Why Savvy Investors Are Watching This Key Mineral

April 25, 2018 - OilPrice.com


The World’s population keeps getting bigger. Multi-millions in Asia are joining the middle class, and they are demanding the same luxuries westerners have taken for granted for decades.

It’s pushing the world’s food infrastructure to provide more and more and more.

To make matters worse - climate change has been destroying arable farmland at the fastest rate in human history. We now need to grow more with up to 30 percent less land.

If humanity is going to survive - it will need millions of tons of a little known mineral called potash.

Companies like Vatic Ventures (TSXV:VCV; OTC:VTTCF) aim to be the ones to deliver it. Right now they’re sitting on a promising property in Thailand’s Khorat Basin.

Thailand is home to what could be one of the largest undeveloped, high-grade potash plays on Earth. And, Vatic’s project? You’ll find it right beside the potentially $1.8 billion Dan Khun Thot find.

As potash prices rise - here are 5 reasons you should pay attention:

1) Rise Of The Asian Middle Class
2) The Largest Undeveloped Potash Region On Earth
3) Next Door To Major Import Markets
4) Properties Adjacent To A $1.8 Billion Find
5) The Thai Potash Dream Team

How The Asian Middle Class Is Driving Potash Prices

The world population keeps growing. We’re adding 200,000 people every single day - with an expectation of 7.7 billion hungry mouths by 2020.

It’s plunging the world into an ever growing need for higher quality, more plentiful food.

With the rise of the new Asian middle class - it’s about to get a lot worse. For companies like Vatic Ventures (TSXV:VCV; OTC:VTTCF), that represents an enormous opportunity.

Consider this: According to a 2017 study by the Brookings Institution, 88 percent of the next 1 billion people to enter the middle class globally will be Asians.

The size of the Asian middle class is expected to reach 3.5 billion people by 2030.

The problem? We’re running out of land suitable for growing food. In fact, scientists say that over the last 40 years the world’s lost one-third of its arable land due to erosion and pollution.

More and more potash is needed to maximize the crop yields.

That’s why demand for potash is soaring - with annual consumption expected to grow from 60 million tons to 70 million tons by 2020Prices could go soaring without major new sources of potash coming on stream.

And that’s good news for Vatic (TSXV:VCV; OTC:VTTCF).

Potentially The Greatest Undeveloped Potash Play On Earth

Thailand’s Khorat basin potentially holds the world’s largest undeveloped high-grade potash resources. It contains the only known, commercially viable deposits in Asia, not far from Vatic’s own property.

The potash is located within a 100 million year-old layer of rocks known as the Maha Sarakahm Formation - with resource intervals that are 10-75m thick.

Vatic Ventures (TSXV:VCV; OTC:VTTCF) has a property right in the middle of it, and right next door to a project that potentially holds $1.8 billion worth of potash, based on numbers from the Dan Khun Thot project.

Many deposits in the region are shallow, at 150 to 350 meters. That’s compared with up to 1,900 meters in Russia or Canada - making them more economical to develop.

Not only that, but exploration costs in the area are lower compared to other projects.

A Massive Logistical Edge

Not only does Thailand have potentially the world’s largest undeveloped high-grade potash resource in the Khorat Basin, it’s also smack dab in the middle of Asia’s biggest import market.

Some of Asia’s top importers of potash are Thailand, Malaysia, Vietnam and Indonesia.

These four countries consume about 75 percent of Asian potash imports (excluding China and India) and have a current demand exceeding 5 million tons of potash annually.

What’s more, that figure is expected to rise by at least 5 percent a year.

Vatic (TSXV:VCV; OTC:VTTCF) - with two very exciting licenses in the Khorat basin - stands to play a key role in supplying the region’s growing demand for fertilizer.

“Location is the key to this,” says Nasim Tyab, Executive Director of Vatic, “because potash is sold by the ton so there is at least a $1.8 per ton transportation advantage to sell into the Asian market compared to overseas potash.”

That’s a huge savings when you consider the cost of potash itself in South East Asia is about $300 a ton, as the region pays a premium on imports compared to the world price of about $230 per ton.

Even at today’s potash prices, Vatic aims for good profit margins. With prices expected by many to rise - they’re leveraged to the market.

And, they’re sitting on one of the most promising projects in the region.

The Crown Jewel Of The Khorat Basin

In January 2017, Vatic (TSXV:VCV; OTC:VTTCF) acquired 80% of the issued and outstanding shares of a Thai company - Saksrithai Development Co. Ltd.

Saksrithai holds two contiguous Special Prospecting Licenses (SPLs) covering an area of 32 km² in the Khorat Basin, for the exploration of potash.

The properties are right next door to the Dan Khun Thot project, which hasan initial potash mining reserve in excess of 100 million tons.

Their find is worth $1.8 billion at current market prices.

More importantly? At a potash grade of almost 22 percent KCL - the Dan Khun Thot project has better economics than most proposed potash projects.

Production levels are projected to start at 500,000 tons per year.

Why is that so compelling for Vatic?

Because initial review of the seismic data demonstrates their neighboring Saksrithai Project has structural continuity with the Dan Khun Thot property.

In February 2017, Vatic commenced the first phase of its exploration program.

Phase 1 of the project, with a budget of $1.5 million, includes the completion of a pre-feasibility study and estimation of a ‘potash resource’.

“In fact, the allowed spacing between drill holes is 4 kilometers, so basically there is a very high probability we are going to hit potash.”

Another reason to expect success? Just look at the team Vatic has put together.

Thailand’s Potash Superstars

Nasim Tyab has been Director since 2011. When it comes to the nascent potash industry in Thailand, few are as knowledgeable as he is.

Before joining Vatic (TSXV:VCV; OTC:VTTCF), Tyab served as a consultant in the Udon Thani Potash Project - developed by Asia Pacific Resources in the mid-1990s.

That project turned into Asia’s most significant commercial potash discovery to date - shooting the company’s market cap to nearly $1 billion.

After that game-changing discovery, in 2016 the CEO of Asia Pacific asked Tyab to join him in
another Thai-based potash project – which was then sold to Vatic Ventures.

“So, in January 2017 I did the deal with him and he became CEO of Vatic,” Tyab said, “and he had this project and rolled it in for shares and now he is aligned with the shareholders.”

That venture is the Saksrithai Project and the new CEO of Vatic is Dr. Gerald Wright.

Dr. Gerald Wright has been CEO and a director of Vatic since 2017.

He served as CEO of Asia Pacific Resources Ltd. for 12 years, during which time he was directly responsible for the acquisition, financing and development of that company’s Udon Thani project – Asia’s most significant commercial potash discovery to date.

Together they’re betting Vatic’s (TSXV:VCV; OTC:VTTCF) Saksrithai Project will eclipse it.

Conclusion

With a rising Asian middle class hungry for Western levels of consumption, and rapidly shrinking arable land - the world needs a lot more potash.

Vatic’s Saksrithai project in the Khorat Basin is right beside a potential $1.8 billion resource, and just a stone’s throw from massive potash import markets.

In May, Vatic is kicking off a drilling program.

According to Vatic Executive Director Nasim Tyab - “that should be a value transformation because if we get what next door has, we have a very valuable asset.”

If they hit near the grades that are found next door at Dan Khun Thot - they would be imminently undervalued. Vatic (TSXV:VCV; OTC:VTTCF) is one to watch.

Other companies investors have an eye on as commodities boom:

Teck Resources (TSX:TECK.B): Zinc hasn’t been Teck’s best friend of late, but that looks set to change in the medium term, as supply continue to dwindle and as we hear news that the world’s top producer of the metal—Glencore—isn’t planning to bring shuttered mines back online. Supply will remain tight.

Teck Resource’s vast array of commodities, however, make it an ideal investment as geopolitical tensions rise.

Endeavor Silver (TSX:EDR) operates three silver-gold mines in Mexico, but it’s also got three attractive development projects. Production has dropped, and all-in sustaining costs have risen, leading to a negative cash flow. But the company has significantly reduced its debt, so its future is anything but bleak.

In 2018, with development in the pipeline, this stock might become prohibitively expensive again because there is plenty of near-term growth potential here. It’s also got further upside with zinc and should get a boost in this coming bull market. Catalysts include positive reserve estimates for its fifth mine, the Terronera silver/gold project in Mexico’s Jalisco state.

Eldorado Gold Corp. (TSX:ELD): This Canadian mid-cap miner has assets in Europe and Brazil and has managed to cut cost per ounce significantly last year. Due to a steep loss in 2016, the company saw its share price tank in 2017. Analysts, however, are getting bullish on this stock again as gold prices are rising.

Eldorado is quite a long way from its highs, leaving plenty of upside potential for investors. After reshuffling their board, the company is beginning to look a lot more attractive for those looking to get a piece of a tried and true gold company.

Dominion Diamond Corporation is a Canadian-based diamond powerhouse that became one of the industry's heavyweights after the purchase of Ekati mines from BHP Billiton (NYSE: BHP) in 2012 and sale of its Harry Winston retail business. The company currently produces nearly 7 million carats of diamonds from its two mines, which are some of the largest in the world.

At a market cap of just $1.6 billion, DDC is much smaller than the other diamond bellwethers on this list. DDC shares are up an astounding 72 percent over the past 52 weeks, though the stock has a remarkably low beta for a company its size. Analysts expect the company's earnings to nearly double over the next 2-3 years, which explains the strong rally. At current share prices though, a lot of the growth appears to be already baked in, which might limit near-term upside potential.

First Quantum Minerals (TSX:FM) is a Canadian mining company specializing in copper. While copper may be the company’s primary focus, it also owns several gold, cobalt, and zinc producing mines. First Quantum operates mines and development projects all over the world, including Australia, Africa, Spain, Finland, Turkey, and Latin America.

First Quantum has a market value of over $13-billion, and analysts are becoming increasingly bullish about the company.

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Forward-Looking Statements

This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that the Thailand potash resource will prove as large and as high grade as hoped; that the potash reserves can be mined; that Vatic will have sufficient funds to develop the potash fields to the point of profitability; that the price for potash will rise; that the Thai project will be able to produce potash as currently scheduled; that Vatic’s potash will enjoy lower costs to market; that Vatic’s exploration and operating costs will be lower than other potash projects; that the potash when produced by Vatic will be high quality suitable for standard use; and that Vatic will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that Vatic may not get Thai approval for its mining, production and sale/export of potash; Vatic may not be able to pay the costs of development; aspects or all of the property’s development may not be successful, production of potash may not be cost effective as expected; there is substantial political risk in Thailand, which have the potential of harming production and assets or having assets expropriated; Vatic may not raise sufficient funds to carry out its plans, changing costs for extraction and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and resource recoveries assumptions based on limited test work with further test work may not be viable; world potash prices may drop; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the potash reserves are not proven or cannot be economically produced on its properties, or that the required permits to build and operate the envisaged facilities cannot be obtained. Currently, Vatic has no revenues. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.

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