1.80-$1.95 billion.

Mosaic is likely to gain from rising global demand for fertilizers. The Vale Fertilizantes acquisition is also expected to deliver significant synergies. Additionally, the company is also likely to benefit from cost reduction actions and capacity expansion.

The Mosaic Company Price and Consensus


The Mosaic Company Price and Consensus | The Mosaic Company Quote


Zacks Rank & Other Stocks to Consider

Mosaic currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc. CF, Israel Chemicals Ltd. ICL and Cameco Corporation CCJ, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CF Industries has an expected earnings growth rate of 748% for the current year. The company’s shares have moved up 2.2% in the past year.

Israel Chemicals has an expected earnings growth rate of 19.4% for the current year. The company’s shares have rallied 33.6% in the past year.

Cameco has an expected earnings growth rate of 66.7% for the current year. Its shares have gained 13.9% in a year’s time.

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