Artificial Intelligence stocks aren’t the only hot play. Fertilizer and potash stocks are getting similar attention. The difference is that the latter isn’t getting the headlines deserved. That’s not necessarily bad news, especially for investors wanting to position into fertilizer and potash companies at bargain prices. Millennial Potash Corp. (OTCQB: MLPNF) (TSXV: MLP) is a company to consider, especially for those who like to leverage risk that can lead to potentially massive rewards. With its stock trading at just $0.28, off its 52-week high of $0.48, despite being better positioned than ever for near and long-term growth, the case supporting investment has never been stronger.
That’s not going entirely unnoticed. Last week MLPNF shares surged by over 34% to an intra-week high of $0.35. While the stock gave back some of those gains, it did so on meager volume. In fact, investors should know that MLPNF’s thinly traded nature does generate some wild swings. Again, not a bad thing. Patient investors are scoring shares at ground floor prices, evidenced by a base of $0.28 that has not been pierced since September 2022.
Moreover, their accumulation reduces an already tight float, meaning that this thinly-traded stock could be set to move appreciably higher. Notably, volume reached its highest mark ever in June, and referring to the adage that “volume precedes price,” MLPNF reclaiming its July highs and even breaching its 52-week levels, 84% higher than current, may happen sooner than later.
Providing Relief to a Fertilizer Market Stranglehold
For the right reasons. Foremost is that Millennial Potash is completing the groundwork necessary to become a potash market leader. That’s different from targeting only natural fertilizer sales opportunities. For those unfamiliar, potash is the common name given to a group of minerals and chemicals containing potassium (K), a primary nutrient for plants and an important ingredient in fertilizer.
Most potash is produced as potassium chloride (KCl). However, its also measured and referred to in terms of potassium oxide (K2O) equivalence for consistency because deposits can have different percentages of potassium. Those are the technicals. More likely, from an investor’s perspective, the company’s focus and timeliness to the market opportunity has smoothed a pathway to target an estimated $30 billion revenue-generating opportunity. In addition to doing the right things at the right time, MLPNF addresses a growing back story: the global need to break free from Russia and China’s stranglehold on the fertilizer and potash markets.
That’s less of an option; it’s a must-do initiative to maintain global food security. And it must happen quickly. The grip of those two countries has tightened further due to the ongoing Russia-Ukraine conflict, which has caused severe disruptions in the worldwide fertilizer market, leading to alarming instability in food supply chains. Disturbingly, the United Nations has pinpointed 48 nations across Africa, Asia, and Europe as exceptionally vulnerable to the fertilizer supply imbalance arising from this very conflict.
Coverage Of The Crisis Is Growing
The headlines that do make the front page have likened the fertilizer and potash shortage to the semiconductor chip shortage crisis that wreaked havoc on supply chains and manufacturing operations in 2022. While the chip scarcity received substantial media coverage, it’s essential to acknowledge that the stakes are considerably higher regarding food security. Remember, fertilizers are pivotal in ensuring an abundant food supply, making the current race to secure and stabilize fertilizer sources a priority for leaders worldwide. The United States is no exception and is urgently acting to address the critical issue.
Reports indicate the State Department has intensified its focus on fertilizers, with the topic reaching political leaders who now prominently include the developing crisis in their discussions at various political events. The message isn’t good; it highlights that many countries lack control over their food and fertilizer supply. The potential ramifications of that fact can be dire.
That’s especially true, considering Russia and its allies hold a substantial share of nearly 25% of global crop nutrient exports. Moreover, while agricultural products, including specific fertilizers, are technically exempt from sanctions, take that with a grain of salt. When countries find themselves under pressure, they seldom respond favorably. In fact, Russia and its sympathetic counterparts have significantly reduced their fertilizer exports, exacerbating the trade disruption. Consequently, this disturbance in trade dynamics has caused price spikes and prompted stockpiling, resulting in an inflationary impact on global food prices.
Amidst these challenging circumstances, numerous companies are actively working to transform the dynamics and bring about positive changes. On the largecap side, there’s CF Industries (NYSE: CF), Nutrien (NYSE: NTR), and Scotts Miracle-Grow (NYSE: SMG). They are catching investors attention. But not exclusively. As noted, microcap, Millennial Potash Corp., is as well, and for excellent reasons.
MLPNF Targets Massive Market Opportunities
Foremost is MLPNF’s strengthening position to capitalize on a substantial revenue-generating opportunity by supporting the global fertilizer supply chain, addressing food security concerns, and reducing overreliance on a limited number of dominant suppliers. What’s truly exciting is that MLPNF, despite its microcap size, already has the necessary assets and resources to make a meaningful contribution to the global supply chain.
That results from MLPNF leveraging the value from a portfolio of potash assets that offer both short and long-term potential for generating substantial revenue. Of particular significance is MLPNF’s ability to tap into the value inherent in its Banio Potash Project situated in Gabon, which is renowned for its abundant reserves of potassium salts. Notably, this region is estimated to hold over 2 billion tons of untapped potassium salts, positioning it as one of the largest potash basins worldwide. MLPNF is there.
What’s even more encouraging is MLNPF’s proven commitment to expedite the development of the Banio Potash Project. Their published updates provided valuable insights into historical drilling activities and outlined plans to expand the project further. That can happen sooner than later by MLPNF leveraging existing infrastructure systems, which provide unimpeded access and enhanced operational efficiency. That advantage is expected to provide a tailwind for MLNPF to swiftly advance the project’s development pace.
Timely To Its Opportunity With Banio Project
Indeed, the work being completed by Millennial Potash comes at a crucial time, noting the global fertilizer industry is intensely focused on seeking alternative sources of supply. This can benefit MLPNF in two ways. First, it serves the demand of those needing MLPNF’s offerings. But also important, that focus helps expose potentially massive opportunities, which will do more than make MLPNF bigger faster; it could facilitate investors’ sharing in on the rewards of being early to an investment proposition supported by favorable market conditions and extraordinary fertilizer demand.
In this case, size doesn’t matter; location does. And by developing Banio, MLPNF checks that box, which history shows also ushers in the potential to unearth potash, the goal being to serve enormous demand and monetize the asset. Achieving this objective only requires MLPNF to stay on its current course. That includes continuing to expedite exploration initiatives and maximize the value of their mining assets in some of the world’s most mining-friendly jurisdictions. That’s happening at their flagship Banio Potash Project in Gabon. Remember, MLPNF isn’t exploring with blind ambition. The area is an established potash-bearing basin and, as important, near major potash markets.
Here’s the better news. MLPNF has nurtured the Banio Potash Project to an advanced exploration stage, made possible by the supporting infrastructure, including a well-established exploration camp, drill rigs, and on-site drill cores. That does more than help propel this project forward; it puts MLPNF on the precipice of unlocking its value.
That can happen faster than many think. MLPNF has made a significant stride by enlisting the expertise of global industry leader Ercosplan to undertake the completion of a NI 43-101 compliant technical report on the project. This strategic move adds momentum to its mission and underscores MLPNF’s dedication to transparency and adherence to industry compliance standards. Moreover, by partnering with such reputable entities and investing in comprehensive technical assessments, MLPNF shows its commitment to thoroughly evaluating the project’s potential before spending capital to exploit it.
Management with A History Of Success
That’s not a coincidence. The decision-making process within MLPNF is guided by a highly experienced team of industry professionals who bring invaluable strategic expertise to the company. The team boasts a remarkable track record of successfully building, exploring, and monetizing assets, highlighting their proficiency in recognizing and maximizing the value of underground resources. It’s worth noting that MLPNF can derive financial rewards from these assets without necessarily bringing them to market. Proven assets, even those underground, serve as balance sheet multipliers and often attract partnerships that can provide the necessary investment capital to bring mined assets to market.
Still, MLPNF doesn’t need to rely on a deal to create shareholder value. They have the intrinsic strength and capability to pursue their objectives independently. The company’s management, led by Farhad Abasov as the Chairman and Director and Graham Harris as the Senior VP of Capital Markets and Director, brings a wealth of experience and strategic vision to the table, as demonstrated by their previous accomplishments with Millennial Lithium.
In fact, Farhad Abasov is widely respected for his successful track record in business, including notable ventures with Allana Potash Corp. and Millennial Lithium, both of which were acquired for substantial sums. On the financial front, Graham Harris has consistently proven his ability to raise capital as needed and effectively align it with defined strategic goals to maximize assets and seize opportunities. In short, precedent shows that the MLPNF team can execute its mission independently.
And the results can be impressive. Under their guidance, Millennial Lithium stock experienced an incredible surge from $0.06 to $4.70, representing a gain of over 7,733%. That success ultimately led to the acquisition of the Millennial Lithium project by a significant player in the lithium market. Noting similar factors, including the strategic location of company assets, strong product demand, and the inherent appreciation of value at the Banio Potash project, history can repeat.
Path Of Least Resistance Higher In 2H/2023
All tolled, MLPNF is exploiting an enviable position of opportunity. Not only are they positioned for growth, their share price presents a compelling value proposition. However, the window of opportunity may not last long. MLPNF shares have historically exhibited rapid upward movement when the valuation disconnect gets too wide, an argument easily supported at current levels.
But more than bullish sentiment can drive the MLPNF share price higher. Contributing to that cause is the work MLPNF has done and continues to do to create sustainable shareholder value, including work completed and that on the agenda to reduce dependence on a few key suppliers, diversify the fertilizer supply chain, and mitigate the risks associated with the current state of the global fertilizer and potash markets.
That’s a recipe for success. More importantly, it’s a work in progress that helps establish a pathway of least resistance for MLPNF’s growth and share price. That’s, in a word…higher.
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