It is very unusual to interview a company executive twice in a month, but Farhad Abasov’s Millennial Potash (MLP.V) has put out a revised Mineral Resource Estimate for it Banio Potash project in Gabon which has completely changed the scope of the project. Headline numbers,
“Measured + Indicated Resource is up by 275% and Inferred Resource is increased by 210% at its Flagship Banio Potash Project: Measured + Indicated Mineral Resources of 2.45 Billion Tonnes at 15.6% KCl and Inferred Mineral Resources of 3.56 Billion Tonnes at 15.6% KCl”
I reached Abasov in London, where he was at the 121 conference. He’d had 24 meetings with buy-side investors in two days.
“The MRE came out in time for us, just in time to be able to speak freely with these investors,” said Abasov. “When we got the numbers, we were surprised, shocked really. We were expecting around 3 to 3.5 billion tons; we got 6 billion tons in total Measured, Indicated and Inferred.”
At 15-16% KCl, 6 billion tons of total M+I+I works out to roughly a billion tons of contained potash. Which is a lot.
“The resource expanded based on the results from two new drill holes,” said Abasov. “Our first two holes from the 2024 drill program were constrained because about 40% of the resource drilled was under the lagoon and inaccessible. The two new holes discovered resources which are entirely on land. The other thing about the new holes is that the potash layers are 50% thicker than the layers we drilled last year.”
“The grade has been consistent, basically the same 15-16%,” said Abasov. “We are seeing grade continuity; it is the thickness which is increasing.”
The majority of the mineralization (95%) is carnallitite, which grades 15.4% KCI, the rest is higher-grade sylvinite grading 24.3% KCI. I asked Abasov how this compared with, say, Saskatchewan potash. “It’s lower grade but we have much thicker horizons,” said Abasov. “In Saskatchewan, you see 20-meter-thick horizons. At Banio, we are seeing 100 plus meter horizons. Which makes our prospective operations significantly cheaper.”
“Compared to other potash operations, we’ll have a lot less CAPEX,” said Abasov. “And our OPEX will be significantly lower because we’ll only need 10-15 caverns to hit our planned 800,000 tons per year. Our 100-meter-plus horizons mean we will have fewer, thicker, caverns than other potash mines and those caverns will be productive for ten to fifteen years.”
Perhaps as importantly, Millennial has really just begun exploring Banio. “We’ve drilled no more than 5% of the property,” said Abasov. “You can get a sense of the scale from our new presentation.”
That scale is important because, from a larger perspective, Banio is profoundly underexplored, and the extraordinary results reported in the revised MRE are based on drilling in what may not be the most prospective part of the licence. The fact is that the grades are consistent, but the horizons are wider as drilling goes further south on the property.
“We have historic data from drill holes all the way down to the border with Congo,” said Abasov. “The drilling was for oil and gas exploration back in the 1970s. They were not looking for potash, but the drill records show they found potash horizons 200 meters thick.”
We turned to next steps and I mentioned I thought I had seen that the US Government’s initial grant of 3 million dollars towards a bankable feasibility study included a right of first refusal to fully fund the CAPEX of the Banio project. But I could not find the reference.
“The initial agreement does include a right of first refusal to lead project financing for our 500 million CAPEX,” said Abasov. “There are a lot of details to be worked out and in the next few weeks we’ll be sitting down with the US Development Finance Corporation to discuss those details.”
“Compared to other potash mines, Banio has a fairly small CAPEX. With the possibility of the US Government funding part or all of the CAPEX and a low OPEX we are looking at the option of funding and building the mine ourselves,” said Abasov. “We have shareholders who don’t want to sell.”
“It is all about value maximization,” said Abasov. “If we were offered a huge premium? Well, we will obviously bring that to our shareholders to consider.”
“It’s too soon,” said Abasov. “We still need to build value in the project by derisking it further”
Abasov had 24 meetings in London with buy-side investors, funds, large operators, and they were all impressed with the revised MRE. Millennial has 17 million dollars in the bank, its warrants representing several more million, are all in the money. The company is in the middle of preparing its bankable feasibility study largely funded by what is effectively a grant of 3 million dollars from the US government. It has a drilling program planned for next year which will take the drills further to the rich layers of potash to the south of the property.
Millennial can afford to complete its programs and maximize the value of the Banio project before either exiting or funding and building the mine itself.
The market loved the new MRE. The day before the MRE press release, Millennial traded at $2.40, today it traded at $3.15, up $0.75 in three trading sessions. Volume is strong. Investors seem to be confident that, whichever direction Millennial takes, management is committed to maximizing shareholder value.