Millennial Potash: The World's Next Low-Cost Potash Producer

• Millennial Potash has a 1.7 billion ton indicated and inferred potash resource in Gabon from just 2 drill holes, with significant expansion potential.
• The preliminary economic assessment shows very low operating costs of $61/ton (vs $90-100/ton for major producers) and strong project economics.
• The company aims to initially produce 800,000 tons per year, potentially sold in the West African and South African markets.
• Millennial Potash plans to complete a definitive feasibility study and environmental permitting by end of 2025 to reach a construction decision.
• The experienced management team has a track record of successfully developing and exiting potash and lithium projects.

As global populations rise and diets improve in developing countries, the long-term demand outlook for potash fertilizer remains robust. Millennial Potash (TSX-V:MPO) is a Canadian company rapidly advancing the Banio potash project in the West African country of Gabon. 

Interview with Chairman Farhad Abasov

Massive Resource With Expansion Potential

Millennial Potash's Banio project hosts an impressive potash resource of 1.7 billion tons in the indicated and inferred categories. Remarkably, this substantial resource was delineated from just two drill holes combined with historical exploration and seismic data, highlighting the potential to significantly expand the resource with additional drilling. As Millennial's Chairman Farhad Abasov explained in a recent interview,

The potential is huge because those two drill holes cover only barely 2% of the entire property and the property is over 1,200 square kilometers.

Potash deposits like Banio tend to be very thick, high-grade, and continuous, allowing resources to be estimated from relatively few drill holes compared to other commodities.

It is so continuous that you can actually trace it back to 20 km away from the current drill holes based on historical data.

With two additional holes planned, Millennial aims to double the resource to provide enough measured and indicated tons for a bankable feasibility study.

Potential For Lowest Quartile Operating Costs 

Beyond the large resource, what makes Banio stand out is its potential to be one of the lowest-cost potash mines globally. The project's preliminary economic assessment (PEA) outlines very compelling economics, including operating costs of just $61 per ton. In comparison, the largest potash producers in Canada, Belarus and Russia have costs in the $90-100/ton range.

Even if we're off by 50%, we're still going to be close to that. It  is the most important thing about this project and that is possible because of very thick potash horizons - we're looking at over 70 meter thickness.

The project's location and access to infrastructure are also key advantages. Banio is just 50 km from the coast of Gabon, with two port options for exporting production. A new port is being built specifically for resources like potash, while an existing one is being expanded. Additionally, the project will have access to Gabon's low-cost natural gas for its energy needs. These factors should enable Millennial to maintain a very competitive cost structure.

Fast-Tracking to Production 

Millennial Potash is aggressively advancing Banio with the goal of completing a definitive feasibility study (DFS) and environmental permitting by the end of 2025. To derisk the project, the company is taking a dual-track approach of preparing to build the mine while engaging with potential strategic investors and acquirers.

In the next few months, Millennial aims to bring in a large strategic investor, which could be a private equity group, a multilateral development finance institution, or an off-taker.

With offtakes, we don't really want an offtake without any kind of financing component or funding to it. The offtake will come with a significant financial commitment on the part of the offtaker.

This type of strategic investment would fund the DFS and provide a vote of confidence in the project.

Proven Management Track Record 

Millennial Potash is led by an experienced management team with a history of successfully developing and monetizing potash and lithium assets. Chairman Farhad Abasov and the core Millennial team have worked together for 17 years, an unusual level of continuity in the junior mining sector.

They've delivered impressive shareholder returns in the past, taking Millennial Lithium from a $30 million market cap to a $490 million sale to Lithium Americas after a bidding war. Prior to that, they developed and sold several potash projects.

This team knows how to efficiently advance projects, demonstrate value, and negotiate favorable exit transactions. According to Abasov,

Our model is pretty straightforward. We develop these projects on what we call a dual-track basis so one is to make sure that we can actually take it all the way to production... The second track, we basically want to make sure that we get potential interest from an acquirer... Generally speaking, the plan is to take it to the point where we can make a decision after the feasibility study - do we sell or do we actually go to project financing and start construction?

Favorable Jurisdiction 

Gabon has proven to be a very mining-friendly jurisdiction for Millennial Potash. The country is quite familiar with foreign investment from its well-developed oil and gas industry and is keen to diversify into mining. Gabon overhauled its mining code to attract investment and has been highly supportive of Banio's development.

We've seen very strong support from the government there. We've met with His Excellency the President, and he has visited the site.

Notably, Gabon is geopolitically neutral and open to investment from both Western and Eastern countries. This provides Millennial flexibility in choosing financial and strategic partners and avoids overreliance on any one region. The project's environmental footprint should also be minimal, as it will utilize an eco-friendly solution mining method similar to Millennial's past projects.

The Investment Thesis for Millennial Potash:

• Exposure to a huge 1.7B+ ton potash resource with expansion potential from just 2% of property drilled
• After tax NPV₁₀ of $1.08 Bn, and after-tax IRR of 32.6%
• Potential to be one of the lowest-cost producers globally with operating costs of $61/ton (vs. $90-100/ton for major producers).
• Fast-tracking project with feasibility study and permitting targeted by end of 2025
• Proven management team with track record of developing and exiting potash/lithium projects
• Flexible jurisdiction open to investment from multiple regions
• Offtake and strategic investment expected in near-term to fund feasibility
• Dual-track development approach of moving to production while engaging with potential acquirers
• Favorable supply/demand fundamentals for potash from rising global food needs

Macro Thematic Analysis:

The long-term demand outlook for potash remains compelling, driven by global mega-trends of rising populations, limited arable land, and improving diets in developing countries.

Potash is a critical fertilizer nutrient that increases crop yields and is vital for food security. While the potash industry is dominated by a handful of large producers, it remains an attractive space for new entrants that can leverage strategic assets and experienced teams.

In terms of biggest importers globally, Brazil is the largest importer of potash, importing about 13 million tons of potash per year, followed by the US and China at about 10 million tons each.

With a massive, low-cost resource in a favourable jurisdiction, Millennial Potash is well-positioned to meet this rising demand.