South Boulder Mines (STB.AX / SMBSF) owns half of a potash project in Eritrea. We can start off by noting that Eritrea ranks 160 out of 175 on Transparency International's corruption index and 173 out of 177 on the Heritage Foundation Index of Economic Freedom. Good luck trusting the authorities in that country to safeguard an investment. Oh yeah, it's also ranked 147 out of 155 on the World Bank's Logistics Performance Index. The have a photo of the Massawa deep water port on the company website but I'd like to see photos of the road network from the project to that port.
Check out the management team. The CEO is from a major mining company but he's not a geologist by training. Their country manager is a geologist but they need people who've actually mined potash.
The Eritrea project was under development two years ago and is still under development. They have MII resources but no 2P reserves. The IRR and mine life are extremely impressive. I just don't know how to interpret their published statements. They have quarterly reports that look more like press releases than an audited financial statement, and their most recent one for October 31 says they have over A$13M in cash on hand. That's nice to know but without seeing their net income (or loss) I can't figure their burn rate.
I first noted this company back in 2011 and I said nothing at the time because I wanted to see what they would do. We can all see what they've done. The stock has steadily declined for the past two years and is now in penny territory. I had a feeling that would happen. The world needs potash. I won't be buying any potash from this project, or any stock of this company.
Full disclosure: No position in South Boulder Mines, ever.
Check out the management team. The CEO is from a major mining company but he's not a geologist by training. Their country manager is a geologist but they need people who've actually mined potash.
The Eritrea project was under development two years ago and is still under development. They have MII resources but no 2P reserves. The IRR and mine life are extremely impressive. I just don't know how to interpret their published statements. They have quarterly reports that look more like press releases than an audited financial statement, and their most recent one for October 31 says they have over A$13M in cash on hand. That's nice to know but without seeing their net income (or loss) I can't figure their burn rate.
I first noted this company back in 2011 and I said nothing at the time because I wanted to see what they would do. We can all see what they've done. The stock has steadily declined for the past two years and is now in penny territory. I had a feeling that would happen. The world needs potash. I won't be buying any potash from this project, or any stock of this company.
Full disclosure: No position in South Boulder Mines, ever.
