Mosaic Company (MOS)

1. Mosaic Company (MOS) Akrati Johari, Steven Kahan, Prashant Tiwari, and Yana Zalukina Presented, December 8, 2009

2. Industry Analysis http://www.hoovers.com/chemical-manufacturing---agricultural-/--ID__161--/freeuk-ind-fr-profile-basic.xhtml • Mosaic (MOS) belongs to Agricultural Chemical Manufacturing industry • In the U.S. – about 700 companies with combined annual revenue of $30 billion • Highly concentrated industry: • 8 largest phosphate fertilizer producers generate 90% of revenues in the segment • Demand for agri-chemicals depends mainly on demand for various crops, and thus crop prices.

3. Company Overview http://finance.yahoo.com/q/pr?s=MOS Headquarters: Plymouth, MN Industry: Agricultural Chemicals World's largest phosphate producer: makes agricultural fertilizer out of potash and phosphate 13% share of global phosphate and potash production and 58% & 40% share of American production, respectively

4. Business Segments http://www.wikinvest.com/stock/Mosaic_Company_(MOS) • Three segments: Phosphates, Potash, and Offshore. • Phosphates • Produces and sells phosphate crop nutrients for use in crop nutrients and feed phosphate for animal feed ingredients • Potash • Produces and sells potash for use as fertilizers and animal feed ingredients, as well as in industrial applications • Potash is also used for de-icing and as a water softener regenerant • Offshore • Mosaic used to produce nitrogen fertilizer until selling its interest in Saskferco Products ULC at a $673.4 million gain in fiscal 2009. This was always a relatively small part of the company’s business.

5. Mosaic's temporary decline in phosphate profitability was due to unfavorable pricing of sulfur and ammonia, which should be viewed as an abnormal occurrence. http://www.wikinvest.com/image/MOS_opincbreakdown.gif (accessed Dec. 7, 2009).

6. SWOT Analysis

7. Management Assessment Mosaic acquired Esterhazy, Saskatchewan potash mine in late 2006 "This successful expansion, both in terms of the cost and additional capacity, underscores our strong commitment to cost-effectively grow our Potash business” Jim Prokopanko, CEO Mosaic plans to add approximately 200,000 metric tonnes of incremental capacity at its Colonsay, Saskatchewan mine by 2010.

8. Competition • Mosaic has few competitors since the fertilizer industry has significant barriers to entry and economies of scale. It would cost from $1.6-$2.5B for a new company to enter the industry. A company would need five to seven years of development time to build mines and factories, build rail and gas lines, and purchase rail cars and storage before it could even begin making a profit from Potash or Phosphates. • Mosaic primarily competes: • Potash Corporation of Saskatchewan (POT) • Agrium (AGU) http://www.wikinvest.com/ (Accessed December 5, 2009

9. MOS Vs Competitors http://www.wikinvest.com/ (Accessed December 5, 2009

10. MOS Vs Competitors http://www.wikinvest.com/ (Accessed December 5

11. MOS Vs Competitors http://finance.yahoo.com/ (Accessed December 5

12. MOS stock performance Vs competitors http://finance.yahoo.com/ (Accessed December 5, 2009

13. Financial Ratios

14. Diammonium Phosphate Prices

15. Potash Prices

16. Price Forecast • Data for 2008 are actual and data for 2009-2020 are price forecasts • Forecasts prepared on June 3, 2009 by World Bank. (http://web.worldbank.org)

17. Cost of Equity Cost of Debt

18. WACC

19. Multiples Valuation http://finance.yahoo.com/ (Accessed November 26, 2009)

20. Multiples Valuation (Continued) Current Share Price: $58.29 Mosaic Company http://finance.yahoo.com/ (Accessed November 26, 2009)

21. Football Chart

22. Triangulation

23. Correlation Low correlation with current holdings

24. Recommendation • Closing Price: $59.94 (12/7/09) • DCF Value: $61.69 • Triangulation Value: $63.45 • Buy 200 shares at a limit price of $55 good through 12/31/09