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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 389.75+0.5%Dec 1 4:00 PM EST
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To: elmatador who wrote (73166)4/15/2011 12:33:41 PM
From: Rocket Red  Read Replies (1) of 218135
 
“How Blue is the Sky at Cerrado
Verde?”
? We have begun to sharpen our pencil recently regarding
the potential upside of Amazon’s Cambridge process.
The Cambridge process could allow the company to
produce a conventional potassium chloride (KCl) or
potassium sulfate (SOP) and could potentially generate
up to four billion dollars of value for Amazon shareholders.
? We have previously put forward an NAV of $42.12 per
share in the event the Cambridge process is successfully
scaled up. Based upon recent meetings with Amazon
management in Belo Horizonte, Brazil and conversations
with staff tasked with the scale-up of the Cambridge
process, we believe this figure could materially
understate the potential of the project.
Amazon Mining
David Pescod T: 780.408.1750 Debbie Lewis T: 780.408.1748 Toll Free: 1.877.409.1750 Page 2
DEB’S DITTY:
I’ve risen...but I’m sure as hell not shining!
? Our original Cambridge NAV was based on a two million tonne per year operation at an operating cost of US$250
per tonne. We are coming to the view, though, that a successful Cambridge process could result in a plant designed
to satisfy all domestic potash demand in Brazil and that cash costs could be closer to US$200 per tonne vs. our
more conservative US$250 per tonne assumption.
? In a world where the Cambridge process scales up well and runs as efficiently as Amazon’s engineering team believes
it can, the project has the potential to generate more than US$1 billion of free cash flow per year. Assuming a
five million tonne per year project and a cash cost of US$200 per tonne, we arrive at an NAV of $125.85 per share.
Fantástico.
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