American Pacific Borates (ASX:ABR) share price pops following latest presentation

The American Pacific Borates share price jumped after the company’s latest investor presentation was released. Here’s a closer look.

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The American Pacific Borates Ltd (ASX: ABR) share price is up 3.53% to $1.76 at the time of writing, following the release of the company’s investor presentation

American Pacific Borates is a global speciality fertiliser producer. The company’s Fort Cady Borate Mine in California is a resource where boric acid, gypsum and potassium sulfate (SOP) will be produced for the North American specialty fertiliser market as well as new high-end technologies like electric vehicles and space shuttles.

American Pacific is also developing the Salt Wells Borate and Lithium Projects in Churchill County, Nevada, USA.

What are borates and why are they important?

According to American Pacific, boron is classed as a strategic commodity in many countries including the US.

Borates are the naturally occurring minerals which contain boron. American Pacific points out that plants need boron to grow and humans consume borates through food. 

Most globally produced borates come from mining colemanite, borax or kernite ore. The company’s Fort Cady pursuit mines colemanite.

Boron is used for modern car mechanisms like ceramic brake pads and touch screens. It also plays a role in fibreglass insulation and nuclear reactors.

American Pacific states that renewable energy technologies such as wind turbines and solar PV modules cannot be built without boron.

Investor presentation highlights

In its presentation, American Pacific detailed that it is expecting to sell five key products. Boric acid for industrial use, boric acid for agricultural use, SOP, “boron-enriched” SOP and gypsum.

SOP is a potassium sulfate speciality fertiliser that combines potash and sulfur.  The company states that there is a demand for SOP in the US because of how it benefits crops. For example, crop trials using boron-enriched SOP delivered a doubled yield in broccoli. Gypsum is another sulfate mineral that is also used in fertiliser. 

American Pacific splits the revenue streams of the business as a value driver. The current split is estimated to be 52.6% boric acid, 44.7% SOP and 2.7% gypsum.

Current post-tax, unlevered net present value (NPV) was reported as US$2.02 billion.

The company posted an earnings before interest, tax, depreciation and amortisation (EBITDA) of US$453 million and has set its EBITDA target for Phase 3 of its Ford Cady project to A$6.64 billion. 

American Pacific’s cash at bank balance as of 31 January 2021 was $64.3 million.

American Pacific share price snapshot

On current prices, American Pacific has a market capitalisation of $637.7 million. The company’s shares are up 17% in 2021 so far, and over the previous 12-month period, the American Pacific share price has climbed over 277%.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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