Tight Potash Market and Strategic U.S. DFC Funding Boost Valuation

Report Highlights

• Potash prices are up 17% YoY, to US$363/t due to escalating U.S. and Canada tariff tensions, persistent export disruptions from major suppliers Russia and Belarus caused by sanctions and logistical bottlenecks, as well as hurricane impacts that temporarily sidelined U.S. fertilizer infrastructure. Supply constraints were further exacerbated by BHP’s (ASX: BHP) recent announcement that the first phase of its Jansen project in Saskatchewan will be delayed to mid-2027, with projected capital expenditures rising to US$7–7.4B (up from US$5.7B).
• Africa imports most of its potash consumption from Russia. In addition to Africa, a major target market for Banio’s potash is Brazil, which imports 95% of its potash demand from Canada, Russia, and Belarus.
• The Banio project hosts a large-tonnage/low-grade potash resource. A recent drill program intersected very thick potash horizons, including 290 m in one hole, and 100 m in another, extending mineralization along strike and at depth. We believe these results should positively impact an upcoming updated resource, expected in H2 2025.
• With about $15M cash on hand, and the US$3M commitment from the DFC, MLP is well-funded to complete a feasibility study by 2026.
• A 2024 Preliminary Economic Assessment (PEA) reported robust economics, with an AT-NPV10% of US$1.1B, and a high AT-IRR of 33%, using a long-term average price of US$387/t granular Muriate of Potash (gMOP) vs the current spot price of US$363/t. MLP is trading at just 13% of the AT-NPV10%.
• Management and insiders own 33% of MLP’s equity. Management has a highly successful track record in M&A. Their previous deals included – a) Millennial Lithium – sold to Lithium Americas (NYSE: LAC) for $490M in 2022, b) Allana Potash - sold to Israel Chemicals (NYSE: ICL) for $170M in 2015, and c) Potash One – sold to K&S (XTRA: SDF) for $430M in 2011.
• Upcoming catalysts include an updated resource estimate, feasibility study, and potential M&A activity.

*Subsequent to Q3-FY2025, MLP raised $9M through an equity financing.

Price and Volume (1-year)

Banio Potash Project, Gabon

The advanced stage Banio potash project, covering 1,238 km2, is located 450 km south of Libreville along the Atlantic coast of Gabon. MLP plans to transport the enriched brine extracted through solution mining via pipelines to a processing plant in Mayumba, located 50 km north of the Banio project. The processing plant will transform brine into granular fertilizer through evaporation, crystallization, drying, and compaction.

 Located in the potash-rich Congo Evaporite basin in Gabon, which hosts several large potash deposits. Gabon hosts several majors such as Fortescue (ASX: FMG), Eramet (ENXTPA: ERA), Total (NYSE:TTE), and Shell (NYSE: SHEL)

The company plans to ship its products to target markets through the Mangali port. Gabon’s proximity to Brazil gives MLP a transportation cost advantage over other global suppliers

Banio Resource Estimate

Banio hosts a large-tonnage/low-grade potash deposit. The resource envelope measures 5 km (length) x 3 km (width) x 0.2 km (thickness) 

A 2024 PEA study returned an AT-NPV10% of US$1.1B, and an after-tax IRR of 33%, using US$387/t gMOP vs the current spot price of US$363/t. We note that OPEX/CAPEX are relatively low as the deposit is amenable to solution mining 

We believe there is resource expansion potential, as the deposit remains open in multiple directions, and the current resource represents only 1.5% of the project area

Earlier this year, MLP drilled two holes (981 m) as part of a phase two drill program to assess the presence of potash-rich horizons at depth, and lateral continuity of mineralization at the project’s North target. One hole intersected 297 m of interbedded potash and halite, while the other, 3.7 km east, returned over 100 m.

Phase Two Drilling 

Drilling intersected thick potash seams, extending mineralization both along strike and depth; assay results pending. Mineralization has been identified at depths ranging between 230 m and 678 m below surface, and over 8 km along strike; we note that Banio’s potash beds are shallow compared to projects in Saskatchewan (800-1,500 m deep

Management aims to complete a resource update this year, followed by engineering studies for a feasibility study

Financials

Strong balance sheet. Subsequent to Q2-FY2025, MLP raised $5M through an equity financing

The company is currently pursuing a $6M equity financing. In-the-money options and warrants can bring in $12M

FRC Projections and Valuation

Following the DFC funding commitment and improved financing outlook, we are lowering our discount rate assumption from 14.6% to 13.1%

We are using a higher 15-year average potash price of US$323/t (previously US$302/t), and a shorter production timeline of four years (previously six)

As a result, our DCF valuation has increased from $1.38 to $2.47/share

Our valuation is highly sensitive to key inputs

We are reiterating our BUY rating, and adjusting our fair value estimate from $1.38 to $2.61/share. We believe MLP’s exceptional share performance reflects growing confidence in the Banio project, supported by strong drill results, infrastructure progress, and backing from the U.S. DFC. With robust potash fundamentals, improving project economics, and a well-capitalized position, MLP is advancing toward a feasibility study in 2026.

Risks 

We believe the company is subject to the following risks:

• The value of the company is dependent on potash prices
• Exploration and development 
• There is a risk of delays in permitting, construction, or other development milestones 
• FOREX and geopolitical
• Access to capital and potential for share dilution