Millennial Potash Corp. (OTCQB: MLPNF) (TSXV: MLP) stock is catching a bid. And deservedly so. After all, trading at $0.30 on Wednesday, MLPNF shares were on the low end of their consolidation range, trading about 20% lower than the highs reached last month. But the weakness isn't necessarily bad news. It does expose a value opportunity. And considering that MLPNF is better positioned today compared to when it scored its 52-week high of $0.48, higher prices could be in the crosshairs. In fact, with MLPNF shares trading at a baseline, a bounce higher could come sooner than later.
Remember, the often-referenced baseline of a share price is a measure of what a company has. But the “inherent value” factors in what they can do with the assets owned. It's that blue-sky potential that can generate the most powerful bang for the investment buck. With prices and volume trending higher, the MLPNF bulls appear to be making the case that the potential inherent to MLPNF assets is on the verge of being monetized. Updates in June suggest that may indeed be the case.
Most recently, MLPNF provided an optimistic update about its planned construction of a port facility in the Mayumba area to service the mining, forestry, agriculture, oil and gas, and fishing industries. According to the company, the port, located near its Banio Potash Project in southern Gabon, is expected to commence its first phase of construction development in Q3 of this year.
A Game-Changing Addition To Expedite MLPNF's Growth
Investors responded correctly to the update, noting that the development of a new port at Mayumba will significantly de-risk MLPNF's Banio Potash Project by providing efficient and cost-effective access to potash markets throughout the Atlantic and most parts of the world. That's something many potash suppliers don't have. And for MLPNF, it can be a game-changer that helps transform microcap MLPNF into a big-time potash and fertilizer supplier.
At roughly $0.30 a share on Wednesday, the value proposition ahead of planned growth may be too good to ignore. And know this- MLPNF has traded much higher, reaching $0.48 over the past 52-weeks. But here's the interesting part of that measure. Millennial Potash is better positioned than ever to generate higher and more sustainable shareholder value. In other words, stronger today than when it traded 60% higher, an appreciable gain from current levels could be a reachable initial target. And considering the stock's thinly-traded nature, another round of bullish interest could lead to striking that target faster than many expect. Taking into account recent volume and subscribing to the theory that “volume precedes price,” the initial assault on that high may have started.
Feeding Into A $30 Billion Global Potash Market Opportunity
If so, it's well-timed. After all, those already following Millennial Potash know that the company has been completing the necessary groundwork to monetize its assets. That work also comes at the right time for them to drill into a more than $30 billion global potash market opportunity. But they can do something as equally important for the market, alleviate the stranglehold by Russia and China that has the potential to squeeze worldwide food supplies and security. Part of the problem stems from the ongoing conflict between Russia and Ukraine, which has caused significant disruptions in the global fertilizer market that have led to unstable food supply markets. A report from the United Nations indicates that no less than 48 nations have been severely impacted by the shortage, including countries in Africa, Asia, and Europe that have relied on Russian-fed supplies. Without them able to contribute, whether intentionally or resulting from embargoes, many parts of the world are now extremely vulnerable to the fertilizer supply imbalance, which creates disruptions to food and animal farming. The situation is dire.
Many analysts are comparing the need for fertilizer to that of the semiconductor chip shortages that crippled supply chains and manufacturing in 2022. That imbalance earned plenty of headline space despite the fact that a computer chip, other than those needed for infrastructure, is rarely related to life-threatening events. True, chips and the technology that comes with them are important, but not quite to the level of food. Thankfully, the media is starting to cover this global problem more frequently, raising their voice and generating proper concern about the need for fertilizers to secure and stabilize agricultural stock levels. The U.S. is no exception.
The United States Echoes The Global Sentiment
The State Department in the United States is openly increasing its attention to the need of securing fertilizers, with political leaders now joining the discussion and making it an agenda item at open political events. In no uncertain terms, decision-makers are paying attention and are adamant about finding a solution to the current imbalance, particularly finding ways to protect countries that do not control their own destiny regarding food and fertilizer supply. That reality has led to the discussion being included in meetings at the highest level, including talks during high-ranking international diplomacy meetings.
Of course, the attention is timely. It's estimated that Russia and its allies account for almost 25% of global crop nutrients exports. Although agricultural products, including certain fertilizers, are supposedly not subject to sanctions, take that with a grain of salt. Countries being squeezed generally don't reciprocate kindly. On the contrary, Russia and others sympathetic to their cause may intentionally curtail fertilizer exports. That imbalance affects food supplies, of course. But another consideration is that the supply disruption has led to price spikes and stockpiling, creating an inflationary impact on global food prices. Again, not every country can fend for itself. And the United States certainly can't feed potentially 1/3 of the world's population.
Undoubtedly, what's happening in the fertilizer market is bad news all around. Still, there the supply imbalance hasn't delivered a knockout punch just yet. In fact, it's inspired several companies to work even harder to change the supply imbalance. Millennial Potash Corp. is one of them, and their initiatives could contribute to stabilizing the markets.
Millennial Potash Playing In The Fertilizer Big Leagues
No, MLPNF can't save the world, but they can certainly impact it positively. And that's their plan as they tap into a significant revenue-generating opportunity while simultaneously playing a critical role in fortifying the global fertilizer supply chain. At the same time, they are helping alleviate concerns about food security and the world's dependency on a few dominant suppliers. More than having an ambitious plan, MLPNF has the assets to make a difference.
And those assets bring into focus near and long-term revenue-generating opportunities. Currently, MLPNF is working to feed a hungry market by tapping into portfolio properties that include the Banio Potash Project in Gabon, known to hold substantial reserves of potassium salts. Quite a bit, actually. It's estimated that over 2 billion tons of potassium salts are waiting to be uncovered within this project, making it one of the world's largest potash basins. What’s even more promising is that MLNPF has published updates detailing its commitment to fast-tracking the Banio Potash Project, including providing information about historical drilling and plans to expand the project, which they say can be accomplished quickly by taking advantage of established infrastructure systems that allow unimpeded access and higher operational efficiency.
Work at Banio is timely, especially with the global fertilizer industry hyper-focused on finding alternative sources of supply. That's more than excellent news for those needing what MLPNF sells; it's potentially fantastic news for the company and investors since that attention positions MLPNF to benefit from market conditions serving up extraordinary demand for fertilizers. MLPNF can certainly score its share of the revenue prize by doing what it knows best- providing a reliable and diversified supply of potash. That's an objective they can achieve by expediting exploration initiatives and maximizing the value of its assets in mining-friendly jurisdictions. That includes nurturing its flagship Banio Potash Project in Gabon, which indicates excellent potential, an expectation resulting from its location in the established potash-bearing basin, and proximity to significant potash markets.
Keep in mind that MLPNF is not a startup company. Its Banio Potash Project is already at an advanced stage of exploration, a mission accelerated by leveraging a solid contributing infrastructure that includes an established exploration camp, drill rigs, and drill cores on site. MLPNF's investment signifies its commitment and intent to move this project forward to capitalize on a current opportunity and maximize the value of its asset. Additionally, Millennial Potash announced hiring global industry leader Ercosplan to complete a NI 43-101 compliant technical report on the project. This addition does more than fuel its mission, it confirms MLPNF’s commitment to transparency and adherence to industry compliance standards.
Management Expertise Can Deliver Increased Shareholder Value
The work completed is no coincidence. Millennial Potash is capitalizing on its opportunities through strategic decisions made by a team of industry professionals who bring measurable expertise, strategic and operational, to the company. The team has a strong track record of building, exploring, and monetizing assets, which is particularly noteworthy given that assets can hold value even while underground. Explained more simply, MLPNF doesn't necessarily need to bring assets to market to earn its financial rewards. Proven assets, and those underground, are also accretive to the balance sheet. As important, proven assets often attract partnerships that, in many cases, provide most or all of the investment capital needed to bring the mined assets to the markets.
Keeping that in mind, MLPNF could benefit from several strategic opportunities, either on its own or with a partner, to capitalize on a near-term shot at a revenue-generating goal. That opportunity is more than in play; it's amplified by the global urgency to secure fertilizers and potash to serve surging global demand and fill the supply chain gaps. Remember, MLPNF wants to do more than deliver goods to market; they also want to revolutionize the fertilizer industry through its commitment to sustainable and responsible mining practices. That difference additionally benefits those wishing to partner, potentially cutting considerable red tape to expedite moving from exploration to development phases.
While partnership potential is an obvious consideration, keep this in mind: Millennial Potash can go it alone. They have the intrinsic strength and experience to do so, noting it being led by Farhad Abasov, the Chairman and Director, and Graham Harris, the Senior VP of Capital Markets and Director. That team propelled Millennial Lithium and Allana Potash Corp. to their respective highs, which led to them being acquired for significant sums. Furthermore, if capital is needed, Graham Harris has proven his ability to raise it. Moreover, when he does, it's coupled with defined strategic goals to maximize assets and opportunities, thereby attracting the right type of investors. Simply put, MLPNF has the assets and know-how to carry out its mission alone.
And they have. As an example, under the guidance of the current management team, Millennial Lithium stock surged from $0.06 to $4.70, an over 7,733% gain that ultimately led to that project's acquisition by a major player in the lithium market. History in this sector can repeat. Noting the location of company assets, product demand, and intrinsic value already appreciating at its Banio Potash project, that's likely, even probable.
Positioned To Maximize Near-Term Market Opportunities
Considering the markets, needs, and supply imbalances, MLPNF finds itself in the sweet spot of opportunity. And at $0.30 a share on Wednesday, the MLPNF share price presents a window of opportunity worth considering. Remember, thinly traded MLPNF shares can run higher quickly when the bulls sense a valuation disconnect. As noted, that recognition may be happening now, noting the significant increase in volume over the past three trading sessions. And while the increase in the past few days is impressive, the jump could be a precursor to more bullish returns.
A move higher is justified, considering Millennial Potash continues to score operational milestones that keep its projects forward moving. Additionally, demand for the products MLPNF is not a short-term proposition. Thus, while short-term gains may be expected, considering MLPNF as a long-term investment may be the wisest choice when adding it to a growth stock portfolio. Remember, MLPNF's contribution is needed more than ever, as estimates indicate the global annual Muriate of Potash (MOP) capacity has been reduced to a very low 55 million tonnes. This figure exposes a wide gap between supply and demand, making potash potentially worth more than gold in many respects. For its ability to save lives, in that respect, it surely is.
Still, although MLPNF isn't a gold play, savvy investors are treating investments in the potash sector the same. In many ways, they should. Potash is a commodity with significant upside potential, enjoys significant demand, and its luster will never dull. Those factors are more than value drivers for Millennial Potash; they also expose an investment opportunity at ground floor prices that is ripe for immediate consideration.
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