The potash industry, once a topic of nearly daily discussion as a result of BHP Billiton’s $40-billion hostile takeover attempt of Potash Corporation of Saskatchewan (TSX:POT), has somewhat cooled its jets since that deal got the kibosh many months ago. The lack of front page press, however, has not dampened the sentiment of the sector as the industry continues to grow and create new jobs throughout North America.
Equities may have labored throughout the summer across the markets, but the month of October has been especially fruitful for companies in the potash sector. Shares of POT have bounced off of lows and added more than $7 per share (even including today’s $1.24 slide).
Topping those gains in October has been the much smaller company, Passport Potash, Inc. (TSX-Venture:PPI), a potash explorer with a broad focus on advanced potash properties and a more narrow focus on previously explored potash property in Arizona.
The Company has been strategically building a large position in the Holbrook Basin in Arizona, controlling over 81,315 acres. Shares of PPI during the month of August have packed-on more than 30% in value, closing today at $0.49.
The Holbrook basin is a prime target with all the amenities nearby that a miner could possibly need. There is immediate access to rail lines, highways and a major power plant roughly 20 miles away. Of course, none of that matters without the resource. The Holbrook Basin has not only been shown to contain large amounts of potash, but it holds the deposits at shallow levels of only 800 to 1,300 feet in depth, giving Passport a distinct advantage in production.
Looking to add to their position in Arizona, Passport disclosed today that it has entered into a binding Letter of Intent with NZ Potash, LLC to acquire a 50% interest in HNZ Potash, LLC. Taking the "team" mentality to develop their combined potash holdings in the Holbrook Basin, Passport CEO Joshua Bleak stated, "[We] will move the companies forward in ways that were impossible working separately."
The land is no small parcel. Combined, the companies will control over 200,000 acres of mineral rights spanning more than 300 square miles. In comparison, the state of Rhode Island is only approximately 1,500 square miles. Work already completed on the land consists of more than 50 drilled wells and over 100 lines miles of 2D seismic.
The companies intend to jointly file an NI 43-101 report after the release of Passport’s NI 43-101 report from SRK. The mining community will be awaiting these reports to detail just how much mineralization the land contains and could serve as a major catalyst in the future for a stock that appears to already be starting to rise from recent lows, but still leaves a substantial upside just to reach 52-week highs of $1.86.
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