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Fantastic Opportunities in Potash
October 7, 2011
It's been over two years since we first started following potash stocks back in the summer of 2009. Back then, potash stocks were red hot as analysts concurred on the obvious fundamentals - the world population is growing by 75 million persons per year and we need to grow food and a lot of it.
Potash isn't just a fertilizer; it is a mandatory necessity if the planet's population has a hope of sustaining itself.
Investors turned their eyes toward opportunities in Saskatchewan which has half of the world's potash resources. Billionaire George Soros turned up the heat of potash stocks even more in 2009 when it was learned he had purchased nearly a million shares of the blue chip giant, Potash Corp. of Saskatchewan.
Our top pick at the time was the junior exploration company Potash One which later, in November of 2010 was bought out for $450 million by the German based fertilizer giant K+S Group.
The buyout announcement heated up the junior potash market even further. The market was speculating that more acquisitions could be forthcoming. Mining giant BHP has made it clear that they wanted in on the potash market having recently failed to takeover Potash Corp. of Saskatchewan. Also the blue chip mining giant Vale SA stated they are also looking hard at potash opportunities in Saskatchewan.
Now flash forward to October of 2011.
I don't need to tell you that the stock market has tanked based on the world economic crisis.
What we have today is intense fear which has fogged over otherwise clear thinking minds of investors to the opportunities in potash - making for highly opportunistic situations in the market.
Potash fundamentals are as strong as ever. Whereas spot prices over 2010 averaged $351 FOB Vancouver, in September the price was $490 and is expected to continue upward.
According to an August 31, 2011 article in Mining Weekly, "The supply-demand equation for potash continues to tighten, prices will continue to climb...with one predicting they may even top $650/t by the end of next year."
There is no question that as a commodity, potash is still red hot. The burning question for investors should be how can I maximize my potential for capital gains? Knowing the market for potash is strong and that blue chip mining companies are interested in getting in on the profit opportunities by making acquisitions, who is close to developing the next proven resource?
Well due to the current market conditions, there is only a couple of players left standing in the junior sector in Saskatchewan who can prove up sufficient resources in the ground that could attract the next takeover opportunity.
And one of those companies is our old favorite, Encanto Potash.
Encanto Potash (EPO, TSXV)
Fast Development Means Fast Capital Gains.
Traditionally, getting a potash mine developed to the feasibility mining stage takes a considerable amount of time and cash. This is why virtually all prospective potash mining exploration properties in Saskatchewan have been staked but little or no development has been done from the vast majority of claim holders. Most of these claims are just being tied up on speculation but they are going nowhere and never will.
Literally, multi-billion profits can be had over the life of a mine. However as mentioned, the prospective land claims are tied up. And even if you could get a claim you still need to spend considerable time and money permitting the mine and following environmental and other provincial government bureaucratic regulations before getting to the final feasibility stage.
The Encanto management saw an opportunity to explore for potash in a fast and cost efficient manner by making partnerships on prospective projects located on various First Nation lands in Saskatchewan.
Though proper mining and environmental practices must be adhered to, the level of governmental bureaucratic red tape is lessened considerably when working on First Nation lands, thus taking less time and money to move a project forward.
Encanto is currently working with three southeastern Saskatchewan bands, the Muskowekwan, Ochapowace and Chacachas First Nations. These three prospective projects are joined by a fourth property located on Provincial lands referred to as SPAR. All these projects are in the heart of potash country where you will also find the major potash producers Potash Corp of Saskatchewan, Mosaic and Agrium.
Full Article
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For more information, please contact:
Vanguard Shareholder Solutions
Tel: 604.608.0824
Toll Free: 1.866.918.0824
ir@vanguardsolutions.ca
www.encantopotash.com |