Verde Announces Pre-Feasibility Study

Plant 3’s 2023 construction to be fully funded from accumulated cashflow

Plant 3’s NPV of US$2.91 billion considering US$368.65 Brazil CFR long term potash prices

 

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to disclose the conclusions of the Pre-Feasibility Study announced by the Company on March 01, 2021 (the “PFS”) for the Cerrado Verde Project (the “Project”), which supplants the Pre-Feasibility Study completed in December 2017 (“2017 PFS”).

Verde operates Plant 1 with a capacity of 0.6 million tonnes per year (“Mtpy”), Plant 2 is on track for commissioning in Q3 2022 with an additional capacity of 2.4Mtpy, and Plant 3 is expected to add 10Mtpy with construction planned for 2023.

Plant 3’s capex is estimated by the PFS at US$52.77 million. Plant 3’s post-tax net present value (“NPV”) is projected at US$2.91 billion (8% discount rate) with an internal rate of return (“IRR”) of 427.17%, assuming a potash price at less than a third of current Potassium Chloride (“KCl”) prices and those adopted by Verde. The capex for Plant 3 is expected to be covered by accumulated cashflow generated by sales up to Q2 2023, without need for equity or debt financing.

The Company’s Special Committee of the Board of Directors is concluding work on the Paid for Growth strategy, as announced in the press releases dated January 24, 2022, and February 22, 2022, respectively. The Committee’s findings and recommendations will soon be made publicly available, with the expectation that financing Plant 3 entirely from cashflow will not impact the return of gains to shareholders via dividends, buyback or a combination of both.

 

PFS Overview

The PFS contemplates three Product compositions:

  • The Product as a source of potash (“K2O”)
  • The Product as a source of potash and sulphur (“K2O+S”)
  • The Product as a source of potash, sulphur, zinc, boron, copper and manganese (“K2O+S+Micronutrients”)

The PFS contemplates three distinct production scenarios:

  • Annual production of 10Mtpy (“Plant 3 Scenario”), representing 13.51% of the Brazilian potash market demand projected for 2025.
  • Annual production of 23Mtpy (“23Mtpy Scenario”), representing 31.07% of the Brazilian potash market demand projected for 2025.
  • Annual production of 50Mtpy (“50Mtpy Scenario”), representing 54.97% of the Brazilian potash market demand projected for 2030.

The PFS relies on a KCl CFR Brazil port price of US$368.65 per tonne, as per the Market Study (the “Study”) as detailed in the press release of April 21, 2022. Currently, the KCl CFR Brazil port price is approximately US$1,125 per tonne. The Study underpinned the preparation of the PFS and it comprises information about the Product pricing and market share for each composition.

 

For further information on the Study, please see the press release issued on April 2022:
https://investor.verde.ag/wp-content/uploads/2022/04/Verde-AgriTech-Press-Release-Market-Study-April-21-2022.pdf

Figures referenced in this news release can be viewed through the following link:
https://investor.verde.ag/wp-content/uploads/2022/05/Figures-Press-Release-Pre-Feasibility-Results-Verde-AgriTech.pdf

 

PFS Highlights

Tables 01 through 03 show the summary of the financial-economic analysis for the three Scenarios.

 

Table 01: Summary of the financial-economic analysis for the Plant 3 Scenario

 

Plant 3 Scenario
Description Unit Value
Proven and probable reserves million tonnes 715.67
K2O grade % 10.01
Capex US$ million 52.77
Operating cost US$/tonne of Product 12.83
Sustaining capital US$/tonne of Product 0.50
 
Product composition Unit K2O K2O + S K2O + S + Micronutrients
Product Sale Price US$/tonne of Product 80.75 91.54 100.21
NPV after-tax US$ billion 2.91 3.41 3.97
NPV discount rate % 8.00 8.00 8.00
IRR after-tax % 427.17 482.93 560.86
Cumulative Cash Flow US$ billion 17.05 19.97 23.22

 

 

Table 02: Summary of the financial-economic analysis for the 23Mtpy Scenario

 

23Mtpy Scenario
Description Unit Value
Proven and probable reserves million tonnes 715.67
K2O grade % 10.01
Capex US$ million 129.84
Operating cost US$/tonne of Product 11.18
Sustaining capital US$/tonne of Product 0.50
 
Product composition Unit K2O K2O + S K2O + S + Micronutrients
Product sale price US$/tonne of Product 80.72 91.66 99.90
NPV after-tax US$ billion 5.81 6.84 7.95
NPV discount rate % 8.00 8.00 8.00
IRR after-tax % 387.11 437.95 505.02
Cumulative Cash Flow US$ billion 16.14 19.02 22.07

  

Table 03: Summary of the financial-economic analysis for the 50Mtpy Scenario

 

50Mtpy Scenario
Description Unit Value
Proven and probable reserves million tonnes 1,297.66
K2O grade % 9.19
Capex US$ million 553.99
Operating cost US$/tonne of Product 10.07
Sustaining capital US$/tonne of Product 0.50
 
Product composition Unit K2O K2O + S K2O + S + Micronutrients
Product Sale Price US$/tonne of Product 74.05 84.79 92.05
NPV after-tax US$ billion 9.34 11.50 13.54
NPV discount rate % 8.00 8.00 8.00
IRR after-tax % 167.86 196.19 227.08
Cumulative Cash Flow US$ billion 22.74 28.04 32.98

 

The mineral resource for the PFS remains unchanged from the 2017 PFS (effective date March 2014). The 2017 PFS mineral resource estimate was completed by Bradley Ackroyd (MAIG), an independent “Qualified Person,” in accordance with NI 43-101. The 2017 PFS mining plan was modified, considering the three independent production scenarios of and Product compositions.

 

The PFS is based on the following assumptions:

  • Contract mining.
  • A projected mine life of 72 years for the Plant 3 Scenario, 31 years for the 23Mtpy Scenario and 26 years for the 50Mtpy Scenario.
  • Expected mass recovery of 98%.
  • A 15% contingency applied to Capex.
  • US Dollar-Brazilian Real exchange rate of US$1 = R$5.30.
  • KCl long term price of US$368.65 per tonne CFR Brazil, which is the price reference for Product pricing in terms of K2O equivalent content.
  • S-bentonite long term price of US$410.40 per tonne, which is the price reference for Product pricing in terms of Sulphur content.
  • Zinc fertilizer (10%) long-term price of US$400.00 per tonne, which is the price reference for the Product pricing in terms of Zinc content.
  • Boron fertilizer (10%) long term price of US$1,130.00 per tonne, which is the price reference for the Product pricing in terms of Boron content.
  • Copper fertilizer (20%) long term price of US$2,700.00 per tonne, which is the price reference for the Product pricing in terms of Copper content.
  • Manganese fertilizer (10%) long term price of US$120.00 per tonne, which is the price reference for the Product pricing in terms of Manganese content.

 

Mineral Resource Estimate

A combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28% K2O (using a 7.5% K2O cut-off) and an inferred mineral resource of 1.85 billion tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade) are reported for the Project.

The Mineral Resources estimated by the PFS are:

 

Table 04: Mineral Resources Summary[1]

Total Volume (million tonnes) Average Grade (% K2O)
Measured Resource 83 10.13
Indicated Resource 1,389 9.23
Measured & Indicated 1,472 9.28
Inferred 1,850 8.60

 

Capital Cost Estimate

A summary of expected capital costs for each Scenario is presented as follows:

 

Table 07: Capital Costs Summary

Investments (US$ million)
 Description Plant 3 Scenario 23Mtpy Scenario 50Mtpy Scenario
Processing plant
Plants 29.38 70.60 111.17
Conveyor belt and loading wagons N/A N/A 28.49
Unloading of wagons N/A N/A 19.12
Processing subtotal 29.38 70.60 158.78
Roads improvement 10.57 30.88 6.80
Railway branch line[2] N/A N/A 283.02
Owner’s cost[3] 5.93 11.42 33.13
Subtotal 45.89 112.90 481.73
Contingencies (15%) 6.88 16.93 72.26
Total 52.77 129.84 553.99

 

Operating Cost Estimate

 

Table 08: Operating Costs Summary

Operating Costs (US$/tonne of Product)
Description Plant 3 Scenario 23Mtpy Scenario 50Mtpy Scenario
Mining[4] 4.55 4.24 4.48
Processing 2.07 2.38 2.01
General and Administrative 4.20 2.81 2.01
Others[5] 0.34 0.29 0.26
Contingency 1.67 1.46 1.31
Total 12.83 11.18 10.07

 

Sensitivity Analysis

Project economics are most sensitive to CAPEX and changes in the Product’s sales price. A sensitivity analysis of the Project’s NPV was carried out for each Scenario, with different sales prices for each Product composition. The charts can be seen in Figures 02 to 10, through the following link:

Figures 02 to 10: NPV sensitivity analysis charts

 

Technical Disclosure

The Pre-Feasibility Study has been prepared by the following Qualified Persons: Mr Bradley Ackroyd (MAIG (C.P.)) who is a principal consulting geologist with Andes Mining Services Ltd. and Dr Beck Nader. (D.Sc., M.Sc., FAIG), who is a principle at BNA Mining Solutions.

Dr Beck Nader. (D.Sc., M.Sc., FAIG), BNA Mining Solutions’ principal, has reviewed and approved the scientific and technical information contained in this news release. Dr Nader is a “Qualified Person” within the meaning of Canadian Securities Administrator’s National Instrument 43-101 (“NI 43-101”).

The Company expects to file a technical report prepared in accordance with NI 43-101 on SEDAR at http://www.sedar.com within 45 days of the date of this release.

 

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.[6] 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®.[7] By the end of 2022, it plans to become 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 7.92 million[10].

Brazil ranks second in global potash demand and is its single largest importer, currently depending on external sources for over 96% of its potash needs. In 2021, potash accounted for approximately 2% of all Brazilian imports by dollar value.

 

Corporate Presentation

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

https://verde.docsend.com/view/2h4fmnwt9apfa42n

 

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: https://bit.ly/InvestorsNL-April2022

 

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 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 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.investor.verde.ag | www.supergreensand.com | www.verde.ag

 

[1] Mineral resources are not mineral reserves and do not have demonstrated economic viability. Effective Date of the mineral resource estimate is March 31, 2014.

[2] The investment in the railway branch construction is expected to be assumed by the rail operator.

[3] Owner’s cost includes licensing, technical studies and projects, land purchase, equipment and personnel mobilization and demobilization.

[4] Mining operating costs are estimated as a weighted average between transport distance and the feedstock’s mass.

[5] Others Include: Mining Labour, Environmental Recovery, Environmental Compensation and Support Facilities Maintenance.

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

[7] See the release at: https://investor.verde.ag/2-5-million-tonnes-per-year-potash-mining-concession-granted-to-verde/

[8] See the release at: https://investor.verde.ag/verde-to-reach-3-million-tonnes-potash-production-capacity-in-2022/

[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] Union of the Agricultural Fertilizers and Correctives Industry, in the State of São Paulo (“SIACESP”, from Sindicato da Indústria de Fertilizantes e Corretivos Agropecuários, no Estado de São Paulo).

Verde releases Market Study and provides update on new Pre-Feasibility Study

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce the conclusion of the Market Study (the “Study”) that will underpin the preparation of the New Pre-Feasibility Study announced by the Company on March 01, 2021 (the “PFS”).

The Study calculated the potential Brazilian agricultural market for potash (“Potassium Oxide” or “K2O”), sulphur (“Sulphur”), and the micronutrients zinc, boron, copper and manganese (the “Micronutrients” or “Zn, B, Cu and Mn”). Sulphur and Micronutrients are added to Verde’s multinutrient potassium fertilizer K Forte® (the “Product”) to produce BAKS®, a product launched by the Company on December 15, 2020, which has a higher selling point. The additional elements contained in BAKS® allow Verde to meet the specific demands of different crops and soil conditions, thereby boosting the overall Brazilian market serviceable by the Company’s products.

The Study was conducted between May 2021 and March 2022 and will be an integral part of the PFS. The PFS will contemplate a scenario of total annual production of up to 50,000,000 tonnes per year (“tpy”) of Verde’s Product, equivalent to 63% of the total Brazilian potash consumption in 2021. The PFS will update the market information included in the Cerrado Verde Project (the “Project”).

The Pre-Feasibility Study completed in December 2017 (“2017 PFS”) evaluated the technical and financial aspects of total annual production of up to 25,000,000 tpy of Product. The 2017 PFS assumed that a railroad connection was needed to distribute the 25,000,000. Now, based on further and more recent studies for the PFS, the Company has determined the viability of using road haulage for distribution logistics of up to 23,000,000 tpy. A rail spur will only be necessary for logistics of production exceeding such amount, therefore postponing the construction of a railroad access and its related capex.

The PFS contemplates three distinct production scenarios, each modelled in light of the latest Study:

  • Scenario A: Annual production of 10Mtpy.
  • Scenario B: Annual production of 23Mtpy.
  • Scenario C: Annual production of 50Mtpy.

The Company has a combined measured and indicated mineral resource of 1.472 Mt at 9.28% K2O and an inferred mineral resource of 1.850 million tonnes at 8.60% K2O (using a 7.5% K2O cut-off grade)[1]. This amounts to 295.70 million tonnes of potash in K2O. In 2021 Brazil’s consumption of potash in K2O was 7.92 million[2].

“We find ourselves at a key juncture in the Company’s journey, we need to choose between the path of safe expansion or blitzscale to a massive production that supplies the majority of Brazil’s potash consumption. The latter is a more ambitious approach that prioritizes Brazilian farmers’ need for a reliable and clean potash source, to help them feed the world. We will choose not what is easier, but rather the  route that is most aligned to our very purpose: to improve the health of all people and the planet.’” said Cristiano Veloso, Verde’s Founder and CEO.

Market Study: Pricing

Potash

The value of the Product’s potash content was calculated based on the cost of KCl, considering the applicable logistic costs from its arrival at Brazilian ports to its final customer. The price for KCl CFR Brazil port adopted for the Study was estimated at US$368.65. The average delivered cost to the farmer was calculated at US$539.16. Table 01 shows the breakdown of KCl cost per tonne delivered to the farmer.

 

Table 01: Breakdown of KCl cost per tonne delivered to the farmer

Description Brazil’s Weighted Average
Amount in US$ Amount in R$
CFR Brazil Port Price 368.65 1,768.35
Brazil Port costs[3] 25.07 132.87
Demurrage 6.00 31.80
AFRMM[4] Tax 8.75 46.38
Cost of transportation from Brazil Port to distributor 37.21 197.22
Average margin added by distributor 81.82 433.64
Average transportation cost from distributor to farmer 12.00 63.60
Total 539.16 2,857.57

Source: Tec-Fértil.

 

Despite the Product’s inherent qualities as a multi-nutrient product, the calculation of its price per tonne was based on its K2O content equivalent, without contemplating the additional nutrients and benefits that it delivers. KCl has 60% K2O whereas the Product has 10% K2O. Therefore, considering the concentration of potash in the Product, a farmer will pay approximately 6 times less per tonne of Product than per tonne of KCl.  As result, the farmers would pay US$89.86 per tonne of Verde’s Product as a source of K2O.

For the purposes of the Study, the Company assumed pricing of the Product’s K2O content at a 5% discount to conventional KCl as part of its market strategy to accelerate Product trial and adoption across an expanding Brazilian market.

 

Sulphur

The value of the Product’s sulphur content was calculated based on the sale price of sulphur from S-bentonite, a widely available source of sulphur. The price for the Study was estimated at US$ 410.40 per tonne of S-bentonite. The feedstock purchased and beneficiated by Verde to produce fertilizer grade sulphur is elemental sulphur. The price for the Study was estimated at US$ 263.97 per tonne for the feedstock.

 

Table 02: Long-term price of the feedstock and similar source of sulphur

Description Feedstock product Similar product
Material Elemental sulphur S-bentonite
Concentration of nutrient (%) 99 90
Price (US$ / per percentage point per tonne of fertilizer, “ppt”) 2.34[5] 4.56[6]

Source: Tec-Fértil.

 

Micronutrients

The Micronutrients’ pricing was based on the average individual amounts of each Micronutrient, in kilograms per hectare, as applied for different crops in different regions of Brazil based on fertilization needs and alternatives. Crops that use the largest amount of Micronutrients are Soybeans, Corn, Coffee, Cotton, Reforestation, and Sugarcane.

 

Table 03: Micronutrients’ feedstock sources for Verde’s Product

Description Zinc Boron Copper Manganese
Feedstock Zinc Oxide Ulexite Copper Oxide Manganese Oxide
Concentration of nutrient (%) 20 10 20 55
Cost (US$/ppt)[7] 17.14 40.00 111.76 10.70

Source: Tec-Fértil.

 

Table 04: Long-term cost of similar sources of Micronutrients including soil application cost

Description Zinc Boron Copper Manganese
Concentration (%) 10 10 20 10
Price (US$/ppt)[8] 40.00 113.00 135.00 12.00

Source: Tec-Fértil.

 

The amount paid by the farmer per tonne of Product as a source of K2O plus sulphur and micronutrients varies according to the intended concentration of each nutrient. A weighted average price for this Product being a source of K2O plus sulphur and micronutrients delivered to the farm was assumed at US$109.19 per tonne.

 

Market Share

Future demand estimates for nutrients relied on parameters of total planted area, crop and productivity. In addition, the Study accounted for the percentage of producers that apply each nutrient, in light of crop requirements, supply and fertilization alternatives. These criteria were used to calculate the demand for potash, sulphur, and micronutrients on a state-by-state basis across Brazil.

 

Potash

The Study detailed the Brazilian market share for potash that the Project will be able to supply. Table 05 presents Brazil’s historical consumption of K2O from 2000 to 2020, and the projected consumption up to 2070, with the equivalent amount of K Forte demand.

 

Table 05: Historical and projected Brazilian K2O consumption and K Forte® equivalent

Year Brazilian K2O Consumption (tonnes) Equivalent amount of Verde’s Product 10% K2O (tonnes)
2000 2,713,562 27,135,620
2010 3,999,706 39,997,060
2020 6,810,773 68,107,730
2030 8,358,971 83,589,710
2070 12,499,412 124,994,120

Sources: ANDA (potash consumption from 2000 to 2020) and Tec-Fértil (potash demand forecast up to 2070)

 

Sulphur

According to the Study, the Project would be able to supply 11.66% of the Brazilian sulphur market in Scenario A, 27.28% in the Scenario B and 53.78% in Scenario C. Table 06 presents an estimated consumption value for sulphur in 2020, and the projected consumption up to 2070 according to agribusiness growth forecast.

 

Table 06: Brazilian sulphur consumption

Year Brazilian sulphur Consumption (tonnes)
2020 1,794,297
2030 2,239,164
2070 3,348,286

Source: Tec-Fértil, 2022 (Calculation of sulphur consumption in 2020 and sulphur demand forecast for 2070)

 

Micronutrients

The Study detailed the Brazilian market share for Micronutrients that the Project will be able to supply under the three scenarios of production, as shown in Table 07:

 

Table 07: Targeted market share for Zn, B, Cu and Mn in Brazil

Micronutrient Zinc Boron Copper Manganese
Market share Scenario A (10M tpy) 12.97% 17.61% 12.53% 8.66%
Scenario B (23M tpy) 29.43% 37.87% 30.46% 24.68%
Scenario C (50M tpy) 55.73% 62.68% 54.77% 56.06%

Source: Tec-Fértil, 2022.

 

Table 08 presents an estimated consumption value for zinc, boron, copper and manganese in 2020, and the projected consumption up to 2070 according to agribusiness growth forecast.

Table 08: Brazilian Zn, B, Cu and Mn consumption

Year Brazilian Consumption (tonnes)
Zinc Boron Copper Manganese
2020 25,315 26,831 5,382 10,310
2030 31,967 34,301 6,793 13,265
2070 47,801 51,291 10,158 19,836

Source: Tec-Fértil, 2022 (Calculation of micronutrients consumption in 2020 and micronutrients demand forecast for 2070).

“It is hard to overstate the importance of the Market Study because it underscores Verde’s potential market growth in what is the world’s fastest expanding agricultural producer: Brazil.  More than ever, we will continue working to improve our technologies and to ramp-up our production, aiming to establish Verde’s Products as a major brand in Brazil’s agricultural scene”, concluded Mr. Veloso.

 

About Tec-Fértil

The Market Study was done by Tec-Fértil, a leading agricultural consulting company, founded in 1997 by José Francisco da Cunha.

Mr. Cunha holds an agronomist degree from the School of Agriculture of the University of São Paulo (“ESALQ”, from Escola Superior de Agricultura da Universidade Luiz de Queiroz), and postgraduate degrees in Marketing and Finance, with extensive experience in fertilizers, soil fertility, research, commercialization of inputs and technical support in the agricultural sector since 1979.

Mr. Cunha’s work is committed to the environment and focused on sustainable agriculture and the efficient and responsible use of fertilizers.

 

About Verde AgriTech

Verde is an agricultural technology company that produces 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.

 

Corporate Presentation

For further information on the Company, please view shareholders’ deck: https://verde.docsend.com/view/ey7n8ndafmgts2dz

 

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: https://bit.ly/InvestorsNL-March2022

 

Cautionary Language and Forward-Looking Statements

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.

 

For additional information please contact:

Cristiano Veloso, President, Chairman & Chief Executive Officer

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

www.investor.verde.ag | www.supergreensand.com | www.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 2017.

[2] Union of the Agricultural Fertilizers and Correctives Industry, in the State of São Paulo (“SIACESP”, from Sindicato da Indústria de Fertilizantes e Corretivos Agropecuários, no Estado de São Paulo).

[3] The costs of ports and transport from the port to the distributor are represented by the weighted average considering the demand in tonnes for each one of the ports in Brazil.

[4] Additional Freight for the Renewal of the Merchant Marine. This is an additional charge on freight levied by Brazilian and foreign shipping companies operating in Brazilian ports based on the bill of lading and the cargo manifest.

[5] Taxes and logistical costs already included in the feedstock acquisition value. Long-term cost per tonne of elemental sulphur = US$ 263.97.

[6] Sulphur is predominantly applied as an additive to macronutrient formulations (such as N, P and K). Therefore, the nutrient’s logistical and application costs are considered in the formulations of the products in which they are found. Long-term cost per tonne of S-Bentonite = US$ 410.40.

[7] Long-term cost per tonne of feedstock: Zinc Oxide = US$ 342.80; Ulexite = US$ 400.00; Copper Oxide = US$ 2,235.20; and Manganese Oxide = US$ 588.50.

[8] Long-term cost per tonne of similar product including soil application cost: Granulated zinc = US$ 400.00; Granulated boron = US$ 1,130.00; Granulated copper = US$ 2,700.00; and Granulated manganese = US$ 120.00.