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Resources Upheaval Favors Bold Investors
A 90,000-Acre Paradox Basin Project Could Hold As Much Potash As The U.S. Has Produced Since 19251
Editorial Feature | July 10, 2023
And One Young Company Owns It All…
Now It Could Be Set To Generate $1.27 Billion A Year, Over a 20 Year Mine Life
- Despite expectations that potash shortages would subside, the reality is quite the opposite—they are actually worsening. This poses a significant concern for farmers who rely on potash for their agricultural needs.
- And yet this U.S.-based company, stands as the sole pure-play potash mining stock available in the market.
- As this company progresses towards production, they have the potential to hit a historic milestone… by extracting more domestic potash than any other continuous mine in the United States has ever achieved.
The potash supply-chain crisis may have stopped making headlines, but that doesn’t mean the shortage is over.
Nor does it mean the growth streak the potash sector saw over the last two years is coming to an end.
Those early investors got out too soon.
Even as potash fertilizer prices have backed off their all-time highs2…
The simple fact is, that climbing prices only eased after many farmers balked at exorbitant costs – and skipped a year of applying potash fertilizer to their fields.3
But they can’t skip again without putting their crops in jeopardy.
That means it’s only a matter of time before demand overtakes supply once again, triggering another run on what many consider to be the world’s most critical resource.4
And in the midst of this rocketing demand, a small explorer is gaining momentum, with what could be one of the most significant potash discoveries in U.S. history.
Here’s the whole story and why one company looks perfectly positioned, as tightening supplies send prices climbing again.
Supply Chain Woes Add Fuel To An Already Critical Shortage
Twenty years ago, the U.S. imported 80% of the potash it needed. Now that’s jumped to 95%, heightening the need for domestic supply.
The U.S. gets almost all its potash from Canada – where producers can cut production any time they want to boost prices.
That means farmers in the U.S. can find themselves caught in a price trap any time big miners decide to clamp down on production, as they have recently5.
Now, currently there’s only one domestic company with significant enough potash production to help counter this kind of supply stranglehold.
As the U.S.’s largest operator, it only produces 220,000 tons of potash a year from its Moab and Wendover mines in Paradox basin.
This miniscule domestic supply puts the agricultural industry at a major disadvantage… as farmers see margins shrinking, and consumers see prices rising, due to higher production costs.
Go Long On Demand
There are 893 million acres of farmland in the U.S., divided among 2 million farms. Every one of which requires a significant potash supply.
There are three primary nutrients plants must draw from the soil… nitrogen (N), phosphorus (P) and potassium (K). Potash is soluble potassium that plants can use.
Rich soils can supply enough of these minerals without having to rely on additives. But America’s large-scale, intense farmlands are used over and over. After a century of industrial farming, the topsoil in farm fields across the globe is anemic.
They no longer have the minerals they once did.
Nearly half of the world’s most productive soil has disappeared to aggressive farming.6
Here in the U.S., cropland topsoil is eroding 10 times faster than it can be replenished, making vast swaths of farmland nutrient-dead zones.
According to the Guardian, the world grows 95% of its food in the uppermost layer of soil, making topsoil one of the most important components of our food system.7
Topsoil is where the nutrition is.
Lack of topsoil also means the earth’s ability to filter water, absorb carbon, and feed people plunges.
And farmers aren’t the only ones suffering from the growing poverty of our soils. It’s a problem hidden in plain sight, right on your dinner table.8
- Since the 1940s, vegetables and fruits have lost 76% of their copper and 59% of their zinc on average.
- A famous study from University of Texas found that 43 different fruits and vegetables had significant declines in protein, calcium, phosphorus, iron, vitamin B2 and vitamin C between 1950 and 1999.
- The Kushi Institute, an organization tasked with advancing the understanding of the role macrobiotics play in healthful living, found that calcium levels in fresh vegetables dropped 27%, iron fell 37%, vitamin A dropped 21%, and vitamin C was down 30% over the past decades.
Now, to solve this issue, farmers can replace nitrogen with cover crops like clover or alfalfa. Or spread manure.
But only potash can replace lost potassium. There is no substitute or workaround.
Last year, when some farmers skipped potash because of prices, they were working in the “hidden hunger ” zone9. Crops would grow, but not thrive. 10
It’s not feasible to skip more than one year in such soils. That applies to most Midwestern, Great Plains, and Mississippi Basin farms. 11
Tests of U.S. soils by DuPont Pioneer seed company show that some states in America’s corn belt are so needy, crops cannot even grow unless potash is added before planting.12
Michigan and Iowa farms need annual applications or else—failure.
Illinois and Indiana are close behind.
Thankfully, a small explorer could soon offer a solution to this growing concern, as they move towards production on 90,000 acres in a proven region, just down the road from Intrepid.13
Potentially The Richest U.S. Potash Mine Of All Time
That’s why one company should be on every commodity investor’s radar. Its initial pilot production is expected by early 2024.
This company is immediately beginning development in the Paradox Basin, a belt that straddles 33,000 square miles across southeastern Utah and southwest Colorado.
This basin is so rich in the mineral that it is expected to hold as much as 25% of potash in the entirety of the United States.
Early estimates on the two starter projects show the potential for a staggering 70.1 million metric tons of inferred potash.14
Broken down, that means this company has the potential to produce 3 million metric tons a year – for the next 25 years.15
At today’s moderate price of $424 a ton, that equates to $1.27 billion in annual revenue.
And the best news is the first two sites – ”Upper Cycle 18” and “Lower Cycle 18” – are already permitted and expected to go into production within a year.
Potash in this basin was deposited over the ages, in 29 layers or “cycles” that are stacked on top of each other.
These layers are generally between 16- and 32-feet thick. A well shaft may tap into more than one of these cycles as they are numbered from 1 (shallowest) to 29 (deepest).
In the case of the Cycle 18 project, the combined thickness is about 42 feet, and covers 4 square miles in area—lying mostly flat and even across it all.
That makes it easy to mine.
But there’s another advantage this company can claim that its Canadian counterparts can’t…
The location is in the middle of the U.S., near major croplands.
Due to lower rail and shipping costs, that equates to a profit bonus of about $155 to $225 more per ton.
Near-Cash-Flow Growth and Ability to Expand Quickly
Most Canadian or U.S. sourced potash is produced using large brine ponds to evaporate a potash solution and leave crystals behind.
The only two potash miners in the Paradox Basin both use evaporations ponds.16
Now, it takes a year or more to build a pond for evaporation. Then several months to fill it. And nearly a year at the shortest for evaporation to finally yield potash.
Ponds like those also depend on the weather. In fact, Intrepid dyes the water blue to try to help it heat up faster.
Scenic, but not very efficient.
This is where our feature company really differentiates themselves from the competition.
They plan to use mechanical evaporation units. These small shed-size units can be set up within days. Then they’re ready to roll.
Now that the company has raised $5.5 million in startup capital, they expect pilot production of marketable potash to begin in early 2024.
The first evaporation units could be in place later this year.
As the first units come online, the cash earned on product sales will fund more units. And cash flow from those units will fund even more.
The plan is to develop its properties in clusters of twenty 320-acre mining units, each yielding 150,000 metric tons a year for a total of 3 million metric tons a year.17
A Track Record Of Mining Successes
But they’re run by some of the savviest experts in the field.
After all, it’s a rare occurrence for a junior mining outfit to move into production within a year of permitting.
It’s easy to understand why though, when you consider one of their Directors once worked at the very highest levels of the U.S. Department of Commerce, as Chief of Staff at the Bureau of Land Management… in the agency that regulates and approves mines.
And that the CEO was once President and CEO of the only producing potash miner in the U.S.
Now, when it comes to actual exploration, the Chief Operating Officer helped discover a copper mine that sold for $1.1 billion. He was also founder of another major potash compnay, who raised $240 million to get it up and running.
A team with this level of expertise offers a big advantage as they move into production.
What to do now…
Escalating demand will likely last decades.
The supply crunch and its threat to the food supply will likely soon be making headlines again.
And when it does, commodity investors could clamor into this little-known sector.
With as much as $1.2 billion a year in front of it for the next 25 years – it makes this company a long-term play.
Sign up to learn more about this ambitious potash explorer, before more news drives this quiet company to the forefront of watchlists.
1https://pubs.usgs.gov/of/2016/1167/ofr20161167.pdf chart of 60 years U.S. product ion. Mean around 1.5 million tons/yr X 6o yrs = 90 million tons. Sage investor fact sheet says there are 150 million tons inferred on its property and 2 billion recoverable from Paradox Basin https://sagepotash.com/investors/
2https://ycharts.com/indicators/potassium_chloride_muriate_of_potash_spot_price
3https://www.farmprogress.com/crop-protection/mosaic-curtails-potash-output-at-canada-mine-on-demand-slump
4https://www.dtnpf.com/agriculture/web/ag/crops/article/2022/12/22/2023-potash-outlook-see-supply-lower
5https://www.bloomberg.com/news/articles/2022-12-06/mosaic-curtails-potash-output-at-canada-mine-on-demand-slump and https://sports.yahoo.com/news/potash-corp-cuts-jobs-canadian-152312617.html and https://www.reuters.com/markets/commodities/fertilizer-producer-nutrien-may-slow-potash-expansion-ceo-2023-05-11/
6https://www.theguardian.com/us-news/2019/may/30/topsoil-farming-agriculture-food-toxic-america
7https://www.theguardian.com/us-news/2019/may/30/topsoil-farming-agriculture-food-toxic-america
8https://www.scientificamerican.com/article/soil-depletion-and-nutrition-loss/
9https://www.pda.org.uk/plant-potassium-measurements/ also source of the graphic
10https://link.springer.com/chapter/10.1007/978-981-16-6883-8_5
11https://www.globenewswire.com/news-release/2023/04/19/2650239/0/en/Potash-Global-Market-Report-2023.html
graphic source for potash “hidden hunger” is https://www.pda.org.uk/measuring-potassium-in-soil-and-crop/
13This company Fact Sheet https://sagepotash.com/wp-content/uploads/2023/05/Sage-Potash-Investor-Fact-Sheet-25th-May-2023.pdf
14Sage NI 43-101 https://sagepotash.com/wp-content/uploads/2023/02/Sage_Tech_Rept_Feb_8_2023.pdf
15https://sagepotash.com/investors/
16https://geology.utah.gov/map-pub/survey-notes/utah-potash-resources-production-and-exploration/
17This company Fact Sheet
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