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Minbos Resources Ltd


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Our Investment Summary

Date of Initial Coverage


Initial Entry Price


Returns from Initial Entry


Our Big Bet for MNB

MNB delivers a 10x return by building a profitable phosphate project AND progressing its green ammonia project.

Investment Memo: Minbos Resources Ltd (ASX:MNB) CLOSED

Opened: 11-Mar-2022

Closed: 19-Dec-2022

Shares Held at Open: 4,895,000

Shares Held at Close: 8,645,000

Reason Memo Closed: Highly Material Announcement - Energy MoU signed with Angolan power network for green hydrogen/ammonia project

What does MNB do?

Minbos Resources (ASX: MNB) is sitting on a large phosphate resource in Angola that has the potential to dramatically transform the country’s food security and crop yields.

Phosphate is a key ingredient in fertiliser, and MNB will mine the raw phosphate rock, then truck it to a major Angolan port via existing infrastructure.

At the port, it will be enhanced and sold as a blended product to agricultural distribution networks across the country.

What is the macro theme?

Fertilizer prices rose sharply in 2021 and food security is a major issue as supply chains get squeezed in the pandemic. In a broad-based commodities supercycle, phosphate prices are poised to go higher.

[Memo Assessment - 19-Dec-2022]: Grade = A

Fertiliser and phosphate prices have continued to rise through 2022 with food security an ongoing global issue.

Why did we invest in MNB?

Phosphate prices rising means better DFS

With phosphate prices rising sharply in 2021-22, we expect the upcoming DFS to show improved project economics and eventually re-rate the share price.

[Memo Assessment - 19-Dec-2022]: Grade = B

The DFS showed higher projected project NPV at current spot prices. Rising fertiliser prices helped to improve projected project economics, but given rising inflation, CAPEX figures were also higher than forecast in the earlier Scoping Study (this is the case for every revised DFS we have seen in the last 12 months)
Delivery of the DFS did not markedly re-rate the MNB share price higher, much of which may be attributed to poor wider market sentiment for speculative investments.

Mine construction

The potential for MNB to begin mine construction in late 2022 is a big drawcard. We think that construction commencing would signal to the markets that MNB have gone from explorer to producer which could lead to the market valuing MNB as a far less risky and more established company.

[Memo Assessment - 19-Dec-2022]: Grade = B

Mine construction had actually commenced in early-2022, and while this does help in derisking the project, it has not carried over to the company’s market valuation.

Green ammonia optionality

MNB has recently committed to exploring green ammonia production potential in Angola utilising the ample access to cheap hydro power.

[Memo Assessment - 19-Dec-2022]: Grade = A

A technical study (the basis for a Scoping Study) has commenced and is expected to be completed in six months from September 2022.

Angola’s electricity network operator, RNT-EP, confirmed its support for a long-term hydro-electricity offtake agreement which would ensure crucial cheap and green electricity supply - a key reason for us calling MNB our Wise Owl Pick of the Year.

What do we expect MNB to deliver?

Objective #1: Definitive Feasibility Study and Project Financing

We want to see MNB deliver the DFS to better understand the economics of the project and help move MNB into the financing phase

[Memo Assessment - 19-Dec-2022]: Grade = A

The DFS has been delivered. It forecast strong margins with a significant immediate-term sales opportunity. It estimated a project post-tax NPV of US$203M (base case) to US$400M (at current fertiliser prices) at MNB’s 85% ownership.

This compares to MNB’s market cap of just $58M and is an increase on the NPV of US$159-US$260M in the August 2021 Scoping Study.

Objective #2: Plant Construction and first production

  • With long lead items already ordered and the final environmental permitting expected to be lodged by the end of Q1-2022, we want to see construction commence at both its plant and mine.
  • We will be extremely happy if MNB shares a photo of the first bag of phosphate from the project in 2022, even if its from the commissioning or pre-production phase of the project build.

[Memo Assessment - 19-Dec-2022]: Grade = B

While construction has commenced, first production is now anticipated late-2023, having been pushed back from mid-2022 as was previously anticipated.

MNB still requires fInal environmental approvals for the project.

Seeing first production in 2022 was a long shot, which was reflected in our language on the second point above.

Objective #3: Offtake Agreements or supply MoUs

  • We expect this to be the next step after the DFS is delivered. We expect that as the company looks to source project financing and/or commences construction it will turn its focus to signing offtake agreements.
  • A great result for MNB will be if the offtake agreement is signed/underwritten by the Angolan government. The project was considered to be of “National Importance to Angola” by the government so we think this is a possibility.

[Memo Assessment - 19-Dec-2022]: Grade = C

We await news of offtake agreements and MoUs, but with the phosphate project DFS in hand, MNB is in a much stronger position to sign some deals.

The signing of these deals has now been pushed into our new MNB Investment Memo #2
We gave MNB a “C” grade on this objective however, because it indirectly made progress by bringing on some interesting investors in its last cap raise who are also potential offtakers.

A $15M cornerstone investment into MNB in July was from a syndicate of investors led by the chairman of the world’s largest battery anode producer.

The syndicate is led by Hong Kong based Mr Liang Feng who is also founder and chairman of Shanghai listed “Shanghai Putailai New Energy Technology” which has a market cap of US$18 billion and is the world’s largest anode materials maker for lithium batteries.

In China, lithium-iron-phosphate batteries make up 44% of EV’s, hence the interest from this group in a large stake of MNB’s future phosphate mine.

Objective #4: Green Ammonia progress

We want to see MNB make some more progress with respect to outlining its Green Ammonia strategy. As part of this process we want to see MNB make progress with the sourcing of renewable energy power and to sign technology partnerships for the development of the plant.

[Memo Assessment - 19-Dec-2022]: Grade = B

MNB signed strategic cooperation agreement with a syndicate of investors, Longmarch - led by Hong Kong based Mr Liang Feng - for its green ammonia/hydrogen project to:
- Investigate the availability of hydropower for new green ammonia projects.
- Evaluate/develop potential downstream ammonia products.
- Complete feasibility studies on a large-scale ammonia project.
- Secure financing to fund construction of production facilities and help securing a suitable site
- Secure customers and offtake arrangements for the ammonia products

What could go wrong?

Geographic risk

Whilst MNB has strong government support, there is always a risk of geopolitical instability in this part of Africa. There have been four coups in the last 4 years in the West Africa region. Geopolitical risks form a significant part of MNB’s overall risk profile.

[Memo Assessment - 19-Dec-2022]: Risk = Unchanged

This risk remains, however MNB has made progress in further developing positive relationships with the Angolan government, particularly in regard to securing hydro-electric power for its green ammonia project.

Funding risk

MNB’s project is located in Angola which may make it difficult to attract financing with investors thinking the geopolitical risk is too high to make large CAPEX investments in the country. MNB is approaching a juncture where it will need to look to raise the full upfront CAPEX required to put its project into production which means this is another big part of the risk profile when investing in MNB.

[Memo Assessment - 19-Dec-2022]: Grade = B

The cost to complete construction of the phosphate project was US$52.6M, but with work already underway the remaining CAPEX is US$48.5M.
Of this, MNB requires further funding of US$40M to complete project construction and provide initial working capital.
MNB’s June share Placement (to raise $25M) was paired with a non-binding debt term sheet for a further US$25 million which it may opt to utilise.
While the DFS will certainly help in attracting and securing financing, the geopolitical risk remains a constant.

Commodity pricing

Fertiliser prices could impact the economic viability of MNB’s project. MNB will also need to produce the fertiliser at a low cost to be able to attract interest from domestic purchasers who have for a long time avoided the usage of fertiliser due to affordability issues.

[Memo Assessment - 19-Dec-2022]: Grade = A

Fertiliser prices were trading at record highs in 2022. MNB’s phosphate project is highly leveraged to fertiliser prices. For this reason the project NPV estimate of US$400M using current phosphate prices is around double the base case NPV estimate of US$203M calculated using historical phosphate prices.

As for farmers facing increasing costs of fertilisers, the simultaneous food inflation does offset their higher costs, meaning demand for fertilisers should continue.

Building costs inflation

With construction costs globally increasing significantly over the last 12-24 months, MNB is at risk of being exposed to large cost overruns as it gets closer towards putting its project into development. Cost inflation may also impact project economics.

[Memo Assessment - 19-Dec-2022]: Grade = B

CAPEX estimates were increased in the DFS (to US$52.6M complete construction capital cost) above those in the earlier scoping study (up from US$22.4–27.9M). We assume that at least part of this increase is related to higher building materials costs. This cost inflation was signalled by MNB management ahead of the release of the DFS so were anticipated.

Yet as building costs inflation goes hand in hand with commodity price and fertiliser price inflation, MNB’s forecast margins remain high.

We note that the DFS was completed during a time of extremely high short term inflation, so would be surprised if CAPEX remains as high as indicated.

Also since the DFS, MNB has said that simplifying the phosphate flowsheet would deliver “significant CAPEX savings”.

What is our investment plan?

We have been invested in MNB since August 2020, and in that time they have delivered many key milestones and the share price has experienced two sustained re-ratings.

MNB has been a very successful investment for us so far - we have a free carried position going into the construct and production phase per our plan with all our investments, and we expect further re-rates

Our plan is to hold our position into first production, if the share price nears our 1000% gain target we will likely sell another 20% of our position to take some profit.

[Memo Assessment - 19-Dec-2022]: Grade = B

We executed a Top Slice (sell to de-risk position) in the first part of 2022, and also increased our Investment as part of the 11 cent capital raise in July.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 4,895,000 MNB shares at the time of publication and 1,562,500 MNB options. S3 Consortium Pty Ltd has been engaged by MNB to share our commentary on the progress of our investment in MNB over time.

Investment Memo:

Minbos Resources Ltd (ASX:MNB)


Opened: 19-Dec-2022

Shares Held at Open: 8,644,973

What does MNB do?

Minbos Resources (ASX: MNB) is seeking to build high-margin phosphate fertiliser supply business with the potential to dramatically transform Angola’s food security and crop yields.

MNB is also seeking to develop a green hydrogen/ammonia business powered by cheap hydro-electric power that would cut the reliance on natural gas in producing ammonia, also located in Angola.

What is the macro theme?

MNB is targeting phosphate production for fertilisers, as well as green ammonia for use in fertilisers and in explosives.

These two products each have strong tailwinds supporting high prices and ongoing demand. Fertiliser prices are at near record highs and food security is an increasingly important global issue.

Angola is a potential agricultural powerhouse and MNB is positioning itself as one of the very few local fertiliser product producers in the region.

Green ammonia, used in fertilisers and explosives for mining companies, is to be made with hyro-electric power, reducing the reliance on high priced natural gas and without the carbon footprint.

Why did we invest in MNB?

Short timeline to high-margin phosphate production

Armed with a robust DFS, and with construction underway, we look ahead to first production at MNB’s phosphate project in late 2023. The project is leveraged to fertiliser prices, so the forecast high fertiliser prices and supportive supply-demand dynamics should support the years ahead will work to benefit the project.

Capanda green ammonia project

MNB is exploring green hydrogen / green ammonia production potential in Angola. It is leveraging its support from the Angolan government to ensure access to the country’s local hydro-electric power at what may be the world’s cheapest energy rates.

What do we expect MNB to deliver?

Objective #1: Finalise plant construction and first production

  • With construction underway at MNB’s phosphate project, we look ahead to first production of its phosphate product by the late 2023 target.
  • We want to see MNB secure the required $40M in financing to complete construction.


Secure financing to fund construction completion

Complete construction of phosphate project - targeting late-2023

First production

Objective #2: Offtake Agreements or supply MoUs

We want to see offtake agreements and MoUs signed ahead of initial production - should occur no later than later 2023. A great result would be having an offtake agreement signed/underwritten by the Angolan government. As the project is considered of “National Importance to Angola”, we think this is a possibility.


Enter sales and offtake agreement discussions with Angola’s largest commercial farms

Offtake agreement 1 signed

Offtake agreement 2 signed

Agreements regarding phosphate battery offtakes

Objective #3: Green Ammonia Project progress

  • Technical study is now underway with results expected in six months
  • We want to see MNB sign an Electricity Supply Contract to secure supply of hydro-electric power upon completion of successful studies under the current supply MOU with Angola’s national energy operator.
  • Sign technical, offtake, and investment partners for the development of the proposed Green Hydrogen/Ammonia Project.


Completion of technical study

Sign binding agreement for hydro electricity with Angolan power network operator

Sign technical, offtake, and investment development partners

What could go wrong?

Sovereign risk

MNB has strong and demonstrated Angolan government support — the government wants to make Angola self-sufficient in fertilisers and to increase agricultural production to ensure food security.

However, investing in Africa does bring additional sovereign risk. The country suffers from high levels of bureaucracy and an underdeveloped financial system, as well as corruption, poor infrastructure, ineffective ports, abundant but unskilled labour and high costs on the ground for businesses.

Therefore, being in this part of Africa means that geopolitical risks form a significant part of MNB’s overall risk profile.

Funding risk

While Angola is not appealing to some investors, completion of the DFS should assist in securing any further financing required to complete construction.

In the 24 months leading to the DFS, anticipated construction costs increased significantly with CAPEX estimates of US$52.6M (complete construction capital costs in the DFS) being well above those in the earlier scoping study (US$22.4–27.9M). Yet building costs inflation goes hand in hand with commodity price and fertiliser price inflation, so MNB’s forecast margins remain high.

The DFS estimated CAPEX remaining of US$40M, but MNB has since said that simplifying the flowsheet would deliver “significant CAPEX savings”, while inflation has also moderated since the peak inflation seen at the time of the DFS release.

Commodity pricing

MNB’s phosphate project is highly leveraged to fertiliser prices. As per the DFS, a ~20% increase in fertiliser prices increases the project’s NPV by $60M (current NPV base case is US$203.4M)

The fertiliser spot price has more than doubled in a year and the supply/demand imbalance could still be further stretched. We expect any further fertiliser price rises to further increase the project NPV.

As for farmers facing increasing costs of fertilisers, the simultaneous food inflation does offset their higher costs, meaning demand for fertilisers should continue.

What is our investment plan?

We have been Invested in MNB since taking a position at 3c in August 2020. Since then, MNB hit a peak of 18.5c in March 2022 before the share price began to trend back to its current 8c level after a material 11c capital raise was completed in July.

We executed a Top Slice in the first part of the 2022, but also increased our Investment as part of the 11 cent capital raise.

While the share price is off its peak, we are holding for further re-rates as mine construction is completed, offtakes are signed, phosphate production begins, and progress is made on the green hydrogen/ammonia side of the business.

Our investment plan in MNB Investment Memo #2 is to hold a significant position into first production, if the share price nears our 1,000% gain target we will likely sell another ~25% of our position to take some profit and achieve Free Carry.

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 8,645,000 MNB shares and 1,562,500 options at the time of publishing this memo. The Company has been engaged by MBN to share our commentary on the progress of our Investment in MNB over time.

Investment Milestones for MNB

Initial Investment: @3c
Top Slice
Free Carry
Increase Investment: @8c
Free Carry
Increase Investment: @11c
🔲 Free Carry
🔲 Take Profit
✅ Price increases 300% from initial entry
✅ Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Minbos Resources Ltd

Date Title
02-Jun-2023 $ Friday Stock: Production in sight for MNB, offtake "shortly"?
11-Apr-2023 $ MNB reveals first glimpse of green ammonia project - Financiers now circling
25-Feb-2023 $ 0.130 The ups and downs of the small cap market
23-Feb-2023 $ On the Ground in Angola: Our MNB Site Visit
19-Jan-2023 $ Full Steam Ahead - MNB to assemble fertiliser plant
11-Jan-2023 $ MNB Seals Key Deal with Angolan Government - Fiscal Regime Now Clear
19-Dec-2022 $ Announcing our Wise-Owl 2022 Pick of the Year
21-Nov-2022 $ 0.078 IVZ reaches 10 bagger status, lithium day wrap and more...
17-Oct-2022 $ MNB building phosphate (fertiliser) mine as prices at record levels
30-Jul-2022 $ 0.120 What market crash? Phosphate used in batteries now?
29-Jul-2022 $ It’s phosphate - and MNB has a lot of it
01-Jul-2022 $ MNB Signs MoU with technical partner for 300kmtpa Green Ammonia Plant
28-May-2022 $ 0.145 Share price moves on expected vs unexpected announcements
25-May-2022 $ Green-Hydrogen Ammonia is coming
12-May-2022 $ MNB Planning a Zero Carbon Green Ammonia Plant - Leveraging Angola’s Cheap Hydropower
12-Apr-2022 $ Improved MNB DFS Due in Q3 on Record Fertiliser Prices
12-Mar-2022 $ 0.160 Nickel, the War and Under Investment in Exploration
11-Mar-2022 $ Food security now a key global concern as fertiliser prices just keep rising
26-Feb-2022 $ 0.125 The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
21-Feb-2022 $ 0.135 Why we invest in Oil & Gas and Precious Metals
18-Dec-2021 $ 0.115 Investing 101: Taking Stock of your Stocks and Diversification
11-Dec-2021 $ 0.000 ASX rests pre-Christmas as the market trades on very low volumes
27-Nov-2021 $ 0.155 New COVID strain, Santa Rally, Market Thoughts
06-Nov-2021 $ 0.180 COP26, Battery Metals, Green Energy
30-Oct-2021 $ 0.185 The fallout from the VUL short attack explained
25-Oct-2021 $ 0.200 Lockdown lifts, Two stocks to watch: MNB and ONE
20-Oct-2021 $ 0.180 Three stocks to watch for the next few weeks
16-Oct-2021 $ 0.155 Mainstream media casts a big spotlight on Green Hydrogen
02-Oct-2021 $ 0.130 Evergrand, Gold and Traditional Energy
18-Sep-2021 $ 0.140 Why uranium stocks are soaring, one good movie recommendation
13-Sep-2021 $ 0.130 Quick fire commentary on the six stocks making progress today
04-Sep-2021 $ 0.135 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 0.105 Recap of the KNI IPO and share price run
21-Aug-2021 $ 0.095 Market fluctuations and portfolio news and quick takes
18-Aug-2021 $ 0.089 MNB’s Angola Fertiliser development “a Project of National Importance”
14-Aug-2021 $ 0.091 Bookmark it, a new Pick of the Year is coming next week
31-Jul-2021 $ 0.090 Quarterly Reporting Season and other news from our portfolio stocks
26-Jul-2021 $ 0.092 In Depth: Phosphate Price remains above highest predicted price in MNB’s scoping study
17-Jul-2021 $ 0.084 Cash is King, Gold Stocks and Enough of VUL and EMN
03-Jul-2021 $ 0.080 End of Financial Year, and what happened to 88E's share price?
26-Jun-2021 $ 0.067 June tax loss selling is behind us, KNI IPO expected in August
25-Jun-2021 $ 0.052 Phosphate Price Surges above Highest Prediction in MNB Scoping Study
12-Jun-2021 $ 0.065 What did our investments do this week? CPH, ONE, TMZ, 88E and more...
28-Apr-2021 $ 0.094 Zero Carbon Ammonia? What happened last night?
27-Apr-2021 $ 0.073 Our Portfolio Performance from January 1st to March 31st 2021
25-Mar-2021 $ 0.090 MNB: Licence Granted, Placement Digested
18-Feb-2021 $ 0.105 We Just Invested More in this Stock ... ... plus what's happening with VUL and EXR?
11-Feb-2021 $ 0.076 MNB Adopts Global ESG Standard while Phosphate Prices Surge
27-Jan-2021 $ 0.077 MNB “Seals the Deal” with Angolan Government
07-Jan-2021 $ 0.037 Our Stock Picks for 2021
14-Dec-2020 $ 0.038 The Most Undervalued Stock In Our Portfolio
11-Nov-2020 $ 0.040 EMERGENCY INFO: Read if you Invested in Minbos
19-Oct-2020 $ African phosphate project set to improve crop yield
26-Aug-2020 $ 0.040 Introducing Our Latest Portfolio Addition: $11M Capped ASX Stock Unlocking Food Security in Africa