Potash player Davenport looks to Europe because it’s not feeling the love in Oz
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Davenport Resources is considering a European listing because Australian investors aren’t taking much notice of the Germany-focused potash explorer.
In the past year, Davenport’s (ASX:DAV) share price has more than halved from a high of 17c to trade at around 6.8c.
The company has now appointed London-based Bacchus Capital Advisers as its corporate adviser.
Davenport says it has noticed a recent increase in interest from European investors as it progresses its plans to develop a “significant potash business” in Germany’s South Harz Basin.
“Sitting here in Australia, not a lot of money is going to look at a small Aussie company with all its assets in Germany,” executive director Chris Bain told Stockhead.
“It’s just not flavour of the month. So we have to look at ways of tapping ultimately into European investors.”
Davenport is aiming to reinvigorate the South Harz region as a globally significant potash producing region.
“Europe is still a net importer of potash,” Mr Bain said.
“Germany has got a very long history of potash mining and is still up there in the world as a major producer.
“It just makes an awful lot of sense to go there, taking a view that it’s an essential commodity in an area that has got the history and got the need.”
Potash comes from salts that contain potassium in water soluble form. It is used as a fertiliser.
There are two commonly used fertilisers – muriate of potash (MOP) and sulphate of potash (SOP).
MOP, which Davenport will eventually be producing, is the most common (around 90 per cent of the world’s potash) and is used on a variety of crops.
However, the more chloride-sensitive crops like avocados, coffee beans and cocoa require SOP – which fetches $US270 per tonne more than MOP.
The global potash market is estimated to be around 75 million tonnes.
Demand is set to increase as the global population grows to around 8 billion by 2023.
Greg Cochran, the boss of Pilbara potash explorer Reward Minerals (ASX:RWD) told Stockhead this week that an extra 100,000 to 150,000 tonnes of potash will be required each year.
Sticking with Oz
Although Davenport is considering a European listing, the company does plan to remain listed on the ASX.
While Davenport is looking at all the options, Mr Bain said a listing on the Frankfurt Stock Exchange might be a likely outcome.
“Many small Australian companies have effectively done compliance listings in Frankfurt. It’s not going to be a deep market, but it might be sensible at some time in the not too distant future to list there and at least raise awareness even if it doesn’t raise turnover or capital.
“At least then people know you exist and you’ve got a German project and your listed in Germany.”