Copy
View this email in your browser

Clean Seed Capital cited as a leading agricultural investment opportunity and featured on

Today on Stockwatch, a leading financial portal that provides online subscribers with real-time quotes, trades, and market depths for publicly-listed companies, sent an article to its subscriber list titled, “You Can’t Eat Gold: The AgLetter Identifies 3 Agricultural Investments”.

The article cites Clean Seed Capital (TSX-V: CSX) as a leading agricultural investment opportunity. 

The Clean Seed section below also contains a link to an in depth article authored by Tom Wallace -  "Clean Seed Capital: The iPhone of Agriculture" - Click here to read.
I'm Tom Wallace, the publisher and editor of The Agletter. I'm a successful natural resource investor who specializes in the agricultural sphere. My research covers a plethora of agricultural sub industries ranging from agri-mineral miners to farm machinery producers. I've spent significant time in the middle east, Australia and New Zealand where I currently reside. I know you'll get value from the research I present to you, as it's absolutely free. You can receive each edition of The Agletter by signing up to my mailing list at www.agletter.com.

Today I'm going to share 3 of the companies in The Agletter portfolio with Stockwatch Subscribers. I'll start with a company that is backed by some of the most successful natural resource investors in the world.

1) Focus Ventures (TSX-V: FCV)

Focus Ventures is a Canadian junior mining company with a giant Phosphate deposit, the Bayovar 12 concession, located in the nutrient rich Piura region of Peru. The company also happens to be my favorite agricultural play.

Focus caught my eye for a number of reasons, but the main factor that led me to begin my research on the company was the successful record of the company's founder, Simon Ridgway. Simon is serially successful mining entrepreneur, being the founder of Fortuna Silver Mines, Cordoba Minerals, Medgold Resources and Radius Gold Inc.

There is a rough guide for success in the mining industry, being that about 1 in every 3000 deposits end up becoming mines. Many of the 3000 deposits fulfill every requirement to be a profitable mine, but the companies that own them lack one important feature. That feature is high quality people running the company.

Following people who have a track record of success in the industry, is by far the easiest way to:

A. Not lose money.

And.

B. Make a lot of money.

In a commodity bear market, losing money is something that the majority of natural resource investors will achieve. There are on the other hand, a few people who actually manage to increase their wealth during the downturn and be positioned for the spectacular results that follow the turning of the market.

I'm of the opinion that Focus Ventures is going to be one of the natural resource companies that rewards investors, so let's have a look at the company:

Deposit size:

Table 1: Summary of Resource, Beds 1-13
The Bayovar 12 concession is 12,575 hectares in size. The initial resource estimate was based on the phase 1 drill results that were taken from a 650 hectare portion of the property. Phase 2 of the drilling program has since been completed and has expanded the estimated resource by several kilometers in both directions. All the drill results will be incorporated into an updated 43-101 resource estimate as part of the PEA study that is currently underway.

I believe there is a very good chance that this concession is host to a world class phosphate deposit, given the consistency of the grades that have been achieved thus far. Only a fraction of the property has been drilled so I eagerly await the updated 43-101 to confirm my thoughts.

The neighboring concessions are host to:

A. The Bayovar mine (Mitsu, Vale, and Mosaic): 415.9 million tonnes of 15.5% P205

B. Hochschild, Mitsubishi and Zuari: 130 million tonnes of 17.5% P205

The size and quality of the neighboring mines adds support to my thesis.

Simple Production Process:

One option for production being considered by Focus is that of a Direct Application Phosphate Rock fertilizer. This type of Phosphate product requires very little processing and the CAPEX for an operation like this is a significantly reduced when compared with a conventional acidulation concentrate production facility. An example of the simplified production process is as follows:

Open-cut mine > Sizing and Screening > Dryer/Separator > DAPR product to market

Mining-Friendly Jurisdiction:

Peru has a very attractive legal and tax regime. The country is also politically and financially stable. It is one of the most mineralized countries in the world and has numerous free trade pacts.

Logistically Sound:

Focus' partner in the Bayovar 12 project, JPQ, owns a port approx. 30 minutes' drive from the Bayovar 12 project. The port has previously exported Gypsum and Phosphate so all the logistical mechanisms are in place for Focus to bring its Phosphate to market. There is also a deep water container port located 130km from the project and this opens up a whole new world of export opportunities for Focus.
Target Markets with Proven Appetites:

The company is aggressively targeting markets in Argentina, Brazil, Peru and Central America, along with exploring opportunities in California and New Zealand. The Latin American agricultural boom is fueling an insatiable demand for organic fertilizer, a trend that Focus aims to capitalize on.

Superior Product with a High Margin:

Recent sales of DAPR within Latin America range from $110 to $185 per tonne. The high margin of the DAPR product is a result of the simple processing procedure. The PEA due out in the not too distant future will detail the estimated operating costs for the Bayovar 12 project. Similar projects have margins ranging in the 30-70% region and I suspect Focus will be a highly profitable enterprise given the simple mining process and the short distance to transport.

Followed by Experts:

Several newsletter writers cover the company and it receives a lot of exposure due to being part of the Gold Group of companies.

Institutional and Insider Ownership:

Sprott Global is the premier natural resource investment fund and they are a large holder of the company (around 17%). There are also several other highly successful natural resource investors and hedge funds that have a stake in Focus' success. It's very important for the retail investor to leverage the due diligence that is done by institutional backers. Insider ownership stands at around 10% with Simon being a frequent buyer of the stock in the public market. Insiders putting their own money on the line in a commodity bear market is a very common trend that successful companies exhibit.

Access to Capital:

Since 2003, the Gold Group companies (Focus Ventures being one of them) have raised over $400 million for exploration and development projects. Focus recently closed a $4 million dollar private placement and has significant institutional backing as previously mentioned.

Price:

The company is currently trading at C$0.22 with 97,888,554 shares outstanding.

Summary:
·         World class deposit (highly likely with the further expansion of the resource base).
·         Simple mining process - No drilling or blasting required.
·         Simple processing - Washing and sizing to produce a concentrate.
·         Mining friendly jurisdiction.
·         Premium pricing - Recent DAPR sales in Latin America and Canada range from C$110 to C$185 per tonne.
·         Logistically sound - Two ports, 40km and 130km with good road access.
·         Target markets with proven appetites - Argentina, Brazil, Peru and Central America.
·         Ability to penetrate new and lucrative markets - California and New Zealand.
·         Superior product with a high margin.
·         Followed by experts.
·         Heavy institutional and insider ownership.
·         Access to capital.
·         Most importantly - A play on successful people.

Focus is by far my favorite investment in the agricultural sector. It's a play on successful people, both that of company management and the institutional owners of the company. I would encourage any potential investor to visit my website and read the full article on Focus Ventures as it is quite comprehensive.

For additional information on Focus Ventures, you can visit the company website at www.focusventuresltd.com.
2) Clean Seed Capital Group (TSX-V: CSX)
 

Clean Seed Capital Group is a Canadian seed drill manufacturer and a TSX Venture 50 company. The company has developed and patented a revolutionary high precision seed drill that utilizes the Terra Glide planting system that minimizes the tilling of the soil.

The Design:

The engineers who designed the CX-6 Smart Seeder came out of the Auto Industry. This is very important because they were able to look at the issues that the current generation of seeders cause, analyze them from an outsiders perspective with none of the agricultural industry bias then formulate a solution. The current generation of seed drills utilize technology that is over 30 years old, well past its used by date. This dated technology cannot deliver the precision planting that modern agronomy demands and Clean Seed was able to capitalize on this demand through the development of the CX-6 Smart Seeder.
What Separates the CX-6 from the Competition?

·         Seed stored in individual canisters 1.5 feet from the gravity delivery mechanism that treats the seed gently eliminating bunching and seed stress.
·         Seed metered from each and every row so an infinite resolution can be achieved, eliminating overlap and miscounting.
·         Delivery motors move independently so when turning corners, product is uniformly distributed.
·         Each unit contains a pod. In each pod there are 6 canisters than can contain a separate product enabling the ability to deliver up to 6 different types of product per foot of the 60 foot seeder without unloading the seeder and replacing the seed.
·         Complete data logging enabling the review of every foot of the field to see the distribution of each individual product.
·         Wireless connectivity and management from the cab.
·         On the go refilling.
·         Modular construction - easy to replace individual canisters and pods.
Strategy:

Management is cognoscente of the fact that growth in the agricultural industry is driven by acquisition. They have strategically placed themselves through the acquisition of patented equipment, in a very attractive position. The majors (John Deere, Case International, New Holland) know their technology is out of date and there is only so much they can to do improve it. To survive and compete in this industry, the majors have to either develop or acquire the new technology that farmers want.

Over the coming months, the sales contracts will begin to materialize as farmers traditionally put down 50% of the purchase price to order, then the remaining 50% on delivery. There will be extensive demonstrations of the CX-6 throughout the dealerships and the news will spread quickly amongst the farming community that there is a new technology that far exceeds the reliability, cost and results of anything that is currently on the market.

Progress:

On the 23rd of April 2015, the company released news that they had finalized an agreement with WS Steel to manufacture the CX-6 Smart Seeder. The current arrangement is for WS Steel to manufacture 100 CX-6's over the next 3 years. WS Steel is investing significant capital into its own facilities in preparation for the manufacturing of the units.

On the 28th of January 2015, the company announced a distribution agreement with Rocky Mountain Dealerships. Rocky is one of Canada's largest agriculture and construction dealership networks. The agreement is for a renewable period of 3 years beginning in 2016 and Rocky will manage exclusive sales territories with agreed upon sales commitments.

On the 8th of April 2015, Clean Seed announced that they had entered into a distribution agreement with Cervus Equipment Corp. Cervus has interests in 75 dealerships throughout Canada, New Zealand and Australia. Cervus also represents John Deere, Bobcat and JCB equipment. The agreement is for a renewable period of 3 years starting in 2016 and will be managed with agreed-upon sales commitments.

Price:

The company is currently trading at C$0.48 cents with 35,514,566 shares outstanding.

Summary:

Clean Seed's CX-6 Smart Seeder is like the I-Phone of the agricultural sector. The technology is revolutionary, patented and will be looked back on as a pivotal point in the evolution of agricultural equipment. The opportunity to gain a substantial return on investment within a relatively short time period makes Clean Seed Capital Corp an excellent investment for the educated speculator.
·         Strong management with directly applicable experience in farming and agriculture.
·         Patented technology with a 20 year monopoly.
·         Attractive 40% profit margin on the CX-6 Seeder.
·         Tight share structure - Fully Diluted: 45,828,126
·         2 issued patents - opener technology and metering.
·         17 patent claims pending for the CX-6 Smart Seeder - world wide WIPO.
·         Manufacturing agreement.
·         2 distribution agreements.
·         Huge inside ownership - 40%.
·         Revolutionary technology.
·         Family has $3 million invested.

You can view the full article on Clean Seed Capital Group here.

For addition information, visit the Clean Seed Capital Group website at www.cleanseedcapital.com.
3) DuSolo Fertilizers (TSX-V:DSF)

DuSolo Fertilizers is a Canadian listed Phosphate mining company with its flagship mine and production facility, the Bomfim project, located in the Cerrado agricultural region of Brazil. The company went from explorer to producer in a lightning fast pace due to the exceptional skill of the management team.

Deposit:
DuSolo has identified further mineralization past the area of the initial resource estimate. It's highly likely that the resource estimate will be greatly expanded when an updated 43-101 is released in the 2nd half of 2015, that includes the drill results of the 2015 drill program.

Production and Sales:

The company has secured sales contracts of 81,100 tonnes of Phosphate worth $8.5 million for the upcoming planting season and the production facility is on track to produce at least 100,000 tonnes in 2015. Management has submitted an application to increase the production quota from 100,000 to 200,000 tonnes.
Competitive Advantage:

DuSolo is in the very fortunate position of being the only Direct Application Natural Fertilizer producer within 500km. Their Bomfim production facility is surrounded by farms and DuSolo is able to provide a quality fertilizer product at a significant discount to imported alternatives because there are no transport costs involved. The DANF is a high margin product as the production process is a simple and cost efficient. There are 585 farms and agricultural centers that surround the project and the company management is stacked full of people with experience in Phosphate mining.

Price:

The company is currently trading at C$0.20 cents with 130,294,385 shares outstanding.

Summary:

DuSolo has positioned itself to capitalize on the growth of the booming agricultural powerhouse that is Brazil.
·         Strong management and technical team with Phosphate specific experience.
·         Excellent relationships with the government and local populace.
·         No domestic competitors, opportunity to grab a massive market share.
·         60% profit margin.
·         Essential product - No substitute.
·         81,100t in confirmed sales contracts, more on the way.
·         High-grade deposit with compelling fundamentals for further expansion of resource estimate.
·         Excellent margin of safety - Low cost producer trading near 52 week low.
·         Cash flow positive, self-sufficient with no need for financing.
·         Ongoing exploration program - Management deploying capital directly into the business.
·         15% insider and institutional ownership.
·         Potential take-over target.
·         Most importantly - A team comprising individuals who have previously made money in Phosphate.

You can view the full article on DuSolo Fertilizers here.

For additional information, visit the DuSolo Fertilizers website at http://dusolo.com.

About The AgLetter

The AgLetter is an agricultural investment newsletter written by Tom Wallace that brings investors information and analysis on the most promising companies within the agricultural sphere.
Share
Share
Forward
Facebook
Facebook
YouTube
YouTube
Email
Email
Website
Website
Copyright © 2015 Clean Seed Capital Group, All rights reserved.


unsubscribe from this list    update subscription preferences