Australian Potash (ASX code APC) has been a terrible investment for the Punter over the past 18 months. Nevertheless, he has decided to buy more.
APC is a would-be organic sulphate potash producer developing a major brine project at Lake Wells, north of Laverton in WA.
It was always going to be a long-term investment - a formal, final investment decision has still to be made, and the first production will be at least two years after that.
A definitive feasibility study in 2019 predicted output of 100,000 tonnes of brine SOP a year, but front-end engineering and design work suggested this could be 120,000 tonnes.
Since then, further drilling has improved average grades and flow rates, putting the potential production up to 135,000 tonnes per annum for 30 years.
As a result, the number of bores required over the lifetime of the project is now expected to be only 89 instead of 172, which cuts capital costs considerably.
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When fully operational, it will be Australia's largest SOP producer, with 90 per cent of output already under take-or-pay off-take agreements.
However, it hasn't got the cash to last more than three months at the current rate of investment spending, hence the current share purchase plan.
The offer is for one new share for every four at 3.8 cents each, with one free share for every two ordinary shares taken up.
The options last for only 12 months, but they will be in the money if the share price climbs to 6c, which is what they were worth as recently as June.
The offer closes on August 15. With 30,000 shares already, the Punter is paying $285 for 7500 shares and 3750 free options.
Meanwhile, the United Malt Group (UMG) is back on the Punter's watchlist. Shares slumped following a 20pc cut in the estimated profits for the year ending in September, but the group expects a rebound in 2023.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.