kingpotash

We must state for the record that we are as surprised as anyone with the rapid price appreciation
experienced by Potash Corp. of Saskatchewan(POT) shareholders over the past ten years. We started
following the stock back in 1998 and were intrigued by its dominate market position, large amount of
reserves and potential future resources, as well as their business dealings abroad with foreign entities.
Make no mistake, at the time the industry was in troubled times as they could not sell all of their
production and relied heavily upon controlling supply into the market to get by.

All that was then right has continued, and that which was wrong has dramatically changed, in favor of
course to the potash producers. Most notably Potash Corp., which closed Monday April 21 at a price of
C$211.10 on the Toronto Stock Exchange and sporting a hefty sixty-six and a half billion dollar plus
market cap, thus making POT Canada's largest company by market cap. Yesterday's price increase
places Potash Corp. roughly C$1.5 billion ahead of Encana (ECA) for the title of largest company, and
this gap could increase greatly on Thursday April 24 when POT announces earnings. Expectations are
running high for POT, especially after The Mosaic Company (MOS) reported blow-out earnings and
when considering the fact of how high the stock has risen in recent weeks. The market has set the bar
very high and left little room for error, but if 'King Potash' (so long as POT is the largest company by
market cap in Canada we will refer to it affectionately by this name) can find a way to surprise the market
it will be off to the races once again for the industry as a whole.

Times have changed dramatically since the late 90s and early part of this decade. Unlike in those days,
POT, and others in the industry, have customers who are more than willing to purchase any quantity that
they can currently offer due to the current market where demand outstrips supply. Not only can Potash
Corp. sell all of its current production, but prices have risen steadily over the past three years to all-time
highs, further adding to earnings. In the next year potash production should increase by roughly 5%
worldwide, with at least 80% of that increase attributable to 'King Potash'. By 2010 POT should have
production roughly a third higher than where it stands today, and that will be roughly half of all the added
capacity created within that period.

The potash industry reminds us greatly of the go-go days in the uranium industry which occurred over
the past three years. Currently those equities are in a funk, but there is no reason why potash
companies must end their bull run anytime soon. These companies have earnings, production, and a
cartel to market their production. Also, potash is not found in many places around the world, so there
are very few companies who produce it, thus keeping IPOs to a minimum and limiting competition. It must
be noted that Intrepid Potash (IPI) went public this morning and currently is trading up 50%. Nice to see
established entities cashing in on the favorable market right now, and hopefully Intrepid will use a portion
of these proceeds to increase production in some way. We currently have them producing 800,000
tonnes KCl for the future and if they want to please investors they will be forced to go about increasing
production to increase earnings.

We doubt that many more potash focused companies will come public, not because of a lack of interest,
but rather due to a lack of quality issues available. MagIndustries (MAAFF) will have an IPO for its
potash subsidiary (which expects to have a mine in the D.R. Congo with capacity of roughly 500,000
tonnes KCl production), but there are still no guarantees that even this will happen- though the wheels
have been set in motion. There are not many companies who can now attach themselves to ''King
Potash's" coattails which will force interested investors into the readily available securities currently on
the market. Fund managers will flock to POT due to its large market cap, liquidity, and dominate market
position and will help to continue its upward march. Also of interest is the fact that many indexes will
have to be rebalanced now that POT is the largest Canadian company- this has already happened to a
large extent, but the higher its market cap goes, the more buying you should see. Many investors
should marvel at their investment and how far it has come, and to those doubters we have but one thing
to say: "Long live the king!".