|Probable Realized Market Prices||$645/t K2SO4 & $147/t H2SO4|
|Flagship Project||Blawn Mountain|
|Proven & Probable Mineral Reserves, 3% Cut-Off||153,330,000 tons|
|Payable Product (LoM)*||16,096,051 K2SO4Eq tons|
|Estimated Payable SOP (LoM)||10,603,000 tons|
|Estimated Payable Sulfuric Acid (LoM)||24,135,000 tons|
|Alumina Resources (M&I)**||19,418,000 tons|
|Average Annual Production||351,261 K2SO4Eq tons|
|True All-in Cost (TAIC)||$546/t|
|Property Taxes (2%)||($207,639,058)|
|Total Capital Costs||($537,000,000)|
|Net Profit Margin||15%|
|Absolute Cost Structure (ACS)||85%|
|MTQ Score (Higher is Better)||0.2|
|True Value Discount (TVD)||100%|
|Cash Flow Multiple||5x|
|Average Net Annual Cash Flow||34,774,839|
|Future Market Cap||173,874,195|
|Future Market Cap Growth||5,787%|
Notes: All Values in U.S. Dollars
*This analysis hinges on Payable Product tonnages, as opposed to a sum of Proven & Probable Reserves, including: Direct Feed-to-Mill, Medium-Grade Stockpiles and Low-Grade Stockpiles. Analysts will likely be expecting a much larger number (153.3 Mt) for valuation computations. That number isn’t of interest to us in this analysis, today, as our case is predicated on estimated payable product.
Furthermore, we have elected to utilize K2SO4Eq tons in the stead of deducting sulfuric acid credits from our Direct Operating Cost Matrix. This has the effect of raising our independently-calculated True All-in Cost (TAIC) to $546/t, which is an increase of 159% from Millcreek Mining Group’s Cash Cost number ($211/t).
**Alumina, which trades for about $472/t, is classified as a waste byproduct of production. However, efforts are being made to develop a pilot plant 12 miles away from Blawn Mountain in Milford at the site of Tamra’s shuttered copper flotation mill to determine whether or not Alumina waste can be economically monetized.
The value proposition for SOPerior Fertilizer Corp. remains clear. Additionally, a handful of de-risking events have occurred that lend further credence to the SOPerior story. Nevertheless, in spite of the positive news flow, we have chosen to be more conservative with our analysis than in the past.
Net Profit Margins are low and Absolute Cost Structure (ACS) is high. Consequently, we have assigned SOPerior with a conservative 5x Cash Flow Multiple.
|Average Net Annual Cash Flow||$34,774,839|
At 5x Average Annual Cash Flow, SOPerior could sport a Future Market Cap of ~$174M.
***Every once in awhile, you gotta swing for the fences. You can’t do it with all of your stocks, but you can do it with a couple. We’re swinging for the fences with SOPerior. Why? For one thing, the average selling price of SOP is up YoY to ~$594/t. In other words, we are approaching the pilot project’s development incentivization price, which we estimate is just above $600/t.