1. KEATON CERVANTES & MATTHEW RASINSKI THURSDAY, APRIL 4, 2013 THE MOSAIC COMPANY (MOS)

2. AGENDA Introduction Company Overview Industry Overview Stock Performance Macroeconomic Overview Current Events Financial Analysis Valuation Recommendation

3. INTRODUCTION Mosaic (MOS) trades on the NYSE Listed on the exchange in October 2004 It is recognized as a Fortune 500 company Formed through a merger with IMC Global and Cargill A merger between a fertilizer company and a crop nutrition division Sector is basic materials & industry is agricultural chemicals

4. COMPANY OVERVIEW The Mosaic Company is a combined producer and marketer of phosphate and potash Mine, refine, and distribute the final product Produce specialty materials: MicroEssentials, K-Mag, and Pegasus Phosphate and potash are used as fertilizers primarily marketed to farmers as growth supplements for crops and animal feed Mosaic claims their MicroEssentials, K-Mag, and Pegasus are the “most advanced crop nutrient products” on the market 2012 10K annual report

5. OVERVIEW CONTINUED Customer base – wholesalers, retail dealers, and individual farmers in more then 40 countries Headquartered in Plymouth, Minnesota, United States Employ over 8,000 workers in 8 different countries Phosphate – largest producer of finished phosphate products in the world Potash – sales are expanding globally through an alliance with Canpotex, the worlds leading potash exporter

6. Phosphates vs. potash Breakdown – 2012 10k Phosphates exceed potash in terms of sales tonnes by segment and net sales, however, not by operating earnings

7. PHOSPHATE AND POTASH OPERATIONS Mosaic sells phosphate products throughout North America and internationally They account for 58% of North American production and 13% of global production Potash operations are significantly smaller but yield higher profit margins Distribution activities include: sales offices, port terminals, and warehouses in the United States, Canada and several other key countries Key countries encompass China, Brazil, India, Argentina, and Chile Involved in blending, bagging, and production

8. PHOSPHATE PRODUCTION FACILITIES Currently have 5 active phosphate crop nutrient production facilities that are located in Louisiana and Florida 2 additional plants planned for the future

9. POTASH MINING Canada – operate 3 potash mines and 1 solution facility United States – operate 2 potash mines and 1 solution facility Have 3 additional mines under construction Considering opening 2 mines in the near future

10. DISTRIBUTION NETWORKS These are the locations of primary distribution centers in South America and Asia

11. Porter’s 5 forces Bargaining Power of Buyers: High Many suppliers exists, fertilizers and feed are considered commodities to farmers Bargaining Power of Suppliers: Moderate They have near full vertical integration Nitrogen consumption is an exception Threat of New Substitutes: Moderate Several alternatives exist, however, brand recognition is quite powerful Competitive Rivalry within the Industry: High Mosaic competes in both price and quality with respect to their domestic and international competitors Threat of New Entrants: Moderate New advances in technology pose a real threat to existing market participants

12. MAJOR COMPETITORS Monsanto (MON) – Provide seeds and genomics alongside agricultural productivity products to farmers around the world (Coromande.NS) – Manufacture and market fertilizers, specialty nutrients, and crop protection products in India and internationally Potash Corp. of Saskachewan (POTN.MX) – Mine and produce potash and phosphate as a fertilizer and animal feed United Phosphorus Limited (UNIPHOS.NS) – Manufacture and sell chemical fertilizers and feed using phosphorus as a major ingredient

13. 2 YEAR STOCK PERFORMANCE This however, does not represent the entire picture

14. 3 MONTH STOCK PERFORMANCE More accurately represent our position in the stock since its last review

15. FINANCIAL OVERVIEW Mosaic is far smaller relative to their competitors in terms of market cap According to their latest 10Q report, Mosaic will engage in a stock repurchase

16. FINANCIAL OVERVIEW CONTINUED They rank in the top 20% in the majority of industry characterizations 5 year PEG ratio and Dividend Yield are exceptionally high

17. MACROECONOMIC OVERVIEW Based on monitoring done by the USDA, the United States is moving out of a major drought spell which lasted for several years August 14, 2012 March 26, 2013

18. AGRICULTURAL FORECASTS Agricultural commodities are expected to increase according to USDA forecasts Such macroeconomic events tend to entice farmers to use access amounts of fertilizers in order to increase yields Livestock feed is being consumed at an ever increasing pace both domestically and internationally due to global population growth

19. CURRENT EVENTS FY 2013 Quarter 3 results far exceeded expectations with 3 rd quarter profit jumping 26% Surprise earnings a result of Foreign Currency gain and increased potash sales in Asian markets High earnings despite settlement

20. CURRENT EVENTS Labor contracts (pp. 24-25 of 10k) Collective bargaining agreements with various labor unions expire fiscal year ending May, 2013 Implications – this can seriously impact production of phosphate and potash Anti-Trust settlement (pp. 24 of 10Q) Mosaic along with competitors such as Potash, settle anti- trust case lawsuit on January 30, 2013 for an aggregate of $43.8 million Mosaic admitted no wrong doing

21. CURRENT EVENTS CONTINUED Saudi joint venture (pp. 22 of 10Q) Entered into a Heads of Agreement with Saudi Arabian Mining Company (“ Ma’aden ”) and Saudi Basic Industries Corporation (“ SABIC ”) The joint venture would engage in developing a mine and chemical complexes that would produce phosphate fertilizers, animal feed, food grade purified phosphoric acid and sodium tripolyphosphate in the Kingdom of Saudi Arabia Operations are expected to commence in late calendar year 2016 Mosaic would retain a 25% stack in the $7 billion project

22. CURRENT EVENTS CONTINUED Stock Repurchase (pp. 44 of 10K) Limitations on share buybacks due to the Cargill Transaction ruling end on November 26, 2013 Cargill family can start selling shares due to vesting on May 26, 2013 Management has stated in a press release they will expand their treasury stock This is an indication that the stock price is currently undervalued Implications of this may result in an unanticipated rise in stock price A goal of management is to improve their balance sheet by decreasing cash and using debt financing to leverage its expansionary strategy

23. FINANCIAL ANALYSIS Stock Price: $58.52 Beta: 1.57 TTM P/E: 13.09 Dividend Yield: 1.70% EPS: 4.47 Price/Sales: 2.45 Price/Book: 1.88 1 year stock performance compared with S&P500

24. FINANCIALS Mosaic currently has minimal amounts of debt on its balance sheet They plan on accessing the debt markets in the near future to help finance expansion Maintain relatively large sums of cash

25. FINANCIAL ANALYSIS WACC Discount rate of 12.02% 100% weight on CAPM method Not ideal, but lack of debt and negative return on equity made us use

26. VALUATION Discounted cash flow: Price per share: $61.89

27. SENSITIVITY ANALYSIS Representation how value changes with respect to the discount rate

28. COMPARATIVE ANALYSIS By assigning the following weights our comparative analysis yields: $48.97

29. TRIANGULATED PRICE

30. RECOMMENDATION Currently hold 200 shares at $55 Purchased in December 2009 Cost basis of $11,000 Current market value of $11,704 Resulting in a total gain of 6.4% We recommend Mosaic as a hold

31. QUESTIONS?