Establishing mines Companies find that investors are skeptical about how fertilizer prices will rise in the future
(Reuters) — Capital-strapped small fertilizer companies in Canada are shuffling their senior executive ranks to draw investors in a period of weak prices.
Stonegate Agricom Ltd., which is developing a phosphate mine in Idaho, said chief executive officer Mark Ashcroft resigned, the latest change at the top among small players in the sector. Others that have installed new senior executives this year include Canada’s Arianne Phosphate and Karnalyte Resources Inc.
Fertilizer values are rising off the floor prices reached earlier this year, but their upside looks limited, Rabobank said in a report.
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Stonegate’s parting with its CEO was mutual, said co-chair Ian McDonald, who will carry out CEO duties on an interim basis with co-chair Kerry Knoll.
“Nobody’s having any parties because nobody’s happy, but there’s been no pressure here based on Mark’s performance,” McDonald said.
Stonegate stock is down nearly one-third for the year.
The company has tentatively arranged most of its financing for the low-capital, $120 million Paris Hills phosphate project, but has not yet lined up a committed, long-term buyer, which is a key condition.
Earlier this month, Arianne Phosphate, which is developing a mine in Quebec, said that Brian Kenny, an engineer by trade, had resigned as CEO but would stay on as a consultant to cut capital and operating spending.
Executive chair Pierre Fitzgibbon, a former investment banking executive, took over the job of finding a strategic partner or investor to buy the company.
“I think this (stage) requires a different type of leadership,” Fitzgibbon said.
In August, Karnalyte Resources made Tom Drolet’s title as CEO permanent, dropping his acting status.
He replaced Robin Phinney, the company’s founder, in May.
“My opinion is the bottom is in” fertilizer markets, Drolet said.
“But what we don’t know is the slope up, so that’s the prevailing reason why at times like this companies say, ‘are there any changes you want to make?’ ”
The company is seeking financing to build a potash mine in Saskatchewan.
“Whether you’re looking for a corporate investor or acquirer, or you are relying on the good graces of the market to finance, right now it’s definitely a tough slug,” said Brian Ostroff, managing director of Windermere Capital, which holds shares in Arianne and Stonegate.
Ostroff is also a director of Arianne.
“You can’t have a one-size-fits-all management team” for early-stage mining companies, Ostroff said.
“Quite honestly, if a management team doesn’t change over, to me that’s actually a little alarming.”
