MNB Adopts Global ESG Standard while Phosphate Prices Surge
Email Sent On: 11-02-2021
One of our favourite investments, Minbos Resources (ASX:MNB) has hit the market with two pieces of news in the last 24 hours.
MNB is developing a phosphate (fertiliser) project in Angola with a 6 million tonne mining target and a 21 year mine life.
The company is also working with the International Fertilizer Development Centre to develop education programs to small holder farmers, utilising its phosphate fertiliser to increase crop yields.
Investing in companies with positive social and environmental impact has provided by far our biggest returns to date - ESG is becoming an inevitable global movement.
MNB has a market cap of just $27M, and is moving closer to project development. In our opinion, this makes MNB one of the stocks in our portfolio most leveraged to upside.
News 1: Phosphate Prices are Surging
MNB has a phosphate resource. MNB is building a phosphate mine. Phosphate prices are surging.
This is good for MNB.
- December 2019 - US $248 /tonne
- August 2020 - US $328 /tonne
- February 2021 - US $497 /tonne
That’s a doubling of prices in just over 12 months...
What does this phosphate price surge mean for MNB?
We are long term holders in MNB because their recent Scoping Study indicates just US$27M CAPEX to get to production with an After Tax NPV of between $159M and US$260M. (See page 47 of Scoping Study.)
According to MNB’s calcs on project sensitivity to phosphate price, if this price trend continues to $643 / tonne then the After Tax NPV will increase to $343.7M (from a $25M capex).
Not bad for a $27M market capped company.
News 2: MNB announces adoption of global ESG reporting standard
If you have been living under a rock for the past six months, you may not have heard that there is a global flood of capital to environmentally, socially and governance (ESG) focused companies.
Global fund managers, high net worth family offices and millennials are now actively seeking to invest exclusively in ESG companies.
Today, MNB has announced the adoption of this same ESG framework so they can best tell their story to international ESG investors.
Other ASX companies that have adopted this same ESG framework have risen significantly in the last few months, including our other portfolio company Vulcan Energy Resources (ASX: VUL), who last week raised $120M from ESG investors after their share price rose thousands of percent.
MNB’s ESG goals are multi-faceted in sub-Saharan Africa:
- Improve food security and nutrition
- Decrease levels of poverty
- Mitigate the impacts of climate change on farmers.
Where to next
With improving phosphate prices and one of the strongest ESG stories on the ASX, we are anticipating ESG funds could come knocking on MNB’s door in the coming months.