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RWD 17.0¢

30-50 bagger unique opportunity - is now the time to be buying?

  1. ozelectro

    5,251 Posts.
    118
    Spent this beautiful Perth Summer's Sunday morning at Sayers Sister in Perth for Breakfast, followed by a walk around Hyde Park and now finishing off the morning by playing around with some of my projected figures from Reward's 100% owned Lake Disappointment sulphate of potash project.

    Reasons I like Reward
    - Unique product (sulphate of potash) in a growing market (in particular China and India) with only a limited number of SOP producers worldwide
    - Low capex (likely to be <$200m) surface brine lake deposit and low operating costs in the lowest quartile of producers - high margin business
    - Ideal hot climate for brine evaporation
    - Initial testing shows strong brine flows which is important as to how quickly the potash containing brine can be drawn-down
    - High % of shares owned by management and a tight share structure (only 135m shares on a fully diluted basis)
    - Well funded for up-coming drilling program
    - high chance of being a takeover target

    Near term share price catalysts
    - Commencement of expansive LD drilling program (due to commence by end of February)
    - Release of full scoping study
    - Significant upgrade of the LD resource

    In addition, I see any sort of corporate/takeover activity in the global potash sector as a potential strong trigger for an increase in RWD and potash stocks in general.

    Valuation
    Reward's scoping study is based on a 400,000 TPA operation. However, in my opinion a 1M TPA is not out of the question in years to come. Here's some back of the envelope figures based on 275,000,000 shares on issued (just over double the number of fully diluted shares currently on issue), along with scenarios of 400kpta, 600kpta and 800kpta at a SOP price of $780/ton (Expected price received as per Compass Minerals' first half year 2015 guidance). As you can see based on the following scenarios, a 30-50 bagger opportunity may be possible. Happy for anyone to provide feed back and rip apart my numbers.



    Disclaimer: I am a long term holder and bought another 50k shares last week.

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