The bid by BHP Billiton (LON:BLT) for Potash Corp, the Canadian mining company has made investors aware of what gardeners have known for ages, that Potash fertilizer makes food crops grow. Potash, chemical name potassium carbonate, has wide applications - it improves crop yields and nutrient values as well as disease resistance in food crops. BHP has been motivated to make a bid for a producer as it is a fair bet that the demand for food, which has been rising steadily for the past 10 years, could be set to accelerate as third world populations increase. Potash is mined in many places with North America and Australia major producers. Around 90% of mining production is used to make potash, the balance being used to make a number of products, including soap, glass and water softeners.
The potash market is dominated by large companies. There is, however, a penny share which we think looks an interesting situation. Sirius Exploration (LON:SXX) is a mining company which is focused on potash and salt deposits in North America and Australia. It has a number of drilling permits and has just secured an Exploration Permit to drill an exploratory hole in North Dakota to test for potash and other minerals. The share price reached 15p in 2009 but plunged to current levels when a loss of £3.8m in the year ending 31/3/10 was reported. However, the market consensus is that losses could reduce in the current year.
Sirius Exploration is a diversified mining and exploration holding company. Since 2008 it has focussed on the salt and potash mining markets. They have major interests in three significant salt deposits in North America and Australia: Williston Basin in North Dakota, the Boree Salt Member in Queensland and the Canning Basin in Kimberley, Western Australia. They have also acquired the IP for innovative new technologies for utilising their properties after the mining phase for environmentally beneficial activities. Sirius also has copper and gold interests in Macedonia and iron interests in China.
Global demand for potash
It is estimated that by 2050 the global population will reach nine billion. Coupled with enormous urbanisation in the developing world this will place great strain on our planets resources such as clean water, energy and food. The key nutrients for optimising plant (food) growth are nitrogen, phosphorous and potassium. Of these three key nutrients potassium…
