Potash Ridge: A Pure, Strategic SOP Play with a Perfect Score

Potash Ridge Book Value

Flagship Property: Blawn Mountain = 100% Ownership … 1 Point

After-tax IRR = @ US $630/ton SOP — 20.1% … 1 Point

NPV/CapEx =  107% … 1 Point

F/D Market Cap per Resource Ton = US $0.05 (Outstanding) … 1 Point

Cost Structure = 27% … 1 Point

Resource Base = 153 M tons SOP … 1 Point

Future Cash Flow = @ US $630/ton SOP — US $104,190,000 … Unrated

Future Cash Flow Multiple = 13x … 1 Point

Share Structure = 171,900,000 … 1 Point

Debt Coverage = 0 Debt … 1 Point

Projected Future Market Cap = @ US $630/ton SOP — US $14,458,500,000 … Unrated

Projected Future Market Cap Growth Percentage = 174,764% … 1 Point

Location: Utah… 1 Point

Conclusion

Potash Ridge is one of our largest holdings, and for good reason. The Projected Future Market Cap Growth Percentage of 174,764% may seem outrageous at first glance, but in actuality, that would represent half of the present market cap of Nutrien. We consider Blawn Mountain one of the most valuable development-stage deposits in North America, and we’ve put our money where our mouth is. What is more, it ranks well across all measured factors! Potash Ridge is what Deep Value investing is all about!

Score

11/11


Key

Flagship Project: 100% Ownership … 1 Point

After-tax IRR = > 20% … 1 Point

NPV/CapEx = > 1 … 1 Point

EV/Resources = < 1 … 1 Point

F/D Market Cap per Resource ozs./lbs./tons = < $50/oz. Au is Excellent; < $10/oz. Ag is Excellent; < $5 U308/lb. = Excellent; < $25/ton = Excellent … 1 Point

Cost Structure = < 50% … 1 Point

Resource Base = > 80 Mlbs. U308 … 1 Point

Future Cash Flow = Unrated

Future Cash Flow Multiple = > 5x … 1 Point

Share Structure = < 200 M … 1 Point

Debt Coverage = > 50% (or No Debt) … 1 Point

Projected Future Market Cap = Unrated

Projected Future Market Cap Growth Percentage = > 500% … 1 Point

Location: Friendly = 1 Point

2 replies to “Potash Ridge: A Pure, Strategic SOP Play with a Perfect Score”

  1. Hello from Finland and thanks for sharing your ideas!

    Any thoughts on the quality of management or why this is so ridiculously cheap looking at the figures? Yes, it’s a niche market and not trendy by any means but still I’m just wondering why some larger peer (Nutiren?) havent done a takeover or why mgmt is not buying. Btw do you know who are the largest shareholders?

    1. Dear Valtteri,

      I wish I was smart enough to answer these questions… What I do know is this: at the present price, Potash Ridge’s Margin for Error is excellent. No matter what happens, I can’t lose much money. On the flip-side, if the economics are as a good as I think they are and something lucky happens, I could make a lot of money.

      Have a wonderful day.

      Sincerely,

      Tom

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