Phosphate Price Surges above Highest Prediction in MNB Scoping Study
The phosphate price is surging again as countries rush to ensure food security which was impacted during COVID. Phosphate is used to produce fertilisers to grow food.
Minbos Resources (ASX:MNB) is developing a phosphate (fertiliser) project in Angola with a 6 million tonne mining target and a 21 year mine life.
The higher the phosphate price, the higher the value of MNB’s project...
We have invested twice in MNB over the last 10 months, once at 3c then again in the placement 8c - our average entry price is 5c. We have not sold. We are two months away from the 12 months capital gains discount on our first tranche.
We are long term holders in MNB because their Scoping Study indicates just US$27M CAPEX will get them an after tax NPV of between $159M and US$260M.
This Scoping Study NPV was calculated back in August 2020, and assumed a phosphate price range of US$357-482/tonne.
US$643 / tonne phosphate was labelled as an “Extreme Case” in the MNB Scoping Study...
We speculated in February that the phosphate price might hit US$643 / tonne - which we calculated would give MNB a high end NPV of US$343.7M for US$25M capex.
Well, the monthly phosphate prices are just out - we get our data from Profercy... we never expected the phosphate price would hit US$780 / tonne like it just did.
The MNB Scoping Study didn't even contemplate such a high phosphate price.
Our rough calc shows that US$780 / tonne phosphate gives MNB a high end NPV of US$550M
At 5c MNB is capped at just AUD $23M after becoming collateral damage of June tax loss selling with the MNB share price getting hammered on low volumes.
We are working on a new deep dive article for MNB first thing in the new financial year as soon as tax loss selling is finally finished, including:
- our full thesis on why we invested in MNB
- in depth calculations on how the extreme surge in phosphate prices impact MNB’s Net Present Value
- analysis on how increased steel prices might impact the capex required.
- Our MNB investment milestones
- Our MNB investment strategy
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