Exploring Atlas Salt as a Defensive Stock Opportunity

By Patrick Davis

Published:

Disseminated on behalf of Atlas Salt Inc. ValueTheMarkets, a trading name of Digitonic Ltd., was compensated by Atlas Salt Inc two hundred and sixty thousand US dollars starting 4th November 2024 for a period of 4 weeks until 30th November 2024 to produce and disseminate this content. Digitonic Ltd. does not own a position in Atlas Salt Inc.

In this article

Salt is a non-cyclical and truly defensive investment, and an efficient salt mine drives incredible long-term free cash flow. That's why Atlas Salt stands out.

Salt in container on ship ready for export to international markets.

Newfoundland-based Atlas Salt Inc. (TSX.V: SALT) (OTCQB: REMRF) is on a path to sustainable revenue through a strategic offtake agreement with Scotwood Industries. The agreement allocates approximately 50% of Atlas Salt’s production to the Canadian retail market1. This news is great for Atlas as it aims to capitalize on its prime location and drive long-term revenue growth.

With salt's non-cyclical nature and strong demand stability, Atlas Salt’s efficient production model positions it as a defensive investment, offering the potential for reliable long-term cash flow even during times of economic uncertainty.

Atlas Salt CEO, Rick LaBelle, commented:

Since I joined the Company, I’ve been focused on opportunities in the retail market, where supply is more predictable, and margins are generally higher. Atlas is excited to work with Scotwood Industries, the largest packaged retail de-icing business in the United States, on a mutually beneficial strategic offtake and joint venture to provide tailored packaged salt solutions for the Canadian marketplace, by leveraging Atlas Salt’s high-quality, made-in-Canada salt and Scotwood’s brand strategy, industry expertise and reputation for superior customer service.

Introducing The Great Atlantic Salt Project

Atlas Salt’s flagship asset is its Great Atlantic Salt Project, which contains an estimated 860 million tonnes of high-purity Rock Salt2 and stands out for multiple reasons.

  • A product with stable prices and increasing market demand.

  • The first new underground salt mine in North America in over 20 years. 

  • A world-class resource set in a strategic location close to key markets. 

  • An innovative design that will use the latest, state-of-the-art mining technology. 

  • A focus on sustainability, with extremely low greenhouse gas emissions.

  • 50% of its production is already allocated to a strategic offtake agreement.

  • The potential to provide a $4.8 billion boost to regional GDP.

Notably, Great Atlantic is well positioned to become the new “Gold Standard” of salt mines in North America due to its shallowness, homogeneous nature and accessibility through inclined ramps vs. vertical shafts.

As the first new salt mine in eastern North America in more than 20 years, the Great Atlantic should benefit immensely from new technology and its close proximity to a deep-water port and high-voltage hydroelectric power. Situated in a mining-friendly jurisdiction, it is also close to the Trans Canada Highway, with existing roads connecting to the project, further facilitating convenient access.

Is Atlas Salt the Answer to Reducing Dependence on Imported Salt?

Eastern North America imports around 18 million tonnes of road salt annually3. With growing concerns over supply chain disruptions, fluctuating transportation costs, and geopolitical risks, Atlas Salt offers a cost-effective domestic alternative. Its Great Atlantic Project aims to reduce import dependence, ensure safer roads and support winter economic activity.

Envisioning the success of The Great Atlantic Salt Project is easy when considering its incredible combination of innovative mine design and compelling project economics. It’s also backed by a leadership team with proven success, presenting a very strong investment proposition.

Discover all you need to know about Atlas Salt's plans to secure North America’s domestic road salt supplies with our in-depth ONLINE REPORT.

How is Atlas Salt Paving the Way for a Greener Future in Mining?

Another reason Atlas Salt stands out is its determination to be transparent and green from the project’s outset to delivering salt around 20304. According to a feasibility study, The Great Atlantic Salt Project is projected to be one of the world’s lowest greenhouse gas (GHG) emission mining projects. Indeed, the operational GHG emissions of 79 tonnes annually is comparable to the emissions of the annual carbon footprint expected from just four Newfoundland families of four5.

Investors, stakeholders, and the public increasingly demand transparency in understanding the GHG emissions associated with products from their point of origin. This detailed tracing allows them to assess the environmental impact of their investments or purchases. 

Atlas has already selected Sandvik Mining and Rock Solutions as its preferred equipment supplier and integrated project delivery partner6. Their battery-electric fleet plans include continuous miners, haul trucks, scooptrams, and an AutoMine® system with tele-remote and autonomous operation6.

Sandvik will also provide battery management to minimize downtime, aligning with Atlas Salt's goal to reduce its environmental footprint. Furthermore, Sandvik has offered a non-binding $73 million financing arrangement for the equipment and services, pending final purchase documents and due diligence6.

Additionally, the mine’s adaptive infrastructure and modular expansion capability underscore its ability to grow, with minimal re-work required to achieve expansionary goals to 4.0 million metric tons per annum (Mtpa) of production2.

Can a Modern Approach Give This Mine an Edge Over Competitors?

Atlas’s planned use of ramps is not only a time and money saver but offers much greater flexibility in operation. Ramps are simple to construct and maintain, adaptable to varying geological conditions, safer, and ultimately scalable. Indeed, the use of inclined ramps, along with continuous miners and battery-electric truck haulage, provides Atlas Salt with a significant advantage over aging competitor mines.

Atlas Salt aims for long-term success in the mining sector. The project’s extensive inferred resources total 868 Mt2, and the leadership team realistically expects to extend the mine's life beyond 34 years2.

What Economic Impact Will This Salt Project Have?

Jupia Consultants Inc. recently conducted an economic impact assessment on behalf of Atlas Salt7. Their findings show that the Great Atlantic Salt Project will provide substantial economic advantages to Newfoundland and Labrador with a $4.8 billion boost to regional GDP and long-term job creation contributing $2.5 billion in employment income to the province. This project establishes Atlas Salt as a major private-sector investment in southwestern Newfoundland.

David Campbell, President, Jupia Consultants Inc., remarked:

The Great Atlantic Salt Project, represents a generational investment in southwestern Newfoundland, bringing substantial economic benefits and sustaining hundreds of high-paying jobs and associated economic benefits in the province on an annual basis over at least a three-decade period. The $4.8 billion boost to provincial GDP over the 34-year Project life will be felt by everyone in Newfoundland and Labrador.

Is a $1.1B Valuation Within Reach as the Project Progresses?

A Feasibility Study, carried out by SLR Consulting (Canada) Ltd8 valued the project at over $550 million (after-tax NPV at 8%) with an 18.5% after-tax Internal Rate of Return (IRR) over a 34-year mine life. Indeed, as the project progresses and is further derisked, using a 5% discount rate, the valuation jumps to $1.1 billion. 

Atlas Salt's prospects are strengthened by historical mining industry M&A activity and consolidation in the salt sector. De-risking strategies support an expansion case, offering the potential for increased production, project life and enhanced financial returns.

The feasibility study and a greenhouse gas (GHG) emissions survey confirm the Great Atlantic Salt Project's viability, and once operating, robust economics, strong free cash flow conversion and infrastructure support potential expansions. This Tier 1 asset focuses on sustainability with low GHG impact. It has passed its environmental assessment with conditions, lined up equipment financing, and started pre-construction.

Given salt's essential role and consistent demand, Atlas Salt’s domestic supply advantage and ability to displace foreign imports reinforce its potential as a defensive investment, offering stability alongside promising growth prospects.

Sources:

  1. Atlas Salt. Atlas Salt and Scotwood Industries Sign MOU for Strategic Salt Production Offtake & Canadian Joint Venture for Packaged Salt and Related Products. August 20, 2024. https://atlassalt.com/atlas-salt-and-scotwood-industries-sign-mou-for-strategic-salt-production-offtake-canadian-joint-venture-for-packaged-salt-and-related-products/

  2. Atlas Salt. Corporate Presentation: A unique & differentiated story. September 2024. Retrieved from https://atlassalt.com/

  3. Atlas Salt. Market Opportunity. https://atlassalt.com/market/

  4. Atlas Salt. Atlas Salt Announces De-risked Development Schedule for the Great Atlantic Salt Project. August 12, 2024. https://atlassalt.com/atlas-salt-announces-de-risked-development-schedule-for-great-atlantic-salt-project/

  5. Statistics Canada. Map 1 Household greenhouse gas emissions per capita, by province and territory, 2021. December 20, 2023. https://www150.statcan.gc.ca/n1/daily-quotidien/231220/mc-c001-eng.htm

  6. Atlas Salt. Atlas Salt Enters Strategic MOU with Sandvik Mining and Rock Solutions for Underground Mobile Equipment Supply, Including $73 Million Financing. September 9, 2024. https://atlassalt.com/atlas-salt-enters-strategic-mou-with-sandvik-mining-and-rock-solutions-for-underground-mobile-equipment-supply-including-73-million-financing/

  7. Atlas Salt. Great Atlantic Salt Project to Provide Significant Economic Boost to Newfoundland and Labrador and Canada. July 23, 2024. https://atlassalt.com/great-atlantic-salt-project-to-provide-significant-economic-boost-to-newfoundland-labrador-and-canada/ 

  8. Atlas Salt. SLR Amended NI 43-101 Feasibility Study for the Great Atlantic Salt Project. May 1, 2024. https://atlassalt.com/wp-content/uploads/2024/05/SLR-20240501-Atlas-Salt-Great-Atlantic-NI-43-101-FS-AMENDED.pdf

Explore more on these topics:

Share:

IMPORTANT NOTICE AND DISCLAIMER

PAID ADVERTISEMENT

This communication is a paid advertisement, ValueTheMarkets is a trading name of Digitonic Ltd, and its owners, directors, officers, employees, affiliates, agents and assigns (collectively the “Publisher”) is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by Atlas Salt Inc to conduct investor awareness advertising and marketing and has paid the Publisher the equivalent of two hundred and sixty thousand US dollars starting 4th November 2024 for a period of 4 weeks until 30th November 2024 to produce and disseminate this and other similar articles and certain related banner advertisements. This compensation should be viewed as a major conflict with the Publisher’s ability to provide unbiased information or opinion.

CHANGES IN SHARE TRADING AND PRICE

Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to adversely affect share prices. Frequently companies profiled in our articles experience a large increase in share trading volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in share trading volume and share price may likely occur.

NO OFFER TO SELL OR BUY SECURITIES

This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security.

INFORMATION

Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position.

This communication is based on information generally available to the public and on an interview conducted with the company’s CEO, and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher does not guarantee the accuracy or completeness of the information. Further, the information in this communication is not updated after publication and may become inaccurate or outdated. No reliance should be placed on the price or statistics information and no responsibility or liability is accepted for any error or inaccuracy. Any statements made should not be taken as an endorsement of analyst views.

NO FINANCIAL ADVICE

The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser or a financial adviser. The Publisher has no access to non-public information about publicly traded companies. The information provided is general and impersonal, and is not tailored to any particular individual’s financial situation or investment objective(s) and this communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor or a personal recommendation to deal or invest in any particular company or product. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC, SEDAR+ and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results.

FORWARD LOOKING STATEMENTS

This communication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. Statements in this communication that look forward in time, which include everything other than historical information, are based on assumptions and estimates by our content providers and involve risks and uncertainties that may affect the profiled company’s actual results of operations. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results and performance to differ materially from any future results or performance expressed or implied in the forward-looking statements. These risks, uncertainties and other factors include, among others: the success of the profiled company’s operations; the size and growth of the market for the company’s products and services; the company’s ability to fund its capital requirements in the near term and long term; pricing pressures; changes in business strategy, practices or customer relationships; general worldwide economic and business conditions; currency exchange and interest rate fluctuations; government, statutory, regulatory or administrative initiatives affecting the company’s business.

INDEMNIFICATION/RELEASE OF LIABILITY

By reading this communication, you acknowledge that you have read and understand this disclaimer in full, and agree and accept that the Publisher provides no warranty in respect of the communication or the profiled company and accepts no liability whatsoever. You acknowledge and accept this disclaimer and that, to the greatest extent permitted under applicable law, you release and hold harmless the Publisher from any and all liability, damages, injury and adverse consequences arising from your use of this communication. You further agree that you are solely responsible for any financial outcome related to or arising from your investment decisions.

TERMS OF USE AND DISCLAIMER

By reading this communication you agree that you have reviewed and fully agree to the Terms of Use found here https://www.valuethemarkets.com/terms-conditions/ and acknowledge that you have reviewed the Disclaimer found here https://www.valuethemarkets.com/disclaimer/. If you do not agree to the Terms of Use, please contact valuethemarkets.com to discontinue receiving future communications.

INTELLECTUAL PROPERTY

All trademarks used in this communication are the property of their respective trademark holders. Other than valuethemarkets.com, the Publisher is not affiliated, connected, or associated with, and the communication is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks other than valuethemarkets.com.

AUTHORS: VALUETHEMARKETS

valuethemarkets.com and Digitonic Ltd and our affiliates are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above. This article does not provide any financial advice and is not a recommendation to deal in any securities or product. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

ValueTheMarkets do not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above piece. ValueTheMarkets have been paid to produce this piece by the company or companies mentioned above. Digitonic Ltd, the owner of valuethemarkets.com, has been paid for the production of this piece by the company or companies mentioned above.

Sign up for Investing Intel Newsletter