Arianne Phosphate Recovers
I wrote about Arianne Phosphate in December when the tax-loss season had crumpled the price of the shares to $.63. Management was buying shares with both hands. The stock has recovered with a 50% gain in the past six months.
The price for Arianne is still absurd. The company has a NPV of $1.9 billion with a 26 year mine life with a 4.4 year payback and a 21% IRR. That’s compared to a market cap of under $100 million. At over 1 billion tons of phosphate rock it is the largest greenfield phosphate project in the world.
In the past year, management dramatically increased the resource size, announced a power deal with the Government of Quebec, reduced the operational cost by 8% since the feasibility study, gained a $2 million dollar investment from the Government of Quebec demonstrated the ability to produce a very high grade 40.0% P2O5 concentrate.
Phosphate is the essential ingredient in fertilizer for stem and root development. 200 million tons are produced worldwide, 85% of which is owned by fertilizer producers. The 30 million tons traded across the world mostly comes from unstable jurisdictions in Africa and the Middle East. Estimates hold that the US will be forced to double imports of phosphate over the next five years. US phosphate production is projected to decrease by 25 million tons over the next 15 years.
Arianne continues to drill the project with a goal of defining at least 50 years production. The real question has to be, “With 85% of the world’s phosphate mines owned by integrated fertilizer companies, just how much longer will the project remain independent?”
Arianne is an advertiser. I did participate in the last private placement at $1 a share. I own shares. I am biased. Please do your own due diligence.
ARIANNE PHOSPHATE INC