Industry context: China and missed new supply

Yesterday I had Ross Jennings on the podcast to talk about Millennial Potash. He’s the largest shareholder and owns more than a quarter of the stock, and our conversation got into many of the questions I have received on the company. We talked about everything from the political risk in Gabon, what the company has to do to get into production and how long he expects it to take, to the upside case if the company does get the Banio project online. For anyone interested in the company, this one is definitely worth a watch. You can also find Ross’ writeup on Millennial Potash below.

Podcast Summary

* A little bit on his background, and how he first got involved with Millennial Potash.

* Why he thinks Millennial is as undervalued now as it was a year ago due to the progress the company has made.

* Why he thinks port logistics will be resolved in 2026, so the Banio project can produce significantly more than the 800,000 tons/year in the PEA.

* How Millennial Potash has a structural logistics advantage shipping into Brazil (which imports 13-14M tons a year of potash), to the tune of at least $20/ton in dry bulk shipping costs.

* Why investors should pay attention to the CAPEX and OPEX numbers when Millennial releases their feasibility study.

* Comparing Millennial in the future to China’s largest potash producer, QSLI, and the growth in potash imports in China over the last several years.

* The nuance of the drill results, why the Banio project offers huge economies of scale, and how it is ideally located as far as export logistics as well as the extraction process.

* Why he expects full production in 2028 or 2029.

* The political and legislative risk in Gabon, and why he thinks many investors are inflating the risk profile. The government has already been supportive to the company, and they are actively seeking foreign direct investment.

* Funding the project with the project financing and a potential offtake agreement, and why he thinks they could begin operations without a massive amount of equity dilution.

* The items that could break the bull case, and why a material increase in expected CAPEX and OPEX are at the top of the list.

* A discussion on M&A, and the different parties that might be interested in the company.

* Why the stock is probably in the process of turning over the shareholder base, and why he thinks it’s valued today at one third of where it should be.

* Why he thinks that the Banio project could be producing 5M tons annually in 5 years time.

* Book Recommendations: Fooled By Randomness & Antifragility by Nicholas Nassim Taleb & Margin Of Safety by Seth Klarman.

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