Ciner: Mining for Baking Soda?

03/25/2016 7:00 am EST

Focus: MLPS

Nick Hodge

Founder and President, Outsider Club

Our latest new MLP recommendation is in the trona mining business; trona is a sodium carbonate compound that is processed into what is commonly known as baking soda, explains Nick Hodge, editor of Like Minded People.

We all know baking soda. It’s been used since Roman times for baking, glass making, and medicine. It’s timeless. And its demand is steady.

Wyoming is home to the world’s largest deposit of trona, supplying about 90% of the nation’s soda ash.

Ciner Resources LP (CINR)—a master limited partnership—operates in the Green River Basin of Wyoming, which has 42 trona beds spanning 1,300 square miles.

So we have a large, stable industry. And we have a company operating at the heart of the source. These are two great boxes checked off the risk reduction list.

In addition, Ciner Resources is one of the only public ways to invest in this industry.

About 17.3 million tons is produced in Wyoming annually. Of that, Ciner produces about 3.87 million tons, or 22%. So it has serious market share.

At current production rates, based on independent analysis, Ciner has enough trona to mine for another 68 years.

Worldwide average demand for soda ash is expected to increase by 3.3% per year between 2014 and 2024, according to IHS Research.

Ciner Resources LP has a market cap of $470 million. It has a 52-week range of $18.80-$26.10. It pays a quarterly distribution of $0.5575, giving it a very robust 9.8% yield.

In the past 12 months, it has earned $3.20 per share in income, giving it a price-to-earnings ratio of around 7. CINR is a buy under $23.

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By Nick Hodge, Editor of Like Minded People

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