Kore Potash (LSE: KP2) is without doubt one of the hottest shares within the inventory market at the moment. Once I final lined it in late June, it was buying and selling for 1.2p. Right this moment, nevertheless, it’s sitting at 3p – 150% larger!

Ought to traders think about shopping for this inventory given its unimaginable momentum? Let’s talk about.

A play on the rising world inhabitants

First, let me present a fast recap of what this firm does.

Kore Potash is — as its identify tells us — a UK-headquartered potash firm that’s creating property within the Republic of the Congo. Potash is a key nutrient for crops and goes to be essential in feeding the worldwide inhabitants within the many years forward. This firm is aiming to be one of many lowest-cost suppliers worldwide.

Presently, the group is engaged on two key tasks known as ‘DX’ and ‘Kola’. And it’s in talks with Chinese language development powerhouse PowerChina about an Engineering, Procurement, and Building (EPC) proposal for the latter.

A dangerous inventory

Now, the best way I see it, this inventory may be very speculative in nature. Presently, the corporate – which has a market cap of simply £155m – has no revenues or earnings, so there’s an opportunity it might want to boost capital from shareholders in some unspecified time in the future sooner or later and this might ship the share price down.

Such corporations usually face operational setbacks when creating their tasks. These setbacks will be very irritating for traders, as they’ll result in share price weak point.

Potential for large positive factors

That mentioned, threat and reward are straight associated in investing. And on this case, there’s potential for substantial rewards sooner or later.

The truth that PowerChina could possibly be a key accomplice for the Kola mission is a giant deal. A Chinese language state-owned enterprise, PowerChina is a specialist in engineering and development with appreciable expertise on the subject of massive tasks. Having this sort of firm as a accomplice might each de-risk and velocity up mission growth. So, that is very thrilling for traders.

It’s value noting that there’s no assure that the 2 corporations will finish up working collectively. However issues are trying promising. In a latest replace (17 September), Kore Potash mentioned that it met with senior PowerChina officers in Dubai in July. In line with the corporate, each events satisfactorily resolved all excellent business factors and the agreements are actually with the respective authorized counsels of each events for finalisation.

One more reason to be bullish is that the marketplace for potash seems to have big potential. Within the many years forward, the worldwide inhabitants is more likely to rise considerably. So, we might want to produce way more meals to satisfy demand. Potash is more likely to play a key function right here as a result of the truth that it will probably increase yields from arable land. That mentioned, I’ve seen traders burnt by potash shares earlier than. Sirius Minerals was one firm working on this house and it crashed and burned badly.

Value shopping for?

Given the dangers right here, I don’t plan to purchase Kore Potash shares myself. For me, the danger degree is simply too excessive.

Nonetheless, for these with very excessive threat tolerances (who’re ready to lose 100% of their funding if issues go fallacious), the shares could possibly be value a better look. There’s little question that there’s quite a lot of potential right here.