Verde announces partnership with leading carbon developer, WayCarbon, to monetise carbon credits

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce a strategic partnership with WayCarbon to bolster the development and monetization of its carbon removal project.

WayCarbon is 80% owned by Banco Santander, one of Europe’s largest banks. It is a leading developer of carbon removal projects and a pioneer in climate change mitigation and sustainability solutions. The partnership is based on Verde’s specialty multi-nutrient potassium fertilizer K Forte® (the “Product”) and its potential to permanently capture CO2 through Enhanced Rock Weathering.

“This partnership with WayCarbon marks a new chapter for Verde. It represents a crucial step towards monetization of Verde’s own significant carbon removal potential and allows the Company to collaborate on new projects with Brazil’s most credible carbon developer. WayCarbon has been active in this sector since 2006 making it a veteran with a success record to match. I believe that the combination of our attributes has the potential to spawn one of the world’s largest carbon removal platforms,” celebrated Cristiano Veloso, Verde’s Founder and CEO.

WayCarbon has a history of high-quality carbon projects in Brazil. Within the partnership, WayCarbon will support Verde with the development, certification, marketing and monetization of its carbon credits. In addition to leveraging Verde’s Product, the partnership extends its scope to encompass Verde’s origination and utilization of other minerals capable of carbon capture through Enhanced Rock Weathering.

“We are thrilled about our partnership with Verde AgriTech. At WayCarbon, our mission is to drive the transition to a Net-Zero economy. This transformation is a multi-sectoral endeavour. The distinctive properties of Verde’s products, coupled with Verde’s extensive proven mineral reserves and their strategic proximity to key agricultural regions of the country, present a unique opportunity to advance the decarbonization of the Brazilian agricultural sector,” extolled Breno Rates, WayCarbon’s Founding Partner and head of Carbon Projects.

 

Verde’s Carbon Removal Potential

Located in São Gotardo within the state of Minas Gerais, Brazil, Verde’s operations are underpinned by one of the world’s largest potash resources, at 5.9 billion tons as approved by the Brazilian Mining Agency, of which 3.32 billion tons have been certified under Canadian National Instrument 43-101.[1]  Thereupon, Verde has a total capture potential of 0.7 gigatons of CO2 from the atmosphere,[2] which would establish it as one of the world’s largest carbon capture projects.

As Brazil’s largest potash producer by capacity, Verde has an annual production capacity of 3 million tons.[3] With no further CAPEX investment, the Company is capable of capturing up to 0.36 million tons of CO2 per year based on its existing production facilities.[4]

 

About WayCarbon and Santander

WayCarbon is a global company specializing in solutions aimed at transitioning to a net-zero economy. Founded in 2006, it leverages scientific and business knowledge, enhanced by technology, to support companies and governments in their climate change and sustainability strategies.

WayCarbon boasts a portfolio of over 500 private sector clients, in addition to extensive experience serving multilateral organizations (UNDP, CAF, World Bank, IADB) in areas of mitigation, adaptation, and the structuring of emission reduction and carbon removal projects.

The company’s consultancy services, specialized software, and high-quality carbon projects are designed to support, in an integrated manner, companies and governments on their decarbonization journeys. Its technological solutions are utilized by clients in 40 countries.[5]

In addition to its comprehensive expertise and experience acquired over 18 years in the field of climate change and sustainability, one of WayCarbon’s differentiators is its connection with controlling shareholder, Banco Santander. Headquartered in Spain, Banco Santander is a global financial institution with a significant presence in Brazil. Santander plays an important role in supporting sustainable development and is an active member of the Net Zero Banking Alliance, demonstrating its solid commitment to leading innovation and promoting sustainability.

Santander is already carbon-neutral in its own operations and aspires to achieve net-zero emissions across the entire group by 2050, in support of the Paris Agreement’s goals concerning climate change.[6] With a large and strategic presence in the Brazilian agricultural sector, the Bank aligns itself with the growing demands for responsible and efficient agricultural practices and brings with it vast financial expertise in the sector.

Santander’s proactive approach reflects its commitment to decarbonizing its value chain. This initiative not only reinforces Santander’s position as a leader in sustainability, but also expands the possibilities for companies to collaborate and partner with WayCarbon. As an integral part of this banking ecosystem, WayCarbon is positioned to offer solutions and strategic partnerships that transcend conventional borders. Together, WayCarbon and Santander have the potential to promote a significant transformation of their partners, leading them towards more sustainable, eco-efficient practices, aligned with global decarbonization objectives that boost the growth and competitiveness of their businesses.

 

Enhanced Rock Weathering

Verde has developed partnerships with leading British universities in Soil Science[7] that have proven Verde’s Product has the potential to capture carbon dioxide from the atmosphere through Enhanced Rock Weathering (“ERW”).

ERW refers to a suite of techniques aimed at accelerating natural rock weathering, which involves the breakdown of minerals and the absorption of CO2 from the atmosphere. In nature, the process takes centuries as the rocks’ surface is gradually weathered down and reacts with CO2 to form new stable carbonate minerals or bicarbonate ions, effectively removing CO2 from the atmosphere and storing it for thousands of years.

By crushing and grinding such minerals and spreading it over large areas, ERW significantly accelerates the absorption of CO2. The speed of mineral weathering can be calculated using a ‘shrinking core model’, which assumes that the reaction occurs at the surface of the mineral so that the unreacted core gradually shrinks over time.

As detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist, the carbon dioxide capture properties of the Products are estimated at 120kg per ton. The potential CO2 removal does not require any change to the Products’ production and farmland application methods, nor does it change the nutritional benefits to plants. Thus, the Products undergo ERW to permanently capture atmospheric CO2 while releasing potassium and other plant nutrients.

In addition, the Product potentially undergoes mineral dissolution in only a matter of months to a year from its application to soils, faster than the most rapid reacting silicate minerals (forsterite), which takes years to decades for a similar dissolution. Mineral dissolution is directly correlated to the capture of carbon dioxide from the atmosphere, the faster the dissolution the faster the absorption of CO2. The conclusion was reached by a commissioned study conducted by Phil Renforth, Ph.D., at Heriot Watt University, based on peer-reviewed publication and commercial data.

 

About Verde AgriTech

Verde Agritech is dedicated to advancing sustainable agriculture through the innovation of specialty multi-nutrient potassium fertilizers. Our mission is to increase agricultural productivity, enhance soil health, and significantly contribute to environmental sustainability. Utilizing our unique position in Brazil, we harness proprietary technologies to develop solutions that not only meet the immediate needs of farmers but also address global challenges such as food security and climate change. Our commitment to carbon capture and the production of eco-friendly fertilizers underscores our vision for a future where agriculture contributes positively to the health of our planet.

Cautionary Language and Forward-Looking Statements

All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:

  • the estimated amount and grade of Mineral Resources and Mineral Reserves;
  • the estimated amount of CO2 removal per ton of rock;
  • the PFS representing a viable development option for the Project;
  • estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
  • the estimated amount of future production, both produced and sold;
  • timing of disclosure for the PFS and recommendations from the Special Committee;
  • the Company’s competitive position in Brazil and demand for potash; and,
  • estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:

  • the presence of and continuity of resources and reserves at the Project at estimated grades;
  • the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
  • the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining     operations;
  • the capacities and durability of various machinery and equipment;
  • the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
  • currency exchange rates;
  • Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
  • appropriate discount rates applied to the cash flows in the economic analysis;
  • tax rates and royalty rates applicable to the proposed mining operation;
  • the availability of acceptable financing under assumed structure and costs;
  • anticipated mining losses and dilution;
  • reasonable contingency requirements;
  • success in realizing proposed operations;
  • receipt of permits and other regulatory approvals on acceptable terms; and
  • the fulfilment of environmental assessment commitments and arrangements with local

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.

For additional information please contact:

Cristiano Veloso, Chief Executive Officer and Founder

Tel: +55 (31) 3245 0205; Email: investor@verde.ag

www.verde.ag | www.investor.verde.ag

 

 

[1] Combined measured and indicated mineral resource of 1.47 billion tons at 9.28% K2O and an inferred mineral resource of 1.85 billion tons at 8.60% K2O (using a 7.5% K2O cut-off grade). As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2022. For further information, see the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf 

[2] The carbon capture potential of Verde’s products, through Enhanced Rock Weathering (ERW), is 120 kg CO2e per ton of K Forte®. For further information, see “Verde’s Products Remove Carbon Dioxide From the Air”.

[3] Verde is currently fully licensed to produce up to 2.8 million tons per year of its Products and has submitted mining and environmental applications for an additional 25 million tpy awaiting approval.

[4] One carbon credit is equivalent to one metric ton of carbon dioxide captured.

[5] Learn more at: https://waycarbon.com/sobre-a-waycarbon/

[6] Learn more at: https://www.bancosantander.es/en/santander-sostenible/empresas

[7] See “Verde’s Products Remove Carbon Dioxide From the Air” and “Verde’s Products Remove Carbon Dioxide from Air in Mere Months of Application”.

Verde achieves C$9.4 million revenue and increases cash position by 82% in the third quarter of 2023

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q3 2023: C$1.00 = R$3.72)

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) announces its financial results for the third quarter ended September 30, 2023 (“Q3 2023”).

“Our Q3 results overcame the turbulent market conditions experienced in 2023. More importantly, there are reasons for optimism regarding a market recovery: the Brazilian Central Bank has reduced its interest rates and its latest announcements indicate further upcoming reductions, and agricultural commodity prices have stabilized. These factors provide better conditions for farmers, who have grappled with a squeeze in working capital from late 2022 throughout 2023. Furthermore, thanks to a $4.2 million increase in Q3 2023, we have a positive outlook regarding our cash position. This reinforces Verde’s financial health to successfully navigate what has been the most challenging agricultural market in recent years”, commented Cristiano Veloso, Founder, President & CEO of Verde.

 

Q3 2023 Financials

  • Sales of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”) by volume in Q3 2023 were 108,000 tons, compared to 189,000 tons in Q3 2022.
  • Revenue in Q3 2023 was $9.4 million, compared to $27.3 million in Q3 2022.
  • Cash held by the Company in Q3 2023 was $9.3 million, compared to $5.1 million in Q3 2022.
  • Total non-current assets in Q3 2023 were $67.3 million, compared to $55.8 million in Q3 2022.
  • EBITDA before non-cash events in Q3 2023 was -$0.6 million, compared to $8.1 million in Q3 2022.
  • From Q1 to Q3 2023, the Company sold 323,000 tons of Product, which have the potential to capture up to 38,760 tons of carbon dioxide equivalent (“CO2e”) from the atmosphere via Enhanced Rock Weathering (“ERW”).[1] The net amount of carbon captured, represented by carbon dioxide removal certificates (“CORCs”), is estimated at 20,936 tons of CO2e.[2]
  • In Q3 2023, 8,559 tons of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride (“KCl”) fertilizers.[3] A total of 138,241 tons of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production.[4]

 

“Regarding the progress of our carbon capture project, we are excited to announce that we will soon provide updates on the commencement of field monitoring for the CO2 captured through the application of our products. ERW initiatives seeking to generate carbon credits must present their carbon removal quantification methodologies to certification bodies, following strict criteria and guidelines. Therefore, starting the monitoring of our Product’s carbon capture is crucial to validate the measurability of the credits generated from its application to soil, ensuring full compliance with the stringent standards of the carbon market. Additionally, we are thrilled to announce upcoming results that compare the carbon footprint of KCl with K Forte. This comparison could reveal another significant opportunity for farmers to not only reduce their own carbon footprint but also potentially capture millions of tonnes of carbon, further advancing our commitment to sustainable agriculture”, concluded Mr. Veloso.

 

Carbon Capture Potential

Verde’s Products have a carbon capture potential of 120 kg CO2e per ton of K Forte® (“CO2e/t”).[5]  The Life Cycle Assessment (“LCA”) calculated the Product’s carbon footprint from cradle-to-gate at 7.44 kg CO2e/t.[6] Therefore, the Company’s net carbon capture potential covering activities from raw material extraction, processing and production can reach 112.56 kg CO2e/t.[7]

The greenhouse gas emissions associated with the cradle-to-gate cycle of K Forte® are relatively low, at less than 10% of the amount of carbon captured by the Product. This can be attributed to Verde’s sustainable production processes, noticeably the 100% use of renewable energy (hydroelectric) for the processing plants.

When considering the cradle-to-grave assessment[8] of the Product, which includes the final application of Products by farmers, the shipping distance between Verde’s production facilities and the application site influences the range of greenhouse gas emissions within Verde’s supply chain.

Between Q1 and Q3 2023, the Company sold 323,000 tons of Product, which have the potential to capture up to 38,760 tons of CO2e. This amount could result in a potential 20,936 tons of CORC, calculated within the LCA and inclusive of shipping emissions.

Carbon credits for ERW are currently being negotiated in a range of $138.78/t[9] to $563.9/t.[10]

The following table shows the CORCs derived from the cradle-to-grave life cycle assessment and market size for K Forte®, according to the distance radius for the Product’s shipment from Verde’s production facilities.

 

Net carbon sequestration for K Forte®’s cradle-to-grave LCA and market size, according to shipment distance

Distance from Verde’s production facilities (km)[11] CO2 Stored (kg CO2e / t) CO2Supply Chain Footprint
weighted average
(kg CO2e / t)[12]
CORCs

weighted average
(kg CO2e / t)[13]

Potash Market Size (‘000 tons K2O)[14] Product’s Market Size (‘000 tons K Forte®) Product’s Cumulative Market Size (‘000 tons K Forte®)
0 – 200 120.00 15.11 104.89 61.06 610.62 610.62
200 – 400 120.00 23.62 96.38 430.66 4,306.65 4,917.27
400 – 600 120.00 32.52 87.48 884.40 8,844.01 13,761.29
600 – 800 120.00 42.51 77.49 897.40 8,974.03 22,735.31

 

Subsequent Events

  • In October 2023, the Company appointed Lucas Brown as its new Vice President of Corporate Development. Mr Brown is leading Verde’s expansion into the carbon market, in addition to overseeing the Company’s institutional and investor relations. He has dedicated a decade working in Brazil, in the last four years serving as the British Consul to Minas Gerais state.[15]
  • In October 2023, the Company announced that it has secured C$16.2 million in debt financing facility from Banco do Brasil S.A. and Banco Bradesco S.A., the two largest Brazilian banks. The funds raised will be used to replace existing debts that were at higher interest rates and provide the Company with more favorable terms, including 6 months of grace period for Bradesco’s loan and 12 months for Banco do Brasil’s loan. This will enable Verde to offer financing solutions to potential customers, whilst fostering growth and financial stability. The Financing consists of C$10.8 million in debt from Banco do Brasil, Brazil’s largest bank, and C$5.4 million from Bradesco, the second largest financial Company in Brazil. Additionally, Verde currently has C$20 million pre-approved credit with banks in Brazil.[16]
  • In October 2023, Verde announced the results of its first Life Cycle Analysis, completed by LCA Design Corporation, a leading Canadian consultancy firm. The LCA determines the climate impacts associated with the production of Verde’s potassium fertilizer K Forte® from cradle-to-grave. The LCA was conducted according to ISO 14040/44:2006 Standard and Puro Earth Enhanced Rock Weathering Methodology.[17]

Market Overview

Agricultural Inputs Market

At the outset of the Ukrainian conflict in February 2022, there were concerns in the market that geopolitical sanctions against Russia would result in a significant shortage of fertilizers. Amidst this period of uncertainty, with looming concerns over potential fertilizer shortages, farmers hurried to secure these essential inputs, often paying steep prices. This urgency to buy, driven by the fear of scarcity, subsequently led to higher levels of debt among the farming community. However, these concerns proved to be unwarranted, as there was actually an oversupply of many fertilizers in the market due to increased availability, including potash fertilizers.

 

Year-end stock in Brazil (’000 tonnes)[18]

Product 2021 2022 YoY
Ammonium Sulfate 610 848 39%
Urea 1,202 1,271 6%
Monoammonium Phosphate (MAP) 872 781 -10%
Single Super Phosphate (SAP) 816 1,288 58%
KCl 1,740 2,148 23%
NPKs 486 803 65%
Total 5,726 7,139 25%

 

 

This scenario led to a consistent decline in fertilizer prices from the second half of 2022 onwards. As the price of fertilizers started to decrease, many farmers postponed their purchases of agricultural inputs as much as possible, hoping that the downward trend would lead to even lower prices. This delay directly impacted Verde’s sales volumes.

Additionally, the weather phenomenon, El Niño, in the latter half of 2023 led farmers to adopt a more conservative investment strategy.[19] The anticipated severe heat and drought conditions associated with El Niño, led to farmers adjusting their investment strategies to mitigate the predicted challenges in crop production.

Average KCl Price

After the historic high reached in 2022, the Average KCl CFR price declined by 59% in Q3 2023, compared to Q3 2022, with a 34% decrease from January to September 2023.

The table below compares Brazil’s monthly average KCl CFR prices from 2022 to 2023:

 

KCl Brazil CFR average spot price (US$)[20]

Month 2022 2023 YoY
January 772 510 -34%
February 781 498 -36%
March 1,018 463 -54%
April 1,183 415 -65%
May 1,113 366 -67%
June 1,030 333 -68%
July 943 328 -65%
August 883 352 -60%
September 711 351 -51%
October 624 343 -45%
November 571 340* -40%
December 513

*As of November 09, 2023.

 

Other Fertilizers

The following tables present an overview of the price trends for essential nitrogen and phosphate fertilizers, as well as sulfur fertilizers, capturing the market’s response to a period of geopolitical unrest.

 

Granular Urea Brazil CFR average price (US$)[21]

Month 2022 2023 YoY
January 696 439 -37%
February 597 356 -40%
March 925 327 -65%
April 865 333 -62%
May 706 320 -55%
June 603 290 -52%
July 603 369 -39%
August 614 395 -36%
September 704 399 -43%
October 646 404 -38%
November 586 388* -34%

*As of November 09, 2023.

 

Monoammonium phosphate (“MAP 11-52”)[22] CFR Brazil average price (US$)[23]

Month 2022 2023 YoY
January          860 654 -24%
February          873 652 -25%
March       1,179 636 -46%
April       1,266 596 -53%
May       1,119 530 -53%
June       1,035 461 -56%
July          959 465 -51%
August          878 517 -41%
September          730 533 -27%
October          644 555 -14%
November          611 555* -9%

*As of November 09, 2023.

 

Commodity Prices

The agricultural commodities market has been experiencing significant fluctuations on a downward trend since H1 2022, impacting the fertilizers’ market worldwide. The following table shows the shifts in the price of some of the main commodities in Brazil:

 

2022-2023 variance in Brazilian commodities average prices (% R$)[24]

Month YoY ∆
Soybeans Coffee Corn Cotton
January -1% -32% -10% -22%
February -11% -24% -11% -25%
March -19% -14% -15% -31%
April -22% -12% -16% -40%
May -29% -18% -33% -51%
June -30% -30% -36% -47%
July -23% -38% -33% -37%
August -21% -36% -35% -36%
September -21% -38% -35% -34%
October -22% -27% -30% -22%
November* -23% -10% -30% -24%
YTD (Jan/Sep) ∆ -20% -27% -25% -34%

*As of November 09, 2023.

As the prices of commodities initiated a downward trajectory in 2023, many farmers chose to delay their crop sales, anticipating a market rebound that would fetch more favorable prices. Although the decline in prices has halted, market values remain considerably below the levels observed in 2022, further impacting the agricultural sector.

 

Working capital constraints for Brazilian farmers

In 2023, the agricultural market is facing extreme conditions characterized by a substantial depletion of farmers’ working capital.

The convergence of these circumstances aligns with the timeframe when farmers need to procure essential agricultural inputs, including fertilizers, for the upcoming planting season. Consequently, Brazilian farmers are facing significant challenges in securing financing for their planting activities.

These farmers opt to procure inputs from suppliers that provide extended payment terms, combined with the most competitive interest rates achievable. This strategy enables them to cover the expenses associated with these inputs after generating revenue from the imminent harvest, usually spanning a period of 9 to 12 months.

As a result, Brazilian farmers situation of reduced working capital and demanding conditions for extended payment terms has led to an elevated risk of customer default for fertilizer companies, including Verde.

Brazilian Economy

In August 2023, the Central Bank of Brazil started lowering the SELIC rate after a sequence of 12 consecutive rate hikes. On November 01, 2023, the SELIC rate decreased to 12.25%.[25] However, this rate still represents the country’s highest interest rate since 2017.

The Central Bank of Brazil projects the SELIC rate to reach 11.75% per annum by the end of 2023, 9% in 2024, and 8.5% in 2025 and 2026.[26] Annual inflation forecast for 2023 is 4.63%.[27]

The table below provides an overview of the SELIC rates spanning from 2018 to 2023, along with the projections for 2024, 2025 and 2026.

 

SELIC interest rates[28]

Year  Selic rate at year-end
2017 7.00%
2018 6.50%
2019 4.50%
2020 2.00%
2021 9.25%
2022 13.75%
Current rate 12.25%
2023 Forecast 11.75%
2024 Forecast 9.00%
2025 Forecast 8.75%
2026 Forecast 8.50%

 

 

Global Market Competition and Financing

In the midst of the most challenging conditions witnessed by the fertilizer market in recent years, the Company is contending with the intersection of two crucial factors: In 2022, Brazil experienced its highest interest rates since 2006, a situation that is beginning to show signs of improvement in 2023 but still impacts the Company’s financing conditions. Additionally, there is a pressing demand from farmers for credit.

Verde’s average cost of debt is 16.4%. To incentivize sales, the Company offers its customers a credit line that charges a spread to its finance cost to comprise operational costs, provisions, and bad debt, leading to an average lending cost of 18.2% for credit-based purchases. The Company’s ability to provide financing with longer tenors is considerably lower compared to international players[29], which translates into less competitive terms for its customers. Unlike its competitors, Verde does not have the option to incur most of its cost of debt in US dollar-denominated liabilities. Overall, the Company is not able to provide financing for more than 20% of its revenue due to constraints related to lines of credit.

 

Exchange Rate

The fluctuation in the exchange rate between the Canadian dollar and the Brazilian Real during the quarter also influences the Company’s results. Canadian dollar devaluated by 7% versus Brazilian Real in Q3 2023, with and average exchange rate of R$3.72 in the quarter, compared to R$3.99 in Q3 2022.

 

Market Outlook

The market outlook for agricultural inputs, particularly fertilizers, is cautiously optimistic. Key trends and expectations shaping this outlook include:

  1. Stabilization of Fertilizer Prices: The global market has witnessed a stabilization in the prices of KCl. This trend is expected to continue, providing a more predictable cost environment for fertilizer production. The stabilization of KCl prices is particularly significant for Verde, as it could lead to more stable pricing strategies and potentially improved profit margins.
  2. The market also demonstrates a returning stability in urea, MAP 11-52 and sulphur fertilizers prices following last year’s volatile scenario.
  3. Steadying of Agricultural Commodity Prices: After a period of fluctuation, agricultural commodity prices are showing signs of steadying. This stabilization is likely to positively influence farmers’ investment capabilities in agricultural inputs, including fertilizers.
  4. Brazilian Economic Indicators: The Brazilian Central Bank’s recent reduction in interest rates, with the potential for further cuts, could alleviate financial constraints on farmers. This would facilitate their business development and acquisition of essential inputs. Should the SELIC rate decrease to the anticipated 8.5%, Verde is projected to benefit from interest expense savings of C$1.1 million by the end of 2024 and C$2.7 million by Q4 2026.
  5. Global Potash Market Dynamics: As a major potash producer, Verde is well-positioned in the global potash market, particularly with Brazil’s reliance on imported potash. Verde’s domestic production capabilities place it favorably to efficiently meet local demand.
  6. Focus on Climate Change and Sustainability: As the global shift towards sustainable agriculture gains momentum and environmental impact becomes a critical evaluation metric, Verde’s commitment to sustainable fertilizers and its carbon capture initiative positions the company favorably in response to this market transition.

 

 

Selected Annual Financial Information

The table below summarizes Q3 2023 financial results compared to Q3 2022 and year-to-date (“YTD”):

All amounts in CAD $’000  Q3 2023  Q3 2022  YTD 2023  YTD 2022 
Tons sold ‘000  108 189 323 503
Average Revenue per ton sold $ er ton sold $  87 144 95 126
Average Production cost per ton sold $  (28) (32) (24) (28)
Average Gross Profit per ton sold $ s fit per ton 59 112 71 98
Gross Margin  67% 78% 75% 78%
 
Revenue  9,375 27,269 30,805 63,434
Production costs(1)  on costs  (3,056) (6,069) (7,680) (14,055)
Gross Profit  6,319 21,200 23,125 49,379
Gross Margin  67% 78% 75% 78%
Sales and marketing expenses  (695) (1,866) (3,026) (3,895)
Product delivery freight expenses  (3,919) (9,187) (11,509) (19,200)
General and administrative expenses (2,328) (1,970) (5,142) (3,666)
EBITDA (2)  (623) 8,177 3,448 22,618
Share Based and Bonus Payments (Non-Cash Event)(3)   (261) (20) (145) (124)
Depreciation, Amortisation and P/L on disposal of plant and equipment (3)  (973) (84) (2,852) (148)
Operating Profit after non-cash events  (1,857) 8,073 451 22,346
Interest Income/Expense (4) (1,593) (722) (3,586) (1,152)
Net Profit before tax  (3,450) 7,351 (3,135) 21,194
Income tax (5) (14) (893) (196) (2,079)
Net Profit   (3,464) 6,458 (3,331) 19,115

(1) – C$2,693,000 of depreciation in 2023 related to the investments made in Plant 1, Plant 2 and access routes improvement in the last 12 months that are included in production costs in the financial statements have been reclassified to a non-cash event in the MD&A.
(2) – Non GAAP measure.
(3) – Included in General and Administrative expenses in financial statements.
(4) – Please see Summary of Interest-Bearing Loans and Borrowings notes.
(5) – Please see Income Tax notes.


External Factors

Revenue and costs are affected by external factors including changes in the exchange rates between the US$, C$ and R$ along with fluctuations in potassium chloride spot CFR Brazil, agricultural commodities prices, interest rates, among other factors.

For further details, please refer to the Market Overview section (page 04):

Q3 2023 compared with Q3 2022

EBITDA and EPS

The Company had an EBITDA of -$600,000 in Q3 2023, compared to $8,200,000 in Q3 2022. This decrease can be mainly attributed to the factors below, outlined in greater detail within the Market Overview section (please refer to page 04):

  • Increased bad debt provision: The increase in bad debt provision has increased the general expenses, further impacting on the Company’s financial position. In Q3 2023, the Company recognized a bad-debt provision of $563,000, which exerted a considerable impact on the general expenses and, consequently, EBTIDA. As outlined in the Market Overview section, 2023 has proven to be a demanding year for the agricultural sector, However, the Company is currently in active negotiations with these clients. If the negotiations are successful, the provision will be reversed.
  • Potassium chloride price decline: The average price of KCl CFR Brazil experienced a substantial 59% decrease in Q3 2023 when compared to the same period in 2022, with a 34% decrease from January to September 2023.
  • Extreme market conditions and working capital constraints: The current agricultural market scenario is characterized by extreme challenges, including working capital constraints for Brazilian farmers due to low agricultural commodity prices and financial market instability. Farmers are encountering difficulties in financing planting activities and are opting for extended payment terms with competitive interest rates from suppliers.
  • Intensified competition and financing conditions: Larger international competitors benefit from lower financing costs within their countries and possess larger balance sheets. These advantages enable them to extend more appealing interest rates and favorable commercial terms to farmers when supplying products, giving them a distinctive competitive edge. Verde’s capacity to offer competitive credit terms to farmers encounters limitations due to the Company’s higher cost of debt compared to these well-established competitors. This financial discrepancy impairs Verde’s ability to match the financing terms offered by its competitors, impacting its appeal to farmers seeking more favorable credit options.
  • Sales price and volume: Verde’s average sales price per ton had a decrease of 40% in Q3 2023, in addition to a 43% decrease in the sales volume. This was mainly driven by the lower potassium chloride prices and additional discounts provided by the Company, aiming to increase market adoption.
  • Shift in product mix due to constrained working capital: With many farmers facing restricted cash flows, there has been a noticeable shift towards opting for lower-value-added products. Consequently, the utilization of micronutrients, which do not fall within the essential NPK elements for plants, has witnessed a reduction. This shift has culminated in a decrease in the sales proportion of BAKS, Verde’s higher-margin product, from 11% to 8% in the third quarter of 2023.

Basic loss per share was $0.066 for Q3 2023, compared to earnings of $0.126 for Q3 2022.

Product Sales

Sales by volume decreased by 43% in Q3 2023, to 108,000 tons sold, compared to 189,000 tons sold in Q3 2022.

The combination of the previously described factors of extreme market conditions explained in detail within the Market Overview section (page 03) has brought forth noteworthy challenges for the agricultural sector, also impacting Verde’s sales volumes.

 

Revenue

Revenue from sales decreased by 66% in Q3 2023, to $9,375,000 from the sale of 108,000 tons of Product, at average $87 per ton sold; compared to $27,269,000 in Q3 2022 from the sale of 189,000 tons of Product, at average $144 per ton sold.

Average revenue per ton excluding freight expenses (FOB price) decreased by 47% in Q3 2023, to $51 compared to $95 in Q3 2022 mainly due to the decrease in Potassium Chloride CFR Brazil, from US$640-US$980 per ton in Q3 2022 to US$310-US$360 per ton in Q3 2023.[30] This reduction was partially offset by the 7% appreciation of the Brazilian Real against the Canadian Dollar.

 

Production costs

Production costs include all direct costs from mining, processing, and the addition of other nutrients to the Product, such as Sulphur and Boron. It also includes the logistics costs from the mine to the plant and related salaries.

Verde’s production costs and sales price are based on the following assumptions:

  1. Micronutrients added to BAKS® increase its production cost, rendering K Forte® less expensive to produce.
  2. Production costs vary based on packaging type, with bulk packaging being less expensive than Jumbo Bags.
  3. Plant 1 produces K Forte® Bulk, K Forte® Jumbo Bag (sold in 1-ton bags), BAKS® Bulk, and BAKS® Jumbo Bag, while Plant 2 exclusively produces K Forte® Bulk. Therefore, Plant 2’s production costs are lower than Plant 1’s costs, which produces two types of Products and offers two types of packaging options each.

The table below shows a breakdown of full year 2023 Verde’s production costs projection for BAKS® and K Forte®, and what percentage of those costs is not controllable by management:

 

(+) (+) (=)
Cost per ton of product projected for 2023[31] (C$) Cash cost Assets depreciation Total cost expected for 2023[32] Non-controllable costs (% of total costs)
K Forte® Bulk (Plant 1) 20.2 3.8 24.0 61%
K Forte® Bulk (Plant 2) 10.2 2.8 13.0 58%
K Forte® Jumbo Bag (Plant 1) 30.4 2.8 33.2 71%
BAKS® (2%S 0.2%B)[33] Bulk (Plant 1) 42.1 3.8 45.9 81%
BAKS® (2%S 0.2%B) Jumbo Bag (Plant 1) 51.3 3.8 55.0 85%

 

Verde calculates its total production costs as a weighted average of the production costs for BAKS® and K Forte®, taking into account the production site and packaging type for each product. Therefore, comparing the Company’s production costs on a quarter-over-quarter basis may not be meaningful due to the varying proportions of the cost factors that impact each quarter.

Production costs decreased by 50% in Q3 2023, to $3,056,000 compared to $6,069,000 in Q3 2022. Average cost per ton decreased by 11% in Q3 2023, to $28 compared to $32 in Q3 2022.

Plant 2 has lower operational costs than Plant 1 and, consequently, a lower production cost per ton of K Forte® Bulk. The construction of Plant 2 in Q4 2022 resulted in a reduction of production costs due to the increased volume of K Forte® Bulk sold from Plant 2, representing 70% of the total volume sold in the quarter. Additionally, there has been a change in the sales mix of packaging types, with a reduction in the proportion of Products sold in Jumbo Bags, which decreased to 18% in Q3 2023 from 27% in the same quarter of the previous year.

Similarly, the sales mix between BAKS® and K Forte® also underwent a shift, with the percentage of BAKS® sales decreasing to 8% in Q3 2023, compared to 11% in Q3 2022, as many farmers are opting for lower-value-added products, due to restricted cash flows. Consequently, the utilization of micronutrients, which do not fall within the essential NPK elements for plants, has witnessed a reduction.

 

Sales Expenses

CAD $’000 Q3 2023 Q3 2022 YTD 2023 YTD 2022
Sales and marketing expenses (890)  (1,385) (2,990)  (2,919)
Fees paid to independent sales agents 195 (481) (36) (976)
Total (695) (1,866) (3,026) (3,895)

 

Sales and marketing expenses

Sales and marketing expenses include employees’ salaries, car rentals, travel within Brazil, hotel expenses, and the promotion of the Product in marketing events.

Sales and marketing expenses decreased by 36% in Q3 2023 to $890,000 compared to $1,385,000 in Q3 2022.

 

Fees paid to independent sales agents

As part of Verde’s marketing and sales strategy, the Company pays out commissions to its independent sales agents.

Fees paid to independent sales agents in Q3 2023, had a credit balance of $195,000 compared to $481,000 expenses in Q3 2022, in accordance with the decrease in revenue for the quarter.

The decrease in fees paid to independent sales agents is in accordance with the decrease in revenue of 66% for the quarter. In addition, Sales made through Sales Agents experienced a proportional decline in the period.

The Company has reversed a provision of $249,000 in the quarter, significantly contributing to the credit balance in the quarter.

 

Product Delivery Freight Expenses

Product delivery freight expenses decreased by 57% in Q3 2023, to $3,919,000 compared to $9,187,000 in Q3 2022. This reduction can be attributed to the lower sales volume on a Cost Insurance and Freight (CIF) basis, which decreased to 84,000 tons in Q3 2023, down from 148,000 tons in Q3 2022. Notably, the volume sold as CIF as a percentage of the total sales in the quarter remained stable at 78% during this period.

The Company achieved a reduction in average freight costs per ton for products sold on a CIF basis, to $46.58 in Q3 2023 from $62.06 in the comparable period of the previous year. The 24.97% decrease in freight costs can primarily be attributed to a reduction in the percentage of sales made to regions that are more distant from Verde’s production facilities. For instance, sales to Mato Grosso state significantly dropped to 14% of overall sales in Q3 2023, compared to 33% of the total sales volume accounted for in Q3 2022.

 

General and Administrative Expenses

CAD $’000 Q3 2023 Q3 2022 YTD 2023  YTD 2022
General administrative expenses (1,203) (1,096) (2,983) (1,895)
Bad debt provision (563) 0 (592) 0
Legal, professional, consultancy and audit costs (332) (667) (939) (1,155)
IT/Software expenses (190) (180) (532) (570)
Taxes and licenses fees (40) (27) (96) (46)
Total  (2,328) (1,970) (5,142) (3,666)

 

General administrative expenses

These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in Brazil.

General administrative expenses increased by 10% in Q3 2023, to $1,203,000 compared to $1,096,000 in Q3 2022.

This increase can primarily be attributed to general expenses related to Plant 2, such as the rental of water trucks and metallic structures to support operations.

 

Bad Debt Provision

In 2023, for the first time, the Company had to record a Bad Debt Provision in its accounts. As per Verde’s sales policy, any outstanding customer payments overdue for more than 12 months must be provisioned. The total bad debt provision booked in Q3 2023 amounted to $563,000, in contrast to no provision being recorded in Q3 2022.

 

Legal, professional, consultancy and audit costs

Legal and professional fees include legal, professional, consultancy fees along with accountancy, audit and regulatory costs. Consultancy fees are consultants employed in Brazil, such as accounting services, patent process, lawyer’s fees and regulatory consultants.

Expenses decreased by 50% in Q3 2023, to $332,000 compared to $667,000 in Q3 2022.

The primary reason for this decrease can be attributed to expenses related to the Company’s re-domiciliation to Singapore in 2022, which was completed in August 2022. However, the Company has appointed EY as its new audit firm, resulting in higher costs compared to the former auditors starting from 2023 onwards.

 

IT/Software expenses

IT/Software expenses include software licenses such as Microsoft Office, Customer Relationship Management (CRM) software and enterprise resource planning (ERP).

Expenses increased by 6% in Q3 2023, to $190,000 compared to $180,000 in Q3 2022, primarily due to higher license expenses related to the Company’s new ERP system, SAP Business One, which was implemented in H2 2022.

 

Taxes and licenses

Taxes and license expenses include general taxes, product branding and license costs.

Expenses increased in Q3 2023, to $40,000 compared to $27,000 in Q3 2022 and increase of $13,000. This increase was mainly driven by federal taxation on the Company’s financial revenues.

 

Share Based, Equity and Bonus Payments (Non-Cash Events)

These costs represent the expense associated with stock options granted to employees and directors along with equity compensation and non-cash bonuses paid to key management.

Share Based, equity and bonus payments costs in Q3 2023 increased by $241,000 to $261,000 compared to $20,000 in Q3 2022.

This value is attributed to stock options issuance to the Company’s Board members and senior management team.

 

Liquidity and Cash Flows

On September 30, 2023, the Company held cash of $9,275,000, an increase of $4,221,000 on the same period in 2022.

Cash received from / (used for):

CAD $’000

Q3 2023 Q3 2022  YTD 2023  YTD 2022 
Operating activities (9,216) 5,398 (16,090) 16,872
Investing activities 504 (13,797) (1,985) (29,659)
Financing activities 11,883 11,767 25,823 16,079

 

Q3 2023 Results Conference Call

The Company will host a conference call on Wednesday, November 22, 2023, at 10:00 am Eastern Time, to discuss Q3 2023 results and provide an update. Subscribe using the link below and receive the conference details by email.

Date: Wednesday, November 22, 2023
Time: 10:00 am Eastern Time
Subscription link:

 

The questions can be submitted in advance through the following link:

The Company’s third quarter financial statements and related notes for the period ended September 30, 2023 are available to the public on SEDAR at www.sedar.com and the Company’s website at www.investor.verde.ag/.

About Verde AgriTech

Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.

Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product

Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[34] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[35] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[36] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[37].

Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[38]

 

Corporate Presentation

For further information on the Company, please view shareholders’ deck:

https://verde.docsend.com/view/qsh7p2h49u3hmzzt

 

Investors Newsletter

Subscribe to receive the Company’s updates at:

http://cloud.marketing.verde.ag/InvestorsSubscription   

The last edition of the newsletter can be accessed at:

 

Cautionary Language and Forward-Looking Statements

All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:

  • the estimated amount and grade of Mineral Resources and Mineral Reserves;
  • the estimated amount of CO2 removal per tonne of rock;
  • the PFS representing a viable development option for the Project;
  • estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
  • the estimated amount of future production, both produced and sold;
  • timing of disclosure for the PFS and recommendations from the Special Committee;
  • the Company’s competitive position in Brazil and demand for potash; and,
  • estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:

  • the presence of and continuity of resources and reserves at the Project at estimated grades;
  • the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
  • the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining     operations;
  • the capacities and durability of various machinery and equipment;
  • the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
  • currency exchange rates;
  • Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
  • appropriate discount rates applied to the cash flows in the economic analysis;
  • tax rates and royalty rates applicable to the proposed mining operation;
  • the availability of acceptable financing under assumed structure and costs;
  • anticipated mining losses and dilution;
  • reasonable contingency requirements;
  • success in realizing proposed operations;
  • receipt of permits and other regulatory approvals on acceptable terms; and
  • the fulfilment of environmental assessment commitments and arrangements with local

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.

 

For additional information please contact:

Lucas Brown, Vice-President of Corporate Development

Tel: +55 (31) 3245 0205; Email: investor@verde.ag

www.verde.ag | www.investor.verde.ag

 

 

[1] The carbon capture potential of Verde’s products, through Enhanced Rock Weathering (ERW), is 120 kg CO2e per ton of K Forte®. For further information, see “Verde’s Products Remove Carbon Dioxide From the Air”.

[2] CO2 Removal Certificate (CORC) is an electronic document, which records the Attributes of CO2 Removal from registered Production Facilities. Each CORC represents a Net Carbon Dioxide Removal (CDR) volume of 1 ton of Long-Term CO2 Removal, equivalent to 1 carbon credit. Source: Puro.earth, V3.1.

[3] Verde’s Product is a salinity and chloride-free replacement for KCl fertilizers. Potassium chloride is composed of approximately 46% of chloride, which can have biocidal effects when excessively applied to soils. According to Heide Hermary (Effects of some synthetic fertilizers on the soil ecosystem, 2007), applying 1 pound of potassium chloride to the soil is equivalent to applying 1 gallon of Clorox bleach, with regard to killing soil microorganisms. Soil microorganisms play a crucial role in agriculture by capturing and storing carbon in the soil, making a significant contribution to the global fight against climate change.

[4] 1 ton of Product (10% K2O) has 0.1 tons of K2O, which is equivalent to 0.17 tons of potassium chloride (60% K2O), containing 0.08 tons of chloride.

[5] The estimated amount of CO2 captured by K Forte® is equivalent to 120 kg CO2e per ton of Product. The calculation was provided by Dr. Manning, determined through an independent study conducted at Newcastle University. For further information, see “Verde’s Products Remove Carbon Dioxide From the Air”.

[6] Cradle-to-gate is the assessment of a product’s life cycle from raw material extraction (cradle) to its production

facility gate. It does not include the carbon footprint associated with product transportation to the final customer.

Source: https://circularecology.com/glossary-of-terms-and-definitions.html

[7] For further information, see “Verde Announces Life Cycle Assessment Results in Accordance with ISO Standards”.

[8] ‘Cradle-to-grave’ assessment considers impacts at each stage of a product’s life-cycle, from the time natural resources are extracted from the ground and processed through each subsequent stage of manufacturing, transportation, product use, and ultimately, disposal. Source: European Environment Agency.

[9] Source: Puro.earth (Nasdaq), a crediting platform for engineered carbon removal. Available at: https://puro.earth/carbon-removal-index-price/. Exchange rate: €1.00 = $1.07.

[10] Average price of carbon credits sold by Frontier between 2022 and 2023. Frontier is an advance market commitment that aims to accelerate the development of carbon removal technologies by guaranteeing future demand for them. It was founded by Stripe, Alphabet, Shopify, Meta, McKinsey and tens of thousands of businesses using Stripe Climate. Available at: https://frontierclimate.com/

[11] Shipping distances were calculated as the weighted average distance from Verde’s production facilities to the geographical center of each city, determined through geoprocessing.

[12] Considers the weighted average of CO2e emissions within the different shipping distances.

[13] Considers the weighted average of CORCs generated within the different shipping distances.

[14] The potash market size was determined based on the potential demand for K2O. This calculation was derived from the total planted areas in Brazil in 2021 (Source: IBGE, 2022), considering the typical dosages of potash fertilizers for the main crops: Cotton = 100 kg of K2O/ha; Coffee = 200 kg of K2O/ha; Soybean/Maize System = 150 kg of K2O/ha; Other Crops = 100 kg of K2O/ha. On October 27, 2023, the Company updated the dosages of potash fertilizers considered for the main crops to better align with the most recent market data.

[15] See “Verde appoints Vice President of Corporate Development”. Available at:

[16] See “Verde Cultivates Financial Resilience with Banco do Brasil and Bradesco Backing”.

[17] See “Verde Announces Life Cycle Assessment Results in Accordance with ISO Standards”.

[18] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil”, in Portuguese).

[19] Source: Coface for Trade. Available at: https://www.coface.com/News-Publications/News/El-Nino-a-threat-to-global-agriculture

[20] Acerto Limited Report.

[21] Acerto Limited Report.

[22] MAP 11-52 is a type of fertilizer known as Monoammonium Phosphate. The “11-52” notation refers to the nutrient content of the fertilizer, indicating that it contains 11% nitrogen in the form of ammonia (ammoniacal nitrogen) and 52% phosphorus.

[23] Acerto Limited Report.

[24] Source: Economic Research Center of the ESALQ/University of São Paulo. Available at: https://www.cepea.esalq.usp.br/br/indicador/soja.aspx

[25] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/en/pressdetail/2500/nota

[26] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/content/focus/focus/R20231027.pdf

[27] Source: Boletim FOCUS. Available at: https://www.bcb.gov.br/publicacoes/focus

[28] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/en

[29] Verde has an average of 93 days of receivables, while competitors can provide 180-360 days to collect its payments.

[30] Source: Acerto Limited Report.

[31] The costs were estimated based on the following assumptions: Costs in line with Verde’s 2023 budget. Sales volume of 1.0Mt per year. Crude Oil WTI (NYM US$/bbl) = US$80.00. Diesel price = US$1.26. Currency exchange rate: US$1.00 = R$5.25; C$1.00 = R$4.20. Total cost per ton includes all costs directly related to production and feedstock extraction in addition to assets depreciation.

[32] Total cost per ton includes labor mining, mining, crushing, processing, maintenance of support facilities, product transportation from mine pits to production plants, laboratory expenses, G&A, and environmental compensation expenses.

[33] BAKS® can be customized according to the crop’s needs, so it can have several compositions. The 2%S 0.2%B composition is responsible for most of Verde’s sales.

[34] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9

[35] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/

[36] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf

[37] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).

[38] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral

Verde Cultivates Financial Resilience with Banco do Brasil and Bradesco Backing

(All figures are in Canadian dollars, unless stated otherwise. Currency exchange rate: C$1.00 = R$3.70)

 

Singapore, Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it has secured 16.2 million Canadian Dollars (“C$”) – 60 million Brazilian Reais (“R$”) – in debt financing facility from Banco do Brasil S.A. (“Banco do Brasil”) and Banco Bradesco S.A. (“Bradesco”), the two largest Brazilian banks (the “Financing”). The funds raised will be used to replace existing debt that were at higher interest rates and provide the Company with more favorable terms, including 6 months of grace period for Bradesco’s loan and 12 months for Banco do Brasil’s loan. This will enable Verde to offer financing solutions to potential customers, whilst fostering growth and financial stability. The Financing consists of C$10.8 million in debt from Banco do Brasil, Brazil’s largest bank (R$40 million), of which the Brazilian Federal Government retains a 50% share; and C$5.4 million from Bradesco (R$20 million), the second largest financial group in Brazil (the “Banks”). Additionally, Verde currently has C$20 million (R$74 million) pre-approved credit with banks in Brazil.

The loan granted by Banco do Brasil received a Sustainability Certificate (the “Certificate”) distinguishing it as a sustainable financial operation. The Certificate is awarded to financing activities included in Banco do Brasil’s[1] evaluated against a diverse array of national and international standards and taxonomies. The purpose of BB’s Sustainable Business Portfolio is to encourage the expansion of enterprises and initiatives that directly contribute to Brazil’s sustainable development, by offering services and resources aimed at addressing social-environmental issues.

The Certificate awarded to Verde falls under the Environmental category, which encompasses projects like forest restoration, low-carbon agriculture, and the rehabilitation of degraded areas, all of which are undertaken by the Company, which integrates sustainable practices throughout its operational process as a core value.

For a transaction to receive Banco do Brasil’s approval within the Sustainable Credit framework, it undergoes a rigorous evaluation encompassing Environmental, Governance, and Social dimensions. This assessment entails:

  • Analyzing the sustainability of production processes;
  • Ensuring the Company’s financial statements undergo third-party auditing;
  • Gauging the brand’s reliability and reputation;
  • Verifying compliance with national and international quality standards;
  • Reviewing the competence of the management squad;
  • Checking for any recorded discrepancies with government agencies;
  • Assessing transparency in the Company’s communications.

“We are encouraged to count on the backing of two of the largest banks in Latin America[2] to support our growth. The loans will increase our cash reserves and replace existing high-interest debt along with better terms, and provide financing to potential customers, allowing us to extend essential financial support to farmers in the agricultural sector, who require post-harvest input payments. These two loans reflect significant confidence in our business and in the partnership between Verde and these reputable institutions”, stated Cristiano Veloso, Verde’s Founder and CEO.

The Financing transactions were structured as follows:

  • Banco do Brasil: C$10.8 million loan (R$40 million), with an interest rate of CDI[3] + 3.60%. The loan term extended to 36 months, including a grace period of 12 months. Payment was scheduled with three annual instalments of principal and interest, due in August 2024, August 2025, and August 2026.
  • Bradesco: C$5.4 million loan (R$20 million), with an interest rate of CDI + 3,61%. The loan term was set at 24 months, featuring a grace period of 6 months. The payment schedule included the first 6 months with monthly interest, followed by 4 semesters payments of principal in March and October for the next two years.

Out of the total Financing secured, C$9.5 million (R$35 million) has been allocated towards the settlement of six existing loans.

 

Brazilian Interest Rates Outlook:

The Central Bank of Brazil, on August 5, 2023, announced a reduction in the SELIC rate from 13.75% to 13.25%, marking a significant shift following a series of 12 consecutive rate hikes. Subsequently, on October 11, 2023, the SELIC rate was further adjusted, reaching 12.75%.[4] These adjustments reflect the Central Bank’s commitment to managing the nation’s monetary policy in response to changing economic conditions.

Projections indicate a steady decline in the SELIC rate over the coming years, with expectations of reaching 11.75% by the close of 2023, followed by a reduction to 9.0% in 2024 and a further decrease to 8.5% in 2025 and 2026.[5] These adjustments align with the broader economic indicators with annual inflation easing to 4.86% in 2023.

If the projected reduction in the SELIC interest rate materializes in the coming years, it would result in significant interest expense savings for the Company. These potential savings are estimated to reach C$1.1 million (R$4 million) by the end of 2024 and a total accumulated savings of C$2.7 million (R$9.9 million) by the end of Q4 2026.

 

About Banco do Brasil:

Banco do Brasil is a Brazilian bank, incorporated as a mixed capital company, with the Federal Government of Brazil holding 50% of the shares (as of October 18, 2023)[6], being one of the five state-owned banks of the Brazilian government, traded on the B3 as BBAS3.

The bank was established in 1808, is a key player in Brazil’s financial landscape. Originally founded to promote manufacturing businesses during colonial Brazil, it later evolved into one of the country’s largest banks, primarily owned by the government. Today, it actively contributes to Brazil’s economic and social growth, supporting sectors like rural credit and offering a range of financial services, including low-interest loans and insurance. Its multifaceted involvement in culture, sports, and various economic sectors solidifies its role in shaping Brazil’s future.[7]

BB was recognized by the Corporate Knights’ Global 100 ranking as the world’s most sustainable bank four times, first in 2019 at the World Economic Forum in Davos. It was the only Brazilian entity in the top 100, ranking 15th among over 6,000 companies.

The bank is part of several indices including the Dow Jones Sustainability Index (DJSI) since 2012, the Corporate Sustainability Index (ISE) of the São Paulo Stock Exchange since 2005, and the FTSE4 Good Index Series since 2016. It was included in the Silver Class of the S&P Global and RobecoSAM AG 2022 Yearbook. In 2021, the Transparency Observatory listed the bank among the Most Transparent Companies.

In 2023, Capital Finance International named BB the most sustainable bank in South America. The bank scored a ‘B’ in the 2022 CDP Climate Change Programme. It has an ‘A’ rating from the Morgan Stanley Capital International (MSCI) ESG Rating since 2020.

In January 2023, the bank received the Terra Carta Seal from the Sustainable Markets Initiative. Only 19 companies received this in its 2022 edition, with Banco do Brasil being the sole recipient from Latin America. In 2023, the Getúlio Vargas Foundation’s Center for Sustainability Studies awarded the bank the Gold Seal for its Corporate Greenhouse Gas (GHG) Inventory.

 

About Bradesco:

Banco Bradesco, a leading financial institution in Brazil, boasts a rich history of serving customers since 1943. With a comprehensive range of financial services and a vast network of branches and ATMs across the country, Bradesco is committed to providing top-notch customer service. The bank is dedicated to sustainability, actively participating in social and environmental initiatives.[8]

Bradesco stands out as a leading financial institution, consistently recognized for its solidity, security, and innovative strides in technology.

Among other recognitions, Bradesco BBI received awards in 4 Latin American categories of the Sustainable Finance Awards 2023: Outstanding Leadership in Green Bonds, Outstanding Leadership in Transition/Sustainability Linked Bonds, Outstanding Leadership in Sustainable Infrastructure Finance and Outstanding Leadership in Project Finance (Global Finance).

Bradesco was also featured in the Top Innovations in Finance (Global Finance) award. The bank was chosen by the Global Finance magazine, an international publication specialized in finance, as the best sub-custodian bank in Brazil in the 21st annual award as the Best Subcustodian Bank.

Furthermore, Inovabra was recognized as one of the best financial innovation laboratories in the world. Bradesco is also listed among the top-rated companies in the S&P Global Sustainability Yearbook 2023 and is included in Bloomberg’s 2023 Gender-Equality Index.[9]

 

About Verde AgriTech

Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.

Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.

Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[10] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[11] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[12] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[13].

Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[14]

 

Corporate Presentation

For further information on the Company, please view shareholders’ deck:

https://verde.docsend.com/view/nekrk8xfujzasr9x

 

Investors Newsletter

Subscribe to receive the Company’s updates at: http://cloud.marketing.verde.ag/InvestorsSubscription

The last edition of the newsletter can be accessed at:

 

Cautionary Language and Forward-Looking Statements

All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:

  • the estimated amount and grade of Mineral Resources and Mineral Reserves;
  • the estimated amount of CO2 removal per tonne of rock;
  • the PFS representing a viable development option for the Project;
  • estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
  • the estimated amount of future production, both produced and sold;
  • timing of disclosure for the PFS and recommendations from the Special Committee;
  • the Company’s competitive position in Brazil and demand for potash; and,
  • estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:

  • the presence of and continuity of resources and reserves at the Project at estimated grades;
  • the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
  • the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining      operations;
  • the capacities and durability of various machinery and equipment;
  • the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
  • currency exchange rates;
  • Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
  • appropriate discount rates applied to the cash flows in the economic analysis;
  • tax rates and royalty rates applicable to the proposed mining operation;
  • the availability of acceptable financing under assumed structure and costs;
  • anticipated mining losses and dilution;
  • reasonable contingency requirements;
  • success in realizing proposed operations;
  • receipt of permits and other regulatory approvals on acceptable terms; and
  • the fulfilment of environmental assessment commitments and arrangements with local

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.

 

For additional information please contact:

Cristiano Veloso, Founder, Chairman & Chief Executive Officer

Tel: +55 (31) 3245 0205; Email: investor@verde.ag

www.verde.ag | www.investor.verde.ag

 

 

[1] For further information, see: https://www.bb.com.br/site/sustainability/how-banco-do-brasil-works/sustainable-credit-portfolio/

[2] Source: https://www.investopedia.com/articles/investing/111314/10-biggest-latin-american-banks.asp

[3] CDI stands for Certificate of Interbank Deposit (Certificado de Depósito Interbancário, in Portuguese). The CDI rate is an average of interest rates on unsecured interbank short-term funding. Its value is usually very close to the rates of repurchase agreements of securities issued by the federal government. Available at: https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/wps168.pdf

[4] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/en

[5] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/content/focus/focus/R20231013.pdf

[6] Source: https://ri.bb.com.br/en/banco-do-brasil/ownership-structure/

[7] Source: https://www.bb.com.br/site/sobre-nos/

[8] Source: https://banco.bradesco/html/classic/sobre/

[9] Source: https://www.bradescori.com.br/en/market-information/acknowledgments/

[10] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9

[11] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/

[12] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf

[13] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).

[14] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral

 

Verde AgriTech Advances into phase 2 of Musk-Backed $100M XPRIZE Carbon Removal Challenge

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it has successfully advanced to Phase 2 of the largest incentive prize in history, XPRIZE “$100M Carbon Removal” Challenge (the “Challenge”). This challenge seeks innovative solutions to extract and sequester carbon dioxide from the atmosphere, fighting climate change and rebalancing Earth’s carbon cycle.

Verde has delivered an ambitious proposal to develop one of the world’s largest carbon capture projects through Enhanced Rock Weathering (“ERW”) – a natural weathering process that involves the sequestration of carbon dioxide (“CO2”) from the atmosphere by crushing and spreading reactive rock material on land.

Verde has developed partnerships with British universities, leaders in Soil Science[1], that have proven Verde’s K Forte® and Super Greensand® (“Products”) have the potential to capture CO2 from the atmosphere through ERW. As detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist, the carbon dioxide capture properties of the Products are estimated at 120kg per tonne.

The Company has combined measured and indicated mineral resources of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O, compliant with the Canadian National Instrument 43-101.[2] Its total 3.32 billion tonnes of resources put Verde in a unique position of potential scalability to sequester up to 0.40 gigatons of CO2.

XPRIZE is known for its global competitions that drive radical breakthroughs for the benefit of humanity. Backed by Elon Musk and the Musk Foundation, XPRIZE launched the Challenge to inspire and help scale efficient solutions to combat climate change, restoring the Earth’s carbon cycle. The Challenge seeks innovative methods to capture carbon dioxide directly from the atmosphere or ocean and lock it away permanently in an environmentally benign way.

The competition has drawn attention from around the world, with numerous companies vying for the opportunity to showcase their carbon removal solutions. Verde’s selection to Phase 2 stands as a testament to its innovative approach, commitment to sustainability and potential to contribute meaningfully to a more sustainable future through its carbon capture technology.

“We are thrilled to be recognized by XPRIZE for our pioneering efforts in carbon removal. It is not just a recognition of our diligent efforts, but also emphasizes the transformative potential of our technology to create a profoundly positive effect on our planet. We have an established annual production capacity of 3.00 million tonnes, and with this, Verde has the potential to capture up to 0.36 million tonnes of CO2 annually. We are confident that Verde is an outstanding candidate within the XPRIZE Carbon Removal Challenge, not only to our innovative solution, but for the potential of massive scalability”, stated Cristiano Veloso, Verde’s Founder and CEO.

 

About XPRIZE Carbon Removal

XPRIZE Carbon Removal is aimed at tackling the biggest threat facing humanity – fighting climate change and rebalancing Earth’s carbon cycle. Funded by Elon Musk and the Musk Foundation, this $100M competition is the largest incentive prize in history.‎

The climate math is becoming clear that we will need gigaton-scale carbon removal in the coming decades to avoid the worst effects of climate change. The International Panel on Climate Change (IPCC) estimates the need at approximately 10 gigatonnes of net CO2 removal per year by the year 2050 in order to keep global temperature rise under 1.5 or 2C. As governments, companies, investors, and entrepreneurs make plans to meet this challenge, it is clear that we will need a range of carbon removal solutions to be proven through demonstration and deployment to complement work that is already underway. If humanity continues on a business-as-usual path, the global average temperature could increase 6˚(C) by the year 2100.

For further information see: https://www.xprize.org/prizes/carbonremoval

About Verde AgriTech

Verde is an agricultural technology company that produces potash fertilizers. Its purpose is to improve the health of all people and the planet. Rooting our solutions in nature, it makes agriculture healthier, more productive, and profitable.

Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.

Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[3] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[4] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[5] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[6].

Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[7]

Corporate Presentation

For further information on the Company, please view shareholders’ deck:

https://verde.docsend.com/view/mjxisb9by2xbt5y2

Investors Newsletter

Subscribe to receive the Company’s updates at: https://verde.docsend.com/view/e9f4zncag32eiric

The last edition of the newsletter can be accessed at:

Cautionary Language and Forward-Looking Statements

All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:

  • the estimated amount and grade of Mineral Resources and Mineral Reserves;
  • the estimated amount of CO2 removal per tonne of rock;
  • the PFS representing a viable development option for the Project;
  • estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
  • the estimated amount of future production, both produced and sold;
  • timing of disclosure for the PFS and recommendations from the Special Committee;
  • the Company’s competitive position in Brazil and demand for potash; and,
  • estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:

  • the presence of and continuity of resources and reserves at the Project at estimated grades;
  • the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
  • the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations;
  • the capacities and durability of various machinery and equipment;
  • the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
  • currency exchange rates;
  • Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
  • appropriate discount rates applied to the cash flows in the economic analysis;
  • tax rates and royalty rates applicable to the proposed mining operation;
  • the availability of acceptable financing under assumed structure and costs;
  • anticipated mining losses and dilution;
  • reasonable contingency requirements;
  • success in realizing proposed operations;
  • receipt of permits and other regulatory approvals on acceptable terms; and
  • the fulfilment of environmental assessment commitments and arrangements with local

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.

 

For additional information please contact:

Lucas Brown, Vice-President of Corporate Development

Tel: +55 (31) 3245 0205; Email: investor@verde.ag

www.verde.ag | www.investor.verde.ag

 

 

[1] See “Verde’s Products Remove Carbon Dioxide From the Air” and “Verde’s Products Remove Carbon Dioxide from Air in Mere Months of Application”.

[2] Resource Estimate Effective Date: May 12, 2022. Responsible QP: Bradley Ackroyd, B. Sc (Geo), MAIG. Cutoff Content: 7.5% K2O. For further details see the Pre-Feasibility Study: investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf

[3] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9

[4] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/

[5] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf

[6] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).

[7] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral

Verde to Present at the LD Micro Main Event XVI

The presentation will take place on Wednesday,
October 04, 2023, at 9:30am PT

 

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it will be presenting at the LD Micro Main Event XVI (the “Event”). The Event will take place in Los Angeles, from October 03, 2023 to October 05, 2023, and Verde will be represented by its Founder, President & CEO, Mr Cristiano Veloso.

The three-day Event will feature around 200 companies, presenting in half-hour increments, and attending private meetings with investors.

Register to watch the virtual presentation using the link below:

Date: Wednesday, October 04, 2023
Time: 09:30am PT
Register to watch the virtual presentation: https://me23.sequireevents.com/

 

Verde has commissioned an independent mineral resource and reserve study under the Canadian National Instrument 43-101, which has established a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[1] Thus, Verde’s mining sites hold Brazil’s largest identified potash deposit.

Verde currently operates two production plants, along with a biomanufacturing facility for producing fertilizers with microorganism input additives. This establishes the Company as Brazil’s largest potash producer by capacity, with an installed production capacity of 3.00 million tonnes per year.

With Verde’s two production plants already in operation and no further need for CAPEX investment, operating at full capacity and assuming a sales volume of 3 million tonnes of product per year, the Company expects to achieve a 28% EBITDA of C$88 million and earnings per share of C$1.00.[2]

In addition to its production plants, the Company also operates three research laboratories, focusing on Microbiology, Mineralogy, and Agronomy.

Verde’s Carbon Capture Potential

Verde has developed partnerships with British universities that are leaders in Soil Science[3] that have proven Verde’s K Forte® and Super Greensand® (“Products”) have the potential to capture carbon dioxide (“CO2”) from the atmosphere through Enhanced Rock Weathering (“ERW”), while releasing potassium and other plant nutrients.

As detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist, the carbon dioxide capture properties of the Products are estimated at 120kg per tonne.[4] Therefore, the Company’s total 3.32 billion tonnes of resources have the potential to remove 0.40 gigatons of CO2 from the atmosphere.

With its installed annual production capacity of 3.00 million tonnes[5], Verde expects to capture and offset up to 0.36 million tonnes of CO2 per year. The Company plans to deliver its whole CO2 capture capacity to the market to be sold as carbon credits.[6]

Investor day

Verde AgriTech will host an Investor Day on Monday, October 16, 2023, at 11:00 AM Eastern Time. The event will be held virtually and will feature presentations by the Company’s senior leadership team, providing updates on Verde’s strategy, followed by a Q&A session.

Subscribe using the link below and receive the event details by email:

Date: Monday, October 16, 2023
Time: 11:00 am Eastern Time
Subscription link:

 

Detailed registration and event information will be available on Verde’s Investor Relations website.

Questions can be submitted in advance through the following link up to 2 hours before the event:

About Verde AgriTech

Verde is an agricultural technology company that produces potash fertilizers. Its purpose is to improve the health of all people and the planet. Rooting our solutions in nature, it makes agriculture healthier, more productive, and profitable.

Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.

Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.[7] Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®. In 2022, it became Brazil’s largest potash producer by capacity.[8] Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade).[9] This amounts to 295.70 million tonnes of potash in K2O. For context, in 2021 Brazil’s total consumption of potash in K2O was 6.57 million[10].

Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 97% of its potash needs. In 2022, potash accounted for approximately 3% of all Brazilian imports by dollar value.[11]

About LD Micro

LD Micro, a wholly owned subsidiary of Freedom US Markets, was founded in 2006 with the sole purpose of being an independent resource in the micro-cap space. Through the LD Micro Index and annual investor

conferences, LD has served as an invaluable asset to all those interested in discovering the next generation of great companies. For more information on LD Micro, visit www.ldmicro.com (https://www.ldmicro.com/).

Corporate Presentation

For further information on the Company, please view shareholders’ deck:

https://verde.docsend.com/view/mjxisb9by2xbt5y2

Investors Newsletter

Subscribe to receive the Company’s updates at: http://cloud.marketing.verde.ag/InvestorsSubscription

The last edition of the newsletter can be accessed at:

Cautionary Language and Forward-Looking Statements

All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards (May 10, 2014). These standards differ significantly from the requirements of the U.S. Securities and Exchange Commission. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

This document contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:

  • the estimated amount and grade of Mineral Resources and Mineral Reserves;
  • the estimated amount of CO2 removal per tonne of rock;
  • the PFS representing a viable development option for the Project;
  • estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods;
  • the estimated amount of future production, both produced and sold;
  • timing of disclosure for the PFS and recommendations from the Special Committee;
  • the Company’s competitive position in Brazil and demand for potash; and,
  • estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “envisages”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on Verde’s or its consultants’ current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:

  • the presence of and continuity of resources and reserves at the Project at estimated grades;
  • the estimation of CO2 removal based on the chemical and mineralogical composition of assumed resources and reserves;
  • the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining       operations;
  • the capacities and durability of various machinery and equipment;
  • the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times;
  • currency exchange rates;
  • Super Greensand® and K Forte® sales prices, market size and exchange rate assumed;
  • appropriate discount rates applied to the cash flows in the economic analysis;
  • tax rates and royalty rates applicable to the proposed mining operation;
  • the availability of acceptable financing under assumed structure and costs;
  • anticipated mining losses and dilution;
  • reasonable contingency requirements;
  • success in realizing proposed operations;
  • receipt of permits and other regulatory approvals on acceptable terms; and
  • the fulfilment of environmental assessment commitments and arrangements with local

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde’s Annual Information Form filed with SEDAR in Canada (available at www.sedar.com) for the year ended December 31, 2021. Verde cautions that the foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.

 

For additional information please contact:

Cristiano Veloso, Founder, Chairman & Chief Executive Officer

Tel: +55 (31) 3245 0205; Email: investor@verde.ag

www.verde.ag | www.investor.verde.ag

 

 

[1] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2022. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf 

[2] The financial projection is underpinned by the following assumptions: Average Brazilian Real to Canadian dollar exchange rate: C$1.00 = R$3.71. Average Brazilian Real to US dollar exchange rate: US$1.00 = R$5.00. Average KCl CFR Brazil price = US$350. Average Crude Oil price = US$90. Products sales mix: 2.4Mt of K Forte® Bulk (Plant 2), 0.3Mt of BAKS® 2S 0.2B (Plant 1) and 0.3Mt of K Forte® Bio Revolution (Plant 1). Sales channels mix: 50% of sales made by distributors, 30% made by sales agents and 20% as direct sales. Sales price does not consider any discount that may be applied regarding the KCl price.

[3] See “Verde’s Products Remove Carbon Dioxide From the Air” and “Verde’s Products Remove Carbon Dioxide from Air in Mere Months of Application”.

[4] See “Verde’s Products Remove Carbon Dioxide From the Air”.

[5] Verde is currently fully licensed to produce up to 2.8 million tonnes per year of its Products and has submitted mining and environmental applications for an additional 25 million tpy awaiting approval.

[6] One carbon credit is equivalent to one metric tonne of carbon dioxide captured.

[7] Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9

[8] See the release at: https://investor.verde.ag/verde-starts-ramp-up-of-plant-2s-second-stage-to-reach-production-of-2-4mtpy/

[9] As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within Canada (“NI 43 -101”), filed on SEDAR in 2017. See the Pre-Feasibility Study at: https://investor.verde.ag/wp-content/uploads/2021/01/NI-43-101-Pre-Feasibility-Technical-Report-Cerrado-Verde-Project.pdf

[10] Source: Brazilian Fertilizer Mixers Association (from “Associação Misturadores de Adubo do Brasil“, in Portuguese).

[11] Source: Brazilian Comex Stat, available at: http://comexstat.mdic.gov.br/en/geral