Australian Shares Sparty's Blog
Comments on this blog should never be taken as investment advice
Posts on this website are general "tips" and nothing more than that and should never be used to make an investment or trading decision. All information should be carefully cross-checked against official sources for accuracy.
Main Forum•MAK - Minemakers now have world's largest Phosphate JORC resource
-
MAK has certainly made some giant strides of late. Many people don't realize that Phosphate is irreplaceable in agriculture and that recently the term "Peak Phosphate" has begun to enter the agriculture research literature and has become visible in the investment media and as there is no known substitute for Phosphate based fertilisers the term begins to have real meaning, especially for countries dependent on broad acre crops, despite a slight increase (~6.4%) of world phosphate production from 2007 - 2008.
The GFC and following turmoil has resulted in a price decrease but this is now reversing. This coupled with the coming shift of ~3 billion people into a middle class lifestyle over the next two decades and the consequent changes in diet will amplify what is likely to become an established upward trend
Minemakers (ASX: MAK) is now the holder of the world's largest Phosphate JORC resource. And pleasingly they have rock phosphate both here in Australia and a huge marine deposit in Namibia. Both are on the verge of being mined placing this very small by market cap (AUD: $57m), Cash ~ $11m at a very low EV/Resource ratio.... perhaps one of the world's lowest in a commanding - but as yet unrecognized position. Most of the preliminary work has now been done as outlined by MAK's CEO Andrew Drummond in this interview.
For those that would like to gain an investors overview of phosphate www.australian-phosphate.com has been written for you. -
Peak Phosphate... I have never heard the term. A Google search finds an ABC report that states, "The trouble is that the global supply of that rock is running out. According to Cordell, "current global reserves will be depleted in 50 to 100 years." ... With the world's population expected to increase by another two billion people in the next 15 years, experts say a shortage of phosphate poses a grave threat to food security." ..."It's not going to run out," says McLaughlin, "it's just going to get quite expensive."
http://www.abc.net.au/science/articles/2010/08/05/2973513.htm
"Professor Stuart White from the University of Technology, Sydney, has calculated that we could reach "peak phosphorus"—the point where prices shoot up because demand outstrips supply—within 25 years."
Sparty, there seems no rush when it comes to phosphate. To my mind prices are unlikely to increase due to a shortage for many years. And with MAK only a few years away from production the risk of prices rising has dropped.
I'm not saying MAK is not a worthy investment buy... in fact I think they may be. It is just that they need to be the lowest cost producer or they will flounder. Time will tell.
Cheers Alite
