November 7, 2023
This week, because of my interest in strategic minerals required by the USA, I reviewed a start-up miner that I believe has a solid likelihood of success. The name is Sage Potash Corp.
Potash is a strategic mineral required for US domestic food security. The US presently imports 95% of its potash requirements, which gives rise to Sage’s effective brand marketing: “American Potash for American Farmers.”
Sage’s Plain Project in Utah is based on a world-class land package, representing a massive potash deposit potential identified by Dr. Robert Hite. The project began with a 43-101 report in 2013, revealing a thick, high-grade deposit. Due to a commodity price downturn, however, the project was put on hold.
In 2022, Sage co-founder Peter Hogendoorn re-acquired the state leases, assembling mineral rights to approximately 90,000 acres of land. According to Peter, the project aims to initiate pilot production on 30,000 acres, with an inferred resource of 280 million metric tons. He has a take-it-slow plan that he says allows for efficient mining unit administration and cavern design. With a budget of around $25 million, he plans to source used processing equipment to reduce costs enormously. The initial project emphasizes resource expandability with the potential to double or triple the existing resource calculation. He seems to have everything in order, pending the capital raise.
In checking out the Sage story, I contacted a senior executive of BHP Potash to discuss the Jansen Saskatchewan mine. After a brief review of the Sage website and presentation, he told me:
Long-term investors should understand that potash is a true bulk commodity, a bit like iron ore. Any given operation’s success is greatly influenced by their All-In production and sales unit cost. Sage seems like an interesting play if they can get it right. They will not be mining with conventional means but doing solution mining, which is done elsewhere (like Saskatchewan) but not that much. You need to clearly understand their views and mitigations of key project risks, commissioning risks, and operational risks. It will all come down to the anticipated unit cost versus the projected price. If BHP Jansen sees a chance to push its production into the US Midwest markets, any potash mine (solution mine or conventional) better have its costs in order, otherwise they will get washed out. With Jansen phase 2, BHP will produce over 10% of the world demand. That will be an incredibly low unit cost of production and sit right on substantial rail transport infrastructure for Canadian and USA markets.
As Peter Hogendoorn explains it, his mine will supply local farmers at much lower transportation costs than Canadian suppliers, albeit with slightly higher production costs. For his Utah project, he discussed various potential outcomes, including rapid growth to a national US supplier, the development of multiple plants, and potential acquisition interest from a major company.
The Sage Plain Project stands out for its:
- Outstanding deposit size, grade, and purity
- Short timeline to production – 18-24 months
- Largest deposit closest to production in the US.
- Lowest transportation costs and secure domestic supply chain reliance.
- Strategic mineral for domestic food security
- Advanced permitting and engineering to initial production
- Lower risk than associated with most greenfield projects.
At the current share price, which has dropped in anticipation of the large capital raise, I think SAGE.v is investable.
Investors may be interested: https://sagepotash.com/investors/
Corporate presentation: https://sagepotash.com/wp-content/uploads/2023/05/Sage-Potash-Corp-Investor-Presentation-Q4-2023-1.pdf
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