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Branson Hamilton

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  • The Lithium Industry: Will Supply Meet Demand? [View article]
    William,
    I really appreciate your article, coming four years after an article I wrote here called "Is it time to Invest in Lithium" where I introduced some of the same supply sources, discussed the demand concerns, and ultimately concluded that as demand grew the supplies would be sufficient, even if more costly.

    http://seekingalpha.co...

    Your update shows that lithium exists, as do technologies to extract it. Given where much of the currently identified sources and higher-probability next investments are located, there is a meaningful probability of geopolitics influencing supplies, and therefore industry dynamics.
    Branson
    May 9 12:49 PM | Likes Like |Link to Comment
  • Unlike Commodity Potash, SOP Is Not Awash With Mining Capacity [View article]
    1920991 - Thanks for your comment. I appreciate you reading my article.

    As to Yara in Ethiopia, I can understand how a western European fertilizer business could want supply of MOP even when there is sufficient capacity at present in the industry given that a large portion of that capacity is under Russian control. Thus, they may take extra risk and cost to have access to supply.

    After the recent mining convention in Toronto it is quite obvious that only projects with a clear positive reward to risk ratio are moving forward; many have been shelved - for MOP, SOP, and most other minerals. In this environment, funding for concepts like developing a commercial process to get SOP from kainitite will be difficult.

    I still come back to the EPM Mining Ventures project in Utah as one of the only clear opportunities in the whole mining space world wide - low capital cost, safe jurisdiction, proven process and very positive economic reports for a product that has growing demand, relatively fixed supply and a strong sales price. I see that the stock volume and price have increased over the past month or so, and they just announced additional project financing. It looks like others may be seeing what I am.
    Apr 7 10:46 AM | Likes Like |Link to Comment
  • Tech Bubble 2.0 In Cloud And Social Networking Stocks? [View article]
    Nikos, Thanks for this article. We should all know that the very high P/E's can't last. The bet, of course, is that the company will grow fast enough to catch up. History seems to indicate that the decline in the P/E doesn't happen smoothly, and unfortunately, stop loss orders don't help if you wake up to find that the news event last night has dropped the opening value by 10% or so.

    To the extent that these media stocks generate their revenues from advertising, one can look at other advertising-driven companies (even print media) to see where the valuations on revenue may eventually go. Instead of 3x to 6x the market P/E, they tend to be sub-1x the market.
    Jan 19 09:58 AM | 1 Like Like |Link to Comment
  • Unlike Commodity Potash, SOP Is Not Awash With Mining Capacity [View article]
    Cambodine. Thanks for reminding us of Africa.

    I am not an expert on the Ethiopia opportunities, but from what I have read of Allana’s reports and analyst writings, it appears that the issue there is not that there isn’t raw material under the ground, be it MOP or SOP. As you appear to realize, before this resource becomes a viable source of SOP or MOP there are basic hurtles it must overcome, including the large size of the investment, the remoteness of the location, the lack of utilities and road infrastructure as well as the political/civil risks there. And, we have no idea of the cost to extract and deliver to port an SOP product relative to the brine evaporation of SQM or the new EPM, especially, as you say, that the kainite is below the sylvinite. Again, I am not the expert on that project, but it appears that it is about risk and economics, not existence of mineral.

    Given the limited willingness to invest in resource extraction ventures these days, the money will tend toward those where the risks are lowest and the payoff the shortest. EPM is an example of a very low risk opportunity. It is the antithesis of Allana’s situation with a much smaller capital investment, close to rail and utilities, a low-cost proven process in a safe, in a politically-favorable jurisdiction, close to markets and with a predictable ramp-up. So, it isn’t that I didn’t recognize that there is the possibility for SOP elsewhere, perhaps in Ethiopia, but in what you call an “extremely hostile market”, I just don’t see the probability any time soon. That’s just one opinion, of course.
    Nov 12 08:29 PM | Likes Like |Link to Comment
  • Unlike Commodity Potash, SOP Is Not Awash With Mining Capacity [View article]
    Chileanbroker, thank you for reading my article. I appreciate your asking.

    If I understand your question, you are asking if regular commodity potash along with sulphur and / or limestone can be a replacement for SOP because if it is then you’re thinking that a slump in potash will hurt SOP.

    The short answer to your question is that for some crops and some soil conditions, regular commodity potash is an effective fertilizer, but for many high-value crops and in many growing regions commodity potash is NOT a substitute for SOP.

    Regular commodity potash is an effective source of potassium for crops such as maize, cane, wheat, soybeans and other bulk crops that can tolerate the chloride ion being grown in prime soils as may be found in the vast growing region of central North America, Australia or Russia. For these crops and in these regions, commodity potash is the product of choice because it both available in large quantities, and both the soil and the crops will tolerate the chloride.

    On the other hand, for a large range of high-value fruit, vegetables, nuts, the chloride ion actually can actually harm the plant. For these crops under any soil conditions, regular commodity potash is NOT a viable economic substitute. Adding limestone and sulphur to regular potash does not counter the sensitivity to the chloride ion in the regular potash on these crops. Therefore, availability of regular potash even at lower prices will not dig into demand for SOP where it is needed.

    Using limestone to counter the effect of the chloride on soils with pH or salinity issues has not been shown to be an economic alternative in many regions. The example I described in Brazil of applying regular commodity potash to crops was referencing bulk crops that can normally tolerate the chloride ion. But in this case, the issue is the characteristics of the soil. Here limestone can is being applied to offset the impact of the chloride ion on the soil to keep the soil in the right pH range for viable plant growth. Apparently it works, however, if one digs deeper into the economics it actually appears that the more expensive SOP is a lower cost method of applying the potassium.

    Here is the complication: both the limestone and the potash have to be transported over long distance where rail infrastructure is poor. So transportation is quite costly. Add to this that applying potash and limestone requires two separate applications across the field requiring labor, equipment and fuel instead of one application for the SOP. So, twice the transportation and twice the application cost for using the cheaper potash. When those added costs are considered, the initially perceived benefit of using the lower cost regular potash is questionable. Similar situations can be found in Africa and other areas around the world.
    Nov 10 10:02 PM | Likes Like |Link to Comment
  • Secular Bull And Bear Markets [View article]
    437919
    Interesting that you mention non-working children. I saw a photo of working children of about age 12 from the late 1800's - uncommon or not at that time, teenage workers are rare today. Fifty years ago a much smaller portion of the population "invested" in college and instead went right to work vs. today with a very high portion of teen and 20-somethings not working. So there may be an offset to the elderly working longer.
    Again, Doug - thanks for the good work, from the comments it obviously is helping us evolve our thinking.
    Sep 3 09:48 AM | Likes Like |Link to Comment
  • Secular Bull And Bear Markets [View article]
    Doug, as always - good material and presentation. I like that you present a picture using fixed measures as a starting place. I agree with the questions above about the impact of longer life and greater productivity on longer working lives.

    Add to this that the proportion of workers performing hard manual labor today is less than 50 or 100 years ago, thus can be performed by those with less physical strength as they age.

    I'd welcome seeing what happens to these ratios as these factors are considered. I suspect that we don't have as much of a crisis as is predicted.
    Sep 2 12:16 PM | Likes Like |Link to Comment
  • Potash Economics And An Undervalued American Junior Potash Play [View article]
    Well, this certainly has been an interesting comment string!

    We've beat to death the N, P, K differences. Agronomy has shown that all are necessary to healthy plant growth. We've also noted that there is plenty of KCl in the ground.

    There has been a supply overhang in the KCl market with more than a few juniors projecting new production investments. Anyone who has attended the recent Mining conferences and events can tell you that (a) the majors are shelving investment plans, and (b) many of the juniors have or are on the edge of running out of money, and that these potential mines will not be built in this cycle.

    There is an area of the "Potash" market that has not been discussed here: Potassium Sulfate (SOP). This, too, is a mineral used to supply potassium to plants, and unlike KCl it does not stunt or kill some high-value crops because of the Cl ion. A previous comment noted that soil conditions in places like South America, Africa and Asia are challenged by ph and salinity. KCl can exasperate the problem, SOP doesn't.

    I'd suggest to look at this specialty fertilizer instead of wishing that there is a good investment in the KCl space at the moment.

    There are only three natural sources of SOP in the world. Unlike KCl, there is no overabundance of SOP in the ground. The majority of SOP is produced by converting KCl in a chemical process. Thus, SOP has a premium price to KCl. The natural-source production costs are substantially lower than those of the KCl-converters. SOP prices have been Increasing while KCl prices have been stable to declining.

    If one is looking for an investment in the "potash" space, you might want to consider EMP Mining Ventures (EPK.V or EPKF) that has a large resource of SOP in Utah and is readying preparing its final economic report. They have sufficient cash to get to production financing. And, the projected capital investment is a fraction of that required for the typical KCl mine. Of all the potash juniors, this the one that has the compelling market and economics to get it to production. Check out the website, http://epmmining.com and especially the investor report that can be found on the right side of the Investor Tab.
    Jun 22 10:13 AM | Likes Like |Link to Comment
  • Current Stock Market A Reminder Of January 2000 [View article]
    Thank you for the interesting perspective on the market dynamics - a back to Econ 101 supply and demand view of the stock market. I agree that with four years into an economic cycle and stock market cycle the probability of a hiccup increases each day.

    So, how do we operationalize the concept? How do we easily collect useful data to build a picture of this supply/demand as an early warning system? What are your sources for stock float & money flows?
    Thanks
    Jan 10 09:44 AM | Likes Like |Link to Comment
  • Is China The Biggest Malinvestment Case Of All Time? [View article]
    From the article and the comments it appears that there is not a way to predict or expect a governmental collapse in China. Central planning has accomplished much and has had some obvious mistakes; they can print money and have substantial foreign exchange assets with which to work. Will this current period for China end well or not? Only time will tell.

    I note no mention of the near-shoring activity and shifts of manufactured product out of China to Latin America, other countries in Asia, etc. I'm sure that this was not part of the capacity deployment plans, in addition to the global slowdown effects - a double whammy.

    As an investor though, the article and the comments above point to purchase of stocks in Chinese companies on the Chinese exchanges being very risky bets - thus not investments, but gambling instead.

    Another concern is that what happens in China doesn't stay in China - it impacts those companies and countries that sell to China as well as those who buy from China. If the leadership feels threatened in those relationships and chooses to retaliate for perceived external actions, the outcome could quickly become the basis for war - - - as has happened in all regions of the world at one time or another by leaders who are losing control. This would be the ultimate "hard landing". Witness recent Chinese government actions to attempt to have a mural in a small town in Oregon removed, or threatening to attack Japan. So when will China threaten others by withholding rare earths, withdrawing debt or other tactics?

    Rather than leaving this comment on a negative note, the Chinese leadership may be up to the challenges and will hold the society, economy and capacity of the country together. This, too is a possibility, and one we should support. Meanwhile, I, for one, will be sitting on the sidelines of the Chinese stock market for now. There are so many other investment options available.
    Sep 20 09:15 AM | 1 Like Like |Link to Comment
  • Is It Time To Take Profits From The Summer Rally In Fertilizer Stocks? [View article]
    Thanks for this update on the critical food creation business. The repercussions of the reduced harvests of commodity crops in the U.S. and elsewhere around the World are just beginning to play out, in my opinion. It’s unclear how the farmers will react next year in terms of fertilizer application volumes. Your thesis seems plausible now, but I’d be ready to be a buyer of fertilizer stocks before spring (maybe with a regional focus).

    Compass and Intrepid stock prices may have held up better because they produce potash with different chemical composition than the Canadian producers and sell to specialty markets.

    As you know, the Canadian miners (POT, AGU and others) produce potassium chloride (KCl), which is the “potash” used on bulk crops like corn, soybeans and wheat. KCl cannot be used on many specialty crops nor on some soil types. Thus, these miners are impacted by the fate of commodity crops per your discussion above.

    Intrepid produces KCl (approximately 75% of production) and is also one of two producers of sulfate of potash magnesia, a low-chloride potassium fertilizer providing a multi-nutrient product. This product also has industrial and oil-industry uses. Intrepid could be a good option to POT for playing the potash market long-term because of the stabilizing influence of selling its specialty product for industrial uses.

    Compass is one of three producers globally of natural potassium sulfate (SOP), a premium-price, no-chloride potassium fertilizer used on high-value vegetable, fruit and specialty crops like tea and tobacco. SOP is approximately 20% of Compass’s revenues, the remainder being salt and de-icing chemicals. Their focus on SOP reduces their impact from the commodity crop induced volatility.

    Unfortunately, Compass is not a pure play in the valuable SOP market, as most of its business is derived from selling salt and deicing materials. A pure play that investors may want to look to is EPM Mining Ventures (TSXV:EPK) with a large resource of SOP in Utah, USA. It is in a solid financial position, has an enviable strategic partner, and analysts have projected strong stock value increases over the coming year as it moves to build-out low-cost solar evaporation production using methods similar to Compass and SQM. ( epmmining.com ).
    Sep 4 10:15 PM | Likes Like |Link to Comment
  • 5 Ag Equities With Major Upside And Strong Growth Prospects To Buy: 3 Now, 2 Later [View article]
    Thanks for the good info.

    MON is the go-to for playing seeds & ag chemicals; not sure what to do with DD given recent legal events.

    I shy away from nitrogen fertilizers (CF) because there is no constraint to supply development – these products are chemically produced. As noted above – just build a plant. With the potential large finds elsewhere on the globe of phosphate the supply/demand balance is questionable at this point in time.

    I lean toward potash, which is mined and where the supply side is balanced. Even in this space I lean toward specialty producers. 85% of potash is potassium chloride (KCl) which is mined mostly in Canada (POT, MOS, AGU) and Europe and used on bulk crops like corn, soybeans and wheat. Values swing with the fate of commodity crops. I like the specialty fertilizer sulfate of potash (SOP) for its supply/demand balance, the premium price, and the fact that there are only three natural producers – one each in China, South America and the U.S. Compass Minerals is the U.S. producer, although only 20% of its volume is SOP. Its stock price has held up well lately. A new fourth supplier is expected to arrive as EPM Mining Ventures (TSXV:EPK) builds out its low-cost solar evaporation facility in Utah. Analysts expect a strong lift in stock value of EPM over the next 12-24 months.
    Sep 3 12:15 PM | Likes Like |Link to Comment
  • Fertilizer MLPs: The Good, The Bad And The Ugly [View article]
    Back to SOP - Yes, there are several companies that convert bulk potash (KCl) MOP to SOP with chemical processes; several in Europe as well as the one in China. This is the primary reason that SOP has a premium price to MOP - because of the additional cost of production. This enhances the profitability for the 3, going on 4 natural producers where their cost of production is similar to that for MOP producers and they get the benefit of the premium price at no cost. One would think that these companies should garner higher valuations.
    Jun 21 09:41 AM | Likes Like |Link to Comment
  • Fertilizer MLPs: The Good, The Bad And The Ugly [View article]
    I agree on the resource / cash flow issue. But it is also the same issue as with the market in general: that of looking at a company's continuing annuity value vs. what-are-you-doing-today. However, a mine is not like coca cola - the resource has finite life and usually escalating costs as one gets to the edges of the prime resource.
    Jun 21 09:33 AM | Likes Like |Link to Comment
  • Fertilizer MLPs: The Good, The Bad And The Ugly [View article]
    Sorry to hear about family medical . . . . never fun; best of wishes.
    Jun 21 09:32 AM | Likes Like |Link to Comment
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