This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Karnalyte Deal Shines Light On Potash Juniors

Siddharth Rajeev, vice president and head of research at the equity research group Fundamental Research, told Potash Investing News that we should expect “a lot more activity this year with junior potash companies,” including “a lot more consolidation in the potash sector as companies with good assets and low current valuations are driven down by weak potash prices."

Rajeev said the Kanalyte deal and the potential Encanto contract are “very significant for the junior potash space,” which was severely hurt last year after prices plunged from $800 to $460 in just a few years.

Western Potash (TSX:WPX), which is developing the Milestone deposit in Saskatchewan, has long been considered a takeover candidate — India's Rashtriya Chemicals and Fertilizers expressed interest in forming a joint venture back in September. Joel Jackson, an analyst with BMO Capital Markets, has indicated that the company is undervalued.

“Milestone [Western's keystone project] is one of the most advanced junior potash projects, and some parties may view Western Potash's market capitalization as low, relative to the cost to procure potash concessions and advance a project to feasibility,” Jackson said in a research note.

Busting Canpotex's hold

With potash juniors receiving greater attention from strategic partners in India and China, the influence dominant potash suppliers like Canpotex — the offshore marketing arm for the big three North American producers: Mosaic (NYSE:MOS), Agrium (TSX:AGU,NYSE:AGU) and Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT) — have over price is likely to diminish in the future.

“We are going to see decreasing control by big firms in setting prices going forward,” Rajeev said, noting that junior potash plays will be an important part of that process.

“With few big players setting the prices that impact consumers in India and China … developing nations need to acquire long-term, stable potash supply.”

Rajeev said his group is strongly bullish on the potash sector because slow, steady growth from developing nations with decreasing arable land per capita is driving the need to boost agricultural efficiency.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs