Mark Anthony

Potash Heats Up: $1000 a Tonne?

Nice DD, Trader Mark. Thanks for the update.

I believe the commodity bull is far from over. But on potash fertilizer I doubt how much longer can they sell at $1000 per ton. There are plenty of production opportunities at even a fraction of that price. POT itself actually has far more existing production capacity than it is willing to utilize currently. So it is some sort of deliberate price gauging. Will the rest of the world put up with it?

China, for example, has developed the Lop Nur Lake potash production, and speed up the expansion of production. They currently is already producing 3 million tons per year just from that source. Give another year or so China will be totally self-sufficient in potash, and say Tzai Jian (Bye Bye) to POT.

Read my recent articles on Safe Haven investments:
seekingalpha.com/autho...

The Brightest Stars in the Commodities Boom, Part Two

Johnson Matthey, world's largest producer of automobile catalytic converters, reports GROWTH in their North America market:
www.finanznachrichten....

The actual report is here:
www.matthey.com/media/...

So much is the myth that slowing US auto sale hurts the PGM demand in auto catalytic converter. The fact speaks otherwise.

The Brightest Stars in the Commodities Boom, Part Two

Dieuwer:

The going wholesale price of cobalt right now is about $42 per pound. So $58.60/100 grams from Aldrich is too expensive. I want to see a price not much more than whole sale and I can buy a few hundred pounds. BHP has cobalt for sale but you need to buy at least 2 metric tons:
cobalt.bhpbilliton.com/

The Brightest Stars in the Commodities Boom, Part Two

Questar:

1. I drive a Prius and regularly get average of over 60 MPG by the time I need to fill up. It's a fact. EPA ratings have under-rated Prius. See the photo on top of my blog article:
stockology.blogspot.co...
That's an average of 66.6 MPG after driving 88 miles. I did not make it up. It's real.

2. I do not know the exactly cost of weddings. It varies from family to family. If my numbers are off it doesn't hurt my argument at all that increased cost of a platinum wedding ring is a tiny portion of a wedding cost. Consider that MOST weddings go without a platinum diamond ring (the world simply does not have enough platinum for every wedding!) you probably need to consider only those families more wealthier and more interested in platinum jewelries, then the average wedding cost is probably higher.

3.I meant to say kilometers. It was a sili typo. Every one can see that it was a typo.

Sticking with North American Palladium

Heiko:

PAL currently produce roughly 300K ounces palladium and 26K ounces platinum a year, on top of byproducts of gold, nickel and copper.

I see platinum reach $4500 and palladium at $1500 being a very conservative target. The bottom $1500 of platinum and $350 of palladium, as well as byproduct metals pay for the cost, so the profit would be $3000 per ounce platinum and $1150 per ounce palladium, total $420M annual profit before tax. Give a reasonable P/E of at least 10, PAL market cap should be $4.2B, at 80M shares, PAL should be $52.50 per share, about 10 fold from here.

Time frame is one to two years. The first 4 to 5 fold gain should be achieve in the next 12 months as South Africa electricity crisis worsen in the coming winter season. (It's winter time now in South Africa, which is in the southern hemisphere).

Let me repeat this is a very conervative target. Palladium ran up to $1100 in 2000/2001, inflation adjusted that is equivalent to $3000 in today's dollar.

Sticking with North American Palladium

In a recent Thunder Bay TV interview, The VP of PAL commented on the mine grade of the Offset High Grade Zone:

cdn.dayport.com/tbtvim...

Towards the end of the video PAL's VP David Passfield says: "I don't think anybody else has really found a deposit to date that has the same sort of grade and amount of resources that the Lac des Iles deposit has."

He also emphasizes that they have not yet found the ends or bottom of the OHGZ and that it might be even bigger.

Sticking with North American Palladium

Jermp:

Just by anonymously claiming to be a mineral exploration geologist doesn't automatically make you one. Of course if you need to find out the exact amount of mineral reserve and grade to 3 or 4 digits precision, you will need to drill a whole lot more holes to determine it. But as far as give a rough estimate and determine whether a mine is economical, a few dozen holes should be sufficient.

The whole science of explorational drilling, is to provide sufficient information for strategic mining decisions, using as few drill holes as possible, because each drill hole costs a lot of money.

So geologist, you are saying, that after PAL spent more than one whole year and $10M to drill 50 holes in the OHGZ and presented the report, you think they have collected only 1% of data needed for a strategic determination, then to collect 100% of the amount of data you would need, PAL probably will have to spend 100 years and more than US$1 BILLION to keep drilling, before you could have enough data just to answer a simple yes or no question whether it is economical? It would have cost far less to just go ahead and develop the mine, without wasting the money drilling holes.

Frankly, I do not think you can find a job in any mining company if you put your above comment in your resume. No one has unlimited resource to let you just keep drilling without producing data. You are either a fakery, or you are simply unemployed because you cost your employer too much exploration money.

Sticking with North American Palladium

Losing Arse:

PAL is a Canadian company and insiders do not need to file with SEC on their insider sales. However they file with SEDI.CA. In my main article I already provided a link wher you can search for North American Palladium insider trades.

Jack:

You are pushing for the best scenary numbers. The CFO himself meantioned 3 microns in one of the audio recordings. each panel now is rated 70 watts. CdTe deposited on the walls can be recycled, but it's no longer high purity and must be sent to third party recyclers for treatment. In any case, since VNP is their virtually exclusive CdTe supplier, you would expect that purchases from VNP should LINEARLY increase in proportion to FSKR's production volume increase. Such increase is not shown in VNP's quarterly sales revenue.

This recent job posting on FSLR really should make you wonder what FSLR is up to and why they need to go to such extreme measures to acquire tellurium, from mines sources, which in another word, is the waste dump of mining companies. They now have a whole Tellurium Initiative Department just for that, trying to device a way to extract residue tellurium.

I do notice that the tellurium price has been an absolute flat line for the past one month at the AsianMetal web site. Normally you should at least see some sort of up/down fluctuation. The absolutely flat line probably reflect the fact that no trade has happened, and hence there is no available price information to update the price chart. There can NOT be any trade, as all major tellurium suppliers have all of the 2008 tellurium allocations completely sold out. There is nothing more to sale and hence no trading occured in the past 30 days. FSLR has yet to purchase tellurium for the new Malaysia factories.

Sticking with North American Palladium

Jack:

You can do your own math, at 3 microns thickness of the CdTe semiconductor layer, density of CdTe 5.85 grams per cubic centimeter, each panel is 2x4 feet hence 0.75 square meter. Each panel now about 70 watts. The efficiency improvement wasn't that significant, 10.6% in Q1,08 versus 10.5% in Q4,07, according to First Solar.

Also keep in mind, when doing vacuum deposition, not all material gets deposited 100% onto the glass with zero waste. Some NREL document suggest a waste ratio as much as 40%. Give some room for waste, FSLR needs about 250 kilograms of CdTe for each 1 MW of production.

75 tons or 100 tons of tellurium is hard to come by nowadays. I would be very happy if I could find a place to purchase another 75 pounds tellurium. First Solar recently posted a tellurium related job, which is extremely interesting. I advice you to go there have a look.

Sticking with North American Palladium

pfairley:

If you want to speed it up, concentrate on the short term and long term fundamentals of the PGM metals themselves, especially palladium. If the fundamentals of the metals mandate that price must go up, then the performance of the company MUST improve overtime. The rest are just details. Read these two article to understand the palladium market fundamentals:

seekingalpha.com/artic...

And:
seekingalpha.com/artic...

Now there are only two currently producing mining companies who can claim palladium as their main product. SWC and PAL. PAL is unhedged and SWC is hedged. Both will see a great Q1, on May 8 and May 12. Both enjoy much higher metal prices in Q1. SWC gets extra boost because 11.5K platinum going off the forward sale edge. PAL gets an even bigger boost due to the way they account for commodity price adjustment quarterly. So now is a good time to buy both PAL and SWC.

Sticking with North American Palladium

Messels:

I take your advice. I have learned my lessons in PCU and JRCC. You are right I need better investment discipline. If one is convinced of the fundamentals then it is a shame to sell of shares and miss the boat. I am holding PAL firm so I will not repeat the mistake I made on JRCC.

To folks who suspect that I cherry pick the best grade from the drilling result, I did not. Conventional sense is you want to average things. But averaging is not how you judge drilling result.

If you drill all holes right through the richest part of the center of the ore body, you would of course obtain some pretty consistent high grade number. But that would be a waste of exploration expense. One hole in the center should be enough to tell you the highest mine grade at the center. Two or three extra holes at different locations of the main ore body should be enough to confirm that the result is correct. Most of the holes will be drilled near the edge of the ore body, hence result in lower grade. The purpose of such perimeter drilling is NOT to determine the main ore grade, but to determine where is the boundary of the mine body and how big it extends.

So you should NOT look at the average grade, but rather the highest grade, especially when it is confirmed by more than one holes. That is the grade of the main ore body of the mine.

Investing in a Resource-Constrained World (Part IV)

C.M.:

I don't know what nitrogenous minerals you are refering to. The fixed nitrogen in nitrate fertilizers mostly come from the air and synthesized artificially using natural gas, where my favorite PGM metals act as catalyst. We do have a problem as natural gas cost goes up as the natural gas is running out. But I don't see how that can improve profit margin of nitrate fertilizer makers. Any one with adequate money and technology can set up shops and make nitrate fertilizers from the air and natural gas.

I probably shouldn't say potassium is the 7th most abundant on the earth. It's 7th most abundant in the earth crust, where it's accesible. Iron is the No. 1 abundant if you count in the earth core, but as you say the earth core is inaccessible.

Fact of matter is Isreal, as well as Jordan has been cooking the Dead Sea to produce potash for half a century, even during the long decades when potash price was cheap and flat. With higher price, any salty lakes on the earth, or even the ocean itself, could be used to extract potash. once you are talking about the ocean as a resource it becomes unlimited and completely renewable. So I am seeing potash price as a bubble which must burst in short term. I don't know when. Probably after the 2008 harvest. But the price is unsustainable. And I don't see why China should suddenly uses 6 times more potash today than as recent as 1994.

I came from a physics background but I have broad interest in a lot of different topics and I read a lot, learn a lot. I should feel comfortable talking about any topic with experts in a number of different dissiplines in science and technology.

Potash/Fertilizer Industry: The Week That Was

I think there is a potash bubble forming. Read this article:
seekingalpha.com/artic...

Investing in a Resource-Constrained World (Part IV)

Global potash fertilizer prospect, in 1994:

www.nrcan.gc.ca/ms/cmy...

I am surprised to read that in 1994 global potash fertilizer usage was 19.4M ton, China used 1.8M to 1.9M tons and the USA used 5.6M tons. In 1994, China was already comfortably feeding its population, 1/5 of the global, using arable land only 7% of the global, on less than 1/10 of global potash fertilizers.

Today, reports say the world consumes 30M tons of potash a year and China is consuming 12M while itself produces 3M tons. China is now consuming twice the potash that USA consumes, with half of USA's arable land. That is just ridiculous. I don't see why China can not cut back. Even if China cuts back to the USA level per acre, 3M tons per year should be sufficient, which means China's 3M tons production per year should be self-sufficient.

Potassium is the 7th most abundant element on earth. Without applying any potash fertilizer, the soil already contains lots of potassium elements. The potash price bubble must burst soon.

Investing in a Resource-Constrained World (Part IV)

Another interesting piece to read:

The potash equilibrium - How China buys and Russia sells
www.mineweb.com/minewe...