Australian mining giant BHP Billiton plc (NYSE:BHP) reported full fiscal year 2010 earnings today of $12.72 billion, more than double the $5.9 billion the company earned in 2009. BHP also reduced its net debt by 41%, to $3.31 billion.

That debt figure could rise if BHP is able to acquire Canada’s Potash Corp. of Saskatchewan (NYSE:POT). BHP launched an unfriendly all-cash offer for Potash Corp. worth $38.6 billion, which Potash immediately dismissed as too low. There is also some speculation that BHP is interested in acquiring some oil assets from BP plc (NYSE:BP), which is in the process of shedding some $30 billion of assets as it builds a war chest to deal damage from the Macondo well explosion in the Gulf of Mexico.

BHP posted operating cash flow of nearly $18 billion in its 2010 fiscal year and says it has term loans and revolving credit facilities totaling another $45 billion. BHP’s CEO noted that the company is committed to completing the Potash Corp. acquisition, and that the speculation about buying BP’s assets is not worth spending pixels on.

The company’s CEO also said that BHP will stay “disciplined” in working on its bid for Potash Corp. Most observers believe the company will have to raise its bid for the Canadian firm, but BHP points out that so far only its offer exists. The clear inference we are to draw is that BHP is not going to bid against itself. It has already commenced a tender offer directly to Potash Corp.’s shareholders. That offer does not expire until October 19th.

Meanwhile Potash Corp. shares are trading around $145/share, on the belief than another offer is sure to be forthcoming. But BHP is apparently willing to wait for such an offer to materialize, betting than unless an even better all-cash offer appears the Australians stay in the driver’s seat.

The $145/share price for Potash Corp. is pretty close to its enterprise value, and that’s with potash fertilizer at today’s price of $350/metric ton. If, as everyone anticipates, potash prices rise to $500/ton, Potash Corp. shares are worth about $207 each, according to a Reuters estimate.

Paul Ausick

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