Gensource Potash

The global population is increasing rapidly. Yet there is a finite amount of land to grow crops to feed it. So demand for fertilisers is tipped to surge in a bid to boost yields.

The outlook is especially strong for potash too, a key ingredient in the yield-boosting material. This is why I’m considering adding Gensource Potash (LSE:GSP) shares to my portfolio.

The business is developing the Tugaske mining project in Canada, from which the business hopes to begin extracting material in 2024. It has plans to produce 500,000 tonnes of potash a year, a target it hiked from 250,000 last year, owing to the market’s favourable outlook.

As well as boosting yields, potash has allows farmers to use water more efficiently. The latter is especially important as climate change creates drier landscapes.

Investing in Gensource presents higher risk than buying shares in larger miners. Development issues at Tugaske could create large, unexpected costs that add extra stress to its balance sheet. And this penny stock doesn’t have the financial might of say a Rio Tinto to help it overcome any problems.

Yet I still believe this stock is an attractive buy today. The quality of its Canadian asset, allied with bright forecasts for the potash market, could lead to explosive profits growth here. BHP has predicted that global potash demand could double between the late 2010s and late 2040s.

Aura Energy

A fast-growing world population — allied with strong economic growth in emerging regions — means that energy consumption is also set to rocket. Yet fossil fuels are unlikely to plug the supply and demand gap as governments accelerate green policy.

This provides a huge opportunity for UK shares that provide renewable energy or alternative fuels. It’s why Aura Energy (LSE:AURA) is also on my shopping list today.

The company’s flagship asset is the Tiris uranium project in Mauritania where it hopes to start production next year. The site has been subject to recent resource upgrades and is now said to contain 29.6m pounds of the radioactive material. This was up 52% from prior estimates.

Nuclear energy remains a controversial topic. And so the building of a new global fleet of reactors to meet growing power demand is by no means certain.

Yet as countries try to cut oil and gas use — in response to the climate crisis and to reduce their reliance on Russian imports — there appears to be little choice but to increase nuclear output. This is one reason why the International Atomic Energy Agency reckons nuclear energy will account for 14% of total electricity by 2050. That’s up from 10% today.

And Aura, with its uranium-producing assets in Africa and Scandinavia, could be well placed to meet this growing demand. If Sweden lifts a uranium mining ban there — a position that lawmakers are edging closer towards — this penny stock could soar in value.

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Andrada Mining

Digging for commodities can be a problematic and expensive process right from the exploration phase. Junior miners are especially vulnerable to setbacks as they don’t have broad mine portfolios or strong balance sheets to absorb trouble at one or two assets.

But I believe the possible benefits of owning Andrada Mining (LSE:ATM) shares could outweigh the risks. This is because demand for the lithium, tantalum, and tin that it produces in Africa is projected to soar as the electric vehicle and consumer electronics markets boom.

The quality of Andrada’s flagship Uis mine in Namibia also makes the company a great investment in my book. The company has described the asset as “a globally significant lithium and tin resource” and this month upgraded its lithium resource estimates there to 587,000 tonnes. This was up 30% from prior forecasts.

Staffline Group

Recruitment and training business Staffline Group (LSE:STAF) trades on a price-to-earnings (P/E) ratio of just 10 times today. As someone with a great love of value stocks, I’m considering adding it to my portfolio right now.

Recruiters like this can see profits tumble during economic downturns. When company profits come under pressure, hiring activity can freeze. Yet this penny stock’s focus on the more resilient temporary employment market could cushion this blow.

In fact, Office of National Statistics data this week suggests Staffline could remain busy as the cost-of-living crisis endures. It showed 113,000 economically inactive people returned to work between October and November.

Staffline’s revenues could also rise if unemployment increases and demand for its training services increases. A surge in the number of people seeking to change career in this post-pandemic landscape could also fuel income here.

Gensource Potash

Gensource Potash (LSE:GSP) has significant appeal to me as a long-term investor.

The increasing global population means that demand for food is also trekking higher. Furthermore, improving wealth levels in emerging markets is also rapidly boosting consumption for edible goods. This means that sales of potash — a key ingredient in fertiliser production — are also rising.

Encouragingly for investors, Gensource has ambitious plans for its Tugaske potash project in Canada. Late last year the business hiked its production capacity target to half a million tonnes of material a year.

Now there is some uncertainty surrounding financing of the mine’s development. Last month chemicals giant Helm withdrew its 33% ownership offer for the company Gensource has created to run Tugaske (KClean Potash). The penny stock said this was due to “an unappealing risk-return ratio for new investors”.

But I still believe the potential long-term benefits make the small cap a compelling buy. Indeed, the bright outlook for the potash market means sourcing capital from private equity may not be an obstacle.

The post 3 penny stocks I’d buy for my Stocks & Shares ISA today! appeared first on The Motley Fool UK.

But buying smaller companies like these can also turbocharge an investor’s wealth. Profits growth can be extremely rapid and, by extension, share price increases can also be stratospheric.

I don’t have unlimited reserves of cash to spend on UK shares. But here’s a cluster of top penny stocks I’m considering buying this year. I think their profits could soar over the long term.

Gensource Potash

A soaring global population means that maximising crop yields is becoming increasingly important. A recent study suggests that total food demand will grow 35-56% between 2010 and 2050 as the number of mouths to feed increases.

This provides an enormous opportunity for mining businesses like Gensource Potash (LSE:GSP). This AIM-quoted business owns the low-cost Tugaske potash asset in Canada. Last year, it announced plans to double annual fertiliser production capacity to 500,000 tonnes a year during the second phase of the mine’s development.

First supply is scheduled to come online in 2024, and the business has the financial backing of chemicals giant Helm AG to get the project off the ground. Under the deal, Gensource will supply product to the German company for 10 years.

Mine development is highly complex and expensive business. And any setbacks between now and first production could wallop Gensource’s earnings. But this is a risk I’d be prepared to take, given the bright demand outlook for its essential product.

Everyman Media Group

Like Cineworld, cinema chain operator Everyman Media Group’s (LSE:EMAN) share price has been slipping of late. This reflects the gloomy near-term outlook for the box office as the cost-of-living crisis endures. Box office takings look highly uncertain as people tighten their belts.

But I think Everyman could be an attractive dip buy at current prices. It isn’t on the brink of extinction like Cineworld. And the company offers a more complete leisure experience for moviegoers, an important weapon in the fightback against streaming services like Netflix and Amazon’s Prime.

Visitors can enjoy a drink at the bar or a savoury bite before or after their movies. They can also catch up with special events and screenings of independent as well mainstream films. These are the sort of things that will encourage people to leave their sofas.

It’s possible that takings at Everyman could perform better than expected too. This is because of a strong schedule of movies this year following a weak 2022.

A string of hot releases — including fresh chapters in the Indiana Jones, Mission: Impossible, John Wick and Spider-Man franchises — could all court massive ticket sales in spite of the cost-of-living crisis. I’m seriously considering buying Everyman shares before this potential upturn.

The post 2 penny stocks I’d buy to hold for 15 years! appeared first on The Motley Fool UK.

Gensource Potash (LSE:GSP) is a Canadian mineral fertiliser company developing a project in the province of Saskatchewan — one of the world’s leading potash hubs.

Feed the world

So, what is potash and why is it important? Well, potash is a natural fertiliser that contributes to healthy plant growth.

It has become indispensable to crop farmers around the world, and with the global population expected to reach 10 billion in 2050, potash demand is only going one way.

Earlier this year, potash prices more than doubled to $562 per tonne following Russia’s invasion of Ukraine. This is because of Western sanctions on Russia and Belarus, countries that previously supplied 40% of the market.

From this, it’s clear to me that there is immediate and long-term value to be extracted from investing in a vibrant global potash player.

Gensource Potash

A bona fide penny stock currently trading at 22p in London, Gensource has developed a vertically integrated business plan delivering potash direct from its Tugaske project to its offtake customer HELM AG.

Gensource envisions building a series of smaller scale, low-cost production modules. Tugaske in Saskatchewan is the first of those, with estimated operated costs of just CA$85.08 per tonne.

CEO Mike Ferguson recently said that construction of Tugaske will commence later this year, and in June the company and its offtake partner revealed plans to double production to 500,000 tonnes per year in the face of soaring fertiliser prices and constrained supply.

A higher production rate at Tugaske and higher wholesale potash prices implies significantly improved margins compared to the 17.1% post-tax IRR Gensource forecasted at the previous rate of 250,000 tonnes.

The construction period at Tugaske could last up to two years, so I still have plenty of time to invest before the company starts hitting those healthy profitability margins.

But I’ll be doing so sooner rather than later because Gensource won’t be a penny stock forever, in my opinion, given future potash demand projections and the company’s modular growth plan.

Potential downsides

However, one figure in the industry doesn’t think potash prices will stay high for much longer. Last month, Brazil Potash president Adriano Espeschit said prices will ‘normalise’ by 2023 as more supply comes online.

Either way, Gensource is protected from wholesale price volatility via its offtake with HELM. The agreement provides a pricing mechanism tied to the retail price of potash, which historically comes in at a sizeable premium to wholesale pricing.

A final point I’ll be bearing in mind is the escalating cost of energy and how this could negatively impact Gensource’s margins once they start mining from the Tugaske project.

Overall, though, I am going to invest in Gensource while the stock is still cheap, as the growth potential is something I don’t want to miss out on!

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