Minnows show solid promise

After a big win with oil and gas exploration, David Haselhurst is putting his faith in fertiliser

David Haselhurst


WE LAUNCH OUR NEW YEAR’S portfolio with a reshuffle of stocks carried over from calendar 2012, plus pointers on stocks with realistic potential for gains.

The 2013 opening portfolio’s stocks have been carried over at their year-end prices and, as in previous years, it assumes a starting capital of $100,000 in shares plus cash from the end of 2012.

Three stocks with promise have been transferred from Speculator’s former portfolio in online newsletter Eureka Report: emerging heavy minerals miner Image Resources, cancer cure hopeful Viralytics and promising fertiliser developer Potash West (PWN). These stocks enter the portfolio at their year-end closing prices.

Standout winner

The standout winner in Money’s monthly portfolio last year was oil and gas explorer Central Petroleum, with a gain of 191.3% on 80,000 shares purchased at 5.1¢. They rose to 15¢ in our last portfolio report in the Best of the Best issue in December.

The threefold rise helped offset the effects on the portfolio of a fall in confidence in equities, particularly speculative resource stocks. Speculator was up 6.3% for the year while the All Ordinaries Index gained 4.9% over the same period to November 16, around a low point.

Central’s shares have risen following a series of multimillion-dollar farmout deals for exploration joint ventures with companies such as Total Oil and Santos. The farmouts relate to extensive areas of tenements held over the Amadeus, Georgina and Perdika basins beneath southern Northern Territory and into South Australia and east-west from Queensland into Western Australia. Perth stockbroker Patersons Securities released an enthusiastic recommendation in November for the stock as a speculative buy at 16¢ with a price target of 38¢. Drilling in that near waterless country should attract few protestors concerned about water reservoirs.

High expectations

Since listing in May 2011, Potash West has focused on developing a commercially viable processing system to bring its revolutionary glauconite-to-fertiliser technology into production. In late December it lodged a world patent application over what looks to be highly valuable intellectually property. The patent application follows approaches from other companies.

In October, Potash announced it had defined an indicated JORC-compliant resource of 244 million tonnes of 3.5% potassium oxide, including 122 million tonnes of 4.6% K20. This is based on drilling within its 2900sq km tenements covering what’s acknowledged to be one of the world’s largest deposits of glauconite – a greensands mineral and source of potassium – straddling the Dandaragan Trough north of Perth.

In January, it announced the completion of its project scoping study confirming the technical and financial viability to produce an initial 2.4 million tonnes a year of potassium sulphate with other by-products using its proprietary process.

Potash shares have traded down from a high last year of 35¢ to as low as 18¢ and have recovered to around 28¢. As further encouragement to this turnaround, research firm Arrowsmith Business and Resources released a December report in which it asserted a fair value range for Potash shares from a low of 77¢ to a high of $3.87.

With 84 million shares on issue, at 28c Potash carries a market capitalisation of just $23.5 million; the Arrowsmith study gives it a net present value of $808 million.

David Haselhurst has written Speculator for more than 30 years.


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