Intercontinental Potash Corporation is a junior or small capital potash exploration company that is undertaking exploration activities in New Mexico. The company has identified sulphate of potash, (SOP), deposits of significant quantity, purity and accessibility to support future mining operations.
IC Potash Corporation's stock trades on the Toronto Stock Exchange in Canada under the stock symbol ICP on the Venture Exchange. It also trades on the Over the Counter board under the stock symbol ICPTF. As of mid-February, 2011, the market capitalization of the firm is $180 million. The stock price has ranged from 29 cents to $1.80 in the past year. As of mid-February, 2011, it is trading at the high for the past year due to the impressive stock price gains that have occurred in late 2010 and early 2011. Significant numbers of shares have traded during this period as well. There are 99 million shares issued as of early 2011.
Potash is a fertilizer product that is rich in potassium, an element required to sustain life in all living cells. Farmers have found that the application of this fertilizer to soil significantly boosts crop production. In areas of historically intensive farming practices, such fertilizer is a necessity to allow production at profitable levels.
IC Potash Corporation's SOP product is a premium fertilizer which does not add chloride to soils. The standard MOP is chloride based and so it adds salinity to farm land when used. Many crops are sensitive to salt. Over prolonged use of standard potash, the soil builds up salinity which results in less production as the crops cannot tolerate high salt levels. The sulphate form avoids this detrimental side effect. Farmers pay a substantial premium for SOP.
IC Potash is investigating the feasibility of starting a SOP fertilizer production facility that will be among the lowest cost producers in the world. Using a process that uses solar energy, the company plans to extract and purify substantial quantities of potash per year. Since the mineral deposits are located in New Mexico, solar energy is an abundant resource. The process will also require water which is available in sufficient quantity at the processing sites.
IC Potash estimates that there is perhaps a billion tons of ore that will support mining operations. As of early 2011, they are actively investing their claimed areas to prove the viability of the deposits. They already have a number of investigations completed such as drill core tests and various geophysical subsurface tests. Simultaneously, they have begun the environmental application processes. They have estimated that there will be perhaps a two to three year timeframe for the company to establish their operational base. They have preliminary support of the local communities.
With the impressive gains seen in recent years by the Potash Corporation of Saskatchewan, Canada, many investors have looked for other potash investment opportunities. Many have looked for junior exploration and mining companies in order to benefit from the recent gains in the price of potash fertilizer. IC Potash is still a small capital exploration company which has been discovered by many investors. As a result of the high investor demand for IC Potash stock, the share price has risen by over 300% in about six months. During the same time period, Potash Corporation has experienced about a 60% gain, making that company the giant of the industry since they are the largest potash producer in the world. They have defined the market and established an operating example that companies such as IC Potash study. While IC Potash must still be considered a speculative investment, engineering studies show that the companies plans are reasonable.
Since the population of the world continues to expand, there is a substantial demand for all farm crops. In order to satisfy demand, farmers resort to advanced techniques to help increase their crop yields. Often, this involves the application of potash fertilizer on land since this compound is particularly effective at increasing yields. The demand for potash has pushed prices of the material to fairly high levels which are expected to remain stable for the foreseeable future. The premium that is paid for SOP potash ranges from 30% to 50% more than the more saline MOP form. Likely due to cost, the market for SOP is quite small compared to regular potash, but it is increasing faster. The price differential is expected to remain substantial, or even increase further, in time. The value of this form may be recognized by even more farmers which may support ever greater price differences.
IC Potash plans to use a less costly method to produce their SOP potash. They can take advantage of the abundant solar energy at their New Mexico facilities. Other SOP refining methods use substantial amounts of energy and other costly inputs during production. Some of these may prove to be economically impractical. The IC Potash approach seems to be sound. The company has initiated a comprehensive feasibility study to help establish whether the early calculations are accurate. IC Potash also believes that their process is scalable meaning that they will be able to process substantially more SOP without the economics becoming excessively costly.
Investors looking for junior or small capital potash exploration and mining companies may want to investigate IC Potash. The stock trades on the Toronto Stock Exchange, (stock symbol ICP), and on the Over the Counter board, (stock symbol ICPTF). Investors should be able to use the services of their brokerage accounts to review the investor materials and to purchase stocks in the company. The company maintains a web site that displays investor information and news as it becomes available. Investors must be aware that the company has seen a substantial rise in the value of their stock but that this may not continue. In fact, the company is small and may experience significant risks during the next years as they investigate the mineral resources. There may also be extensive environmental considerations before any potash can be produced. Still, the demand for potash fertilizer is strong and is expected to remain so through the next year or more.Â