Agoracom Blog

Potash Corp ($POT) “On The Prowl” To Acquire Legend International ($LGDI)?

Posted by AGORACOM at 8:52 AM on Saturday, October 25th, 2008

According to this excerpt from the October 24th Metals Morning Note from Salman Partners, Potash Corporation of Saskatchewan is “On The Prowl” as depressed equity prices have provided significant acquisition opportunities.

Specifically, Salman believes AGORACOM client Legend International Holdings is a likely target given its ability to provide Potash Corp with an entrée into Indian markets.


AGORACOM members and readers of my blog won’t find this news to be surprising when you consider the company’s fundamentals and some of its investors.  First, on the latter point, Reuters recently reported that George Soros, via Soros Fund Management, has taken a 5.19% stake (11.7 million shares) in AGORACOM client Legend International Holdings (LGDI: OTCBB).

On October 17, his stake in LGDI was increased to 10.18%

Second, if you are looking for reasons behind both the Soros investment and Salman’s call for an acquisition by Potash Corporation of Saskatchewan, take a look at the following.


LGDI caught the attention of markets when these significant results were released from a scoping study on its phosphate projects in Queensland, Australia.  Quite frankly, these are the biggest numbers I have ever seen , the highlights of which are included below:

The scoping study was conducted by British Sulphur, a division of CRU International. They prepared initial project capital and operating costs assuming sale prices for phosphate of US$100 per tonne fob, US$200 per tonne fob, US$300 per tonne fob and US$400 per tonne fob.

In March 2008, sales of Moroccan product at US$400 per tonne fob Morocco were recorded. Phosphate isn’t priced on a daily market like gold or soybeans, so you have to take actual market transactions.

Based on $US 400/tonne:

  • Annual Gross Earnings – $US 1.7 Billion
  • 5 Million Tonnes Of Production Per Year
  • Historically Defined Phosphate Deposits of 1.463 billion tonnes
  • At $300 Per Tonne, Annual Gross Earnings – $US 1.2 Billion
  • At $200 Per Tonne Annual Gross Earnings – $US 700 Million
  • Phosphate Prices Driven By Global Agricultural Demand For Fertilizer
  • CAPEX Of $826 Million To Construct Infrastructure

Given the gravity of these figures, I also think it is important to note the producers of the Scoping Study to make sure it is reliable. The British Sulphur Consultants Division of CRU Group has been the leading business consultancy in the fertilizer and inorganic chemical sector for over 50 years. British Sulphur was the first supplier of information to the fertilizer industry, and remains the largest provider of services to the industry.


On July 16th, LGDI and IFFCO, announced this landmark agreement.

IFFCO is India’s largest fertilizer enterprise, a cooperative with over 50 million farmers associated with it, primarily engaged in production and marketing of nitrogenous and phosphate fertilizers in India. IFFCO has five fertilizer plants in India with a domestic annual capacity of producing 4.3 million tonnes of phosphatic fertilizers and 4.2 million tonnes of nitrogenous fertilizers.


If LGDI is good enough for George Soros, Salman Partners can’t be too far off on its belief that LGDI is a potential acquisition target for Potash Corp.


3 Responses to “Potash Corp ($POT) “On The Prowl” To Acquire Legend International ($LGDI)?”

  1. john says:

    Legend has very large capital expenditure to start mining Also large holder like Soros and Gutnick. a more likely target without the big controlling shareholders or the big Capex is Minemakers. Larger phosphate reserves sitting right next to the main road and existing railway to Port. At current prices market cap $US30-40M

  2. AGORACOM says:

    Thanks bigphos. I copied and pasted from a past post but forgot to include our own update!

    Update now made.



  3. bigphos says:

    Please check your facts.Last week Soros Funds filed and now own just over 10% of Legend.