ARTICLES

Kore

Mining exploration ventures are typically very high risk and difficult to evaluate. This is especially true if the venture is located in a country which has a history of being politically volatile and unpredictable. Kore Potash (KP2) is such a company. It is attempting to bring a massive potash deposit in the Republic of Congo (ROC) into production.

Potash is the essential ingredient of fertilisers required for many crops. It is in demand to boost crop productivity as the world’s demand for food grows. 

Back on 29th January 2019, Kore announced the completion of a definitive feasibility study (DFS) done by a consortium of French engineering companies. The DFS showed an internal rate of return (IRR) of 17% at a price of $350 to $360 per ton generating a free cash flow from the operation of about $500m per annum. The average operating cost is under $62 per ton.

Since that study was done, the potash price has declined to about $286 per ton, but with Kore’s two deposits (Kola and Dougou) able to produce at prices around $62 per ton the operation remains immensely profitable.

The problem is that these deposits are located in the ROC which is dominated politically by the 81-year-old Denis Sassou Nguesso who is a virtual dictator. This makes the investment of capital to exploit the potash deposits potentially highly risky.

From an investment perspective it is also very difficult to accurately evaluate both potential of the potash deposits and the political developments in the ROC. Kore is still in a development phase. It is not producing anything yet and so is unprofitable. It is being sustained by raising capital and has listings on the Australian Stock Exchange (ASX) and the JSE.

In its latest financial statements for the six months to 30^th June 2024 the company reported a loss of $528 636 – and cash in the bank of $959 956. The company is negotiating with the Power Construction Corporation of China to obtain further funding.

Considering all these factors, the primary reason that we added KP2 to the Winning Shares List (WSL) was technical. We observed a strong On Balance Volume (OBV) buy signal on 15^th May 2024. Such a signal occurs because of a large increase in volumes traded with a small increase in price. It shows that an insider is mopping up all the loosely-held shares available in the market.

Every company has insiders who are usually people in senior management with access to privileged information about the company’s prospects. Inevitably, some of these insiders will use that information to trade the share to their advantage before key information is made public. Thei activity shows up in the OBV chart and the observant private investor can sometimes use it to generate a significant capital gain. Consider the chart:

There are three charts here which all use the same timeline on the X-axis. The top chart is a standard candlestick chart of daily price action. The middle chart is an OBV chart, and the bottom chart is a histogram of the daily volumes traded.

The first point to note it that prior to 15^th May 2024 the volumes traded were relatively low. For example, our calculations indicated that in the 30 trading days to 14^th May 2024 (Tuesday), an average of 854 476 shares were traded each day. The next day (Wednesday 15th) a massive 8,432 million shares changed hands. Accompanied by a jump in the price, this immediately triggered a strong OBV buy signal and we acted on that to add the share to the WSL.

Since we added KP2 to the WSL it has risen 250% to 70c per share. This gives it an annualised return of over 600%.

Now clearly, KP2 is not a blue-chip share. It has no profit history and subsists on capital that it raises from a variety of sources. Despite this, it has given astute  private investors the best single stock opportunity on the JSE for many, many years.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

Kore Revisited

Kore (KP2) remains at once the most exciting and most risky investment on our Winning Shares List (WSL) at the moment. We originally added it to the list just over a year ago on 16^th May 2024 at a price of 20c. It subsequently rose to a high of 83c on 3^rd October 2024 and we published an article

Rand Strength 2025

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s

The Creation of Money

The money supply of a country is a symbol of the goods and services of that country. Obviously, if the size of the money supply is increased more rapidly than the real growth of its economy, then you have more money chasing the same goods and services, resulting in rising prices. Since, over the long term, the only organisation that can create money is the government,

V-Bottom is likely

The 10% collapse of Wall Street, which is a direct result of Trump’s random policy of on-again, off-again tariffs, is very similar to what happened to Wall Street in February/March 2020 when investors tried desperately to accurately discount the impact of the COVID-19 pandemic.

Normally, corrections in the market

The Trump Correction

It is relatively unusual for the activities of American presidents or what they say to have an impact on the New York Stock Exchange, especially during their first 100 days in office. Trump, however, is the exception. His confused, on-again, off-again rulings on tariffs have rattled the market. Markets hate uncertainty and even Trump himself doesn’t appear to know exactly