OTCMKTS:VNPKF Archives - Verde AgriTech

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

Investor Relations Verde AgriTech — Wed, 15 Nov 2023 01:00:22 +0000

(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]	CO_{2 Stored} (kg CO₂e / t)	CO_{2Supply 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 ∆
Month	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:

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.
The market also demonstrates a returning stability in urea, MAP 11-52 and sulphur fertilizers prices following last year’s volatile scenario.
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.
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.
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.
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:

Micronutrients added to BAKS® increase its production cost, rendering K Forte® less expensive to produce.
Production costs vary based on packaging type, with bulk packaging being less expensive than Jumbo Bags.
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

The post Verde achieves C$9.4 million revenue and increases cash position by 82% in the third quarter of 2023 appeared first on Verde AgriTech.

Verde to Present at the LD Micro Main Event XVI

Investor Relations Verde AgriTech — Tue, 03 Oct 2023 22:12:07 +0000

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.

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].

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

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.

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

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

The post Verde to Present at the LD Micro Main Event XVI appeared first on Verde AgriTech.

Automatic Securities Disposition Plan Established by Verde AgriTech Chief Executive Officer

Investor Relations Verde AgriTech — Fri, 29 Sep 2023 00:33:34 +0000

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) today announced that its President and Chief Executive Officer, Cristiano Veloso, established an automatic securities disposition plan (“ASDP”) in accordance with applicable Canadian securities legislation and the Company’s internal policies. The ASDP has been established by Mr. Veloso for personal and financial planning purposes and does not reflect Mr. Veloso’s views on the future prospects of the Company. Mr. Veloso will continue to hold a significant equity interest in the Company following the sale of shares under the ASDP.

The ASDP permits trades to be made in accordance with pre-arranged instructions given when Mr. Veloso was not in possession of any material undisclosed information. The ASDP will be effective on October 10, 2023 (the “Effective Date”) and sales of shares under the ASDP may commence on the Effective Date. Any sale will be restricted to a pre-determined percentage of daily volume and minimum prices.

Up to 4,903,967 shares, representing approximately 9% of the issued and outstanding shares of the Company, may be sold under the ASDP implemented by Mr. Veloso. The ASDP is designed to allow for an orderly disposition of the shares at prevailing market prices over the course of the 36-month period that sales under the ASDP are expected to take place.

Mr. Veloso has provided pre-arranged instructions in writing to the independent agent administering the ASDP, including the number of securities to be sold and setting out minimum trade prices. The number of shares that may be sold on a daily basis at a particular sale price will be limited based on share price and daily trade volumes.

The ASDP prohibits the agent administering the ASDP from consulting with Mr. Veloso regarding any sales under the ASDP and prohibits Mr. Veloso from disclosing to the agent any information concerning the Company that might influence the execution of the ASDP. The ASDP has been authorized and established in the form approved by the Company and contains meaningful restrictions on the ability of Mr. Veloso to amend, suspend or terminate the ASDP.

This announcement is made and will be available on SEDAR at www.SEDAR.ca pursuant to the recommended practices set forth in Staff Notice 55-317 Automatic Securities Disposition Plans of the Canadian Securities Administrators. Information regarding the ASDP and transactions thereunder, as the case may be, may be accessed on SEDI at www.sedi.ca.

About Verde AgriTech

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.[1] 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.[2] 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).[3] 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[4].

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

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.

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

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

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

[3] 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

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

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

The post Automatic Securities Disposition Plan Established by Verde AgriTech Chief Executive Officer appeared first on Verde AgriTech.

Railway to freight up to 50Mtpy of Verde’s Product granted construction permit

Investor Relations Verde AgriTech — Tue, 12 Sep 2023 14:53:46 +0000

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that the National Land Transport Agency (“ANTT”, from Agência Nacional de Transportes Terrestres) and the Brazilian Ministry of Infrastructure have authorized Verde to build a railway branch line (the “Railway”) to transport up to 50 million tonnes per year (“Mtpy”) of Verde’s multinutrient potassium products, BAKS® and K Forte®, sold internationally as Super Greensand®, (the “Product”).

The Railway will connect Verde’s production facilities to a railway node part of the Ferrovia Centro Atlântica (“FCA“), effectively linking the municipalities of São Gotardo and Ibiá, both in the state of Minas Gerais. FCA is the largest railroad network in Brazil, interconnecting seven states and the Federal District. The FCA railways are the main freight route between the Southeast, Northeast and Midwest regions in Brazil.[1]

“Verde’s mining sites hold Brazil’s largest identified potash deposit, boasting resources of 3.32 billion tonnes, compliant with the NI 43-101 standard.[2] By connecting our production facilities to the country’s main potash consumption hubs, the Railway will provide farmers with access to a more reliable and increased Product supply. This represents another important milestone in Verde’s dual objectives: reduce Brazil’s dependence on imported potash and expand Verde’s capability to every year capture up to 6.0 million tonnes of carbon dioxide (CO2) every year,[3] thereby making a true contribution to mitigating climate change,” commented Cristiano Veloso, Verde’s founder and CEO.

Verde’s Carbon Capture Potential

With Verde’s carbon capture technology, the Company’s current installed production capacity of 3.00 million tonnes per year has the capability to capture and offset up to 0.36 million tonnes of CO₂ annually.

In the Company’s 50.00 million tonnes production scenario, we aim to emerge as one of the world’s largest carbon capture projects, with a substantial total of 6.00 million tonnes of CO₂ permanently removed from the atmosphere each year. Verde’s 3.32 billion tonnes of mineral resources hold the total carbon removal potential of 0.40 gigatonnes of CO₂.

Railway’s Next Steps

With the authorization of ANTT and the Brazilian Ministry of Infrastructure granted, a contract between ANTT and Verde authorizing the exploration of the Railway in a private regime shall be subsequently signed. After that, the Company will start the environmental and engineering studies for this project.

Based on the studies for the Pre-Feasibility Study filed by the Company in 2022 (the “PFS”), Verde has determined the viability of using road haulage for distribution logistics of up to 23Mtpy of Product. A rail spur will only be necessary for logistics of production exceeding such amount.

Railway’s Capital Expenditure

The PFS estimates a CAPEX of US$283.02 million[4] for the construction of a railway from São Gotardo to Ibiá to transport up to 50Mtpy of Product. The total CAPEX estimated in the PFS for the 50Mtpy Scenario is US$ 553.99 million, which includes the railway branch line, processing costs, road improvement, licensing, technical studies and projects, land purchase, equipment, personnel mobilization and demobilization, and a 15% contingency amount.

The table below shows the 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$/tonne of Product	8.06
General and Administrative Expenses	US$/tonne of Product	2.01
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

As stated in the press release published by the Company on May 16, 2022,[5] FCA, the railway operator, is expected to assume the investment costs for the construction of the railway branch. Verde is studying the possibility of potential partnerships for technical support in the Railway implementation and logistics operation.

About Verde AgriTech

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®. In 2022, it became Brazil’s largest potash producer by capacity.[7] 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).[8] 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[9].

Corporate Presentation

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

https://verde.docsend.com/view/wj5mmrkeegd8qfz5

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

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.

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

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] Source: https://www.fcatransforma.com.br/

[2] Verde had 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). This amounts to 295.70 million tonnes of potash in K₂O.

For further details, 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

[3] See “Verde’s Products Remove Carbon Dioxide From the Air”. Available at: https://investor.verde.ag/verdes-products-remove-carbon-dioxide-from-the-air/

[4] For further information, please see page 264 of the PFS: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf

[5] See the press release at: https://investor.verde.ag/wp-content/uploads/2022/05/Verde-AgriTech-Press-Release-Pre-Feasibility-Results-May-16-2022.pdf

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

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

[8] 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

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

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

The post Railway to freight up to 50Mtpy of Verde’s Product granted construction permit appeared first on Verde AgriTech.

Verde Appoints Chief Marketing Officer

Investor Relations Verde AgriTech — Tue, 22 Aug 2023 11:21:21 +0000

Newton Nagumo brings over two decades of successful communication and marketing planning expertise to boost Verde’s market strategy

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce the appointment of marketing veteran Newton Nagumo to the position of Chief Marketing Officer (“CMO”). Mr. Nagumo is brand marketing leader with a 20-year track record of driving transformative innovation and guiding high-performing teams to achieve substantial growth for major Brazilian and global corporations. Mr. Nagumo will join Verde’s leadership team to oversee brand and product marketing, creative initiatives, consumer insights, and global communications.

As CMO, Mr. Nagumo will collaborate closely with the operations team to bolster sales efforts and will devise and execute strategies to fortify Verde’s position as one of the world’s largest carbon capture initiatives.[1]

In 2022, as the Chief Strategy Officer of a leading Brazilian marketing firm, Mr. Nagumo oversaw Verde’s rebranding strategy. During that occasion, he interviewed many of the Company’s customers and studied the sector and Verde’s main competitors.

“We are delighted to have Newton Nagumo’s competence and leadership at Verde to amplify our sales efforts and bolster the Company’s market reputation,” commented Mr. Veloso. “With his extensive brand experience, costumer-centric marketing approach, and ability to build and inspire teams, we are confident that he will propel Verde to the next level.”

Throughout his corporate journey, Mr. Nagumo held managerial and leadership roles overseeing strategic communication and marketing planning teams at renowned advertising agencies including Asia (a spin-off of Africa), Heads, JWT, Dentsu, W/Brasil, among others.[2] He has crafted comprehensive communication strategies and orchestrated successful campaigns for clients such as Nestlé, Johnson & Johnson, Unilever, Ford, Toyota, Renault, Braskem, and Mondelez. Furthermore, Mr. Nagumo presides over the Grupo de Planejamento,[3] a non-profit organization that brings together professionals specializing in brand and communication planning and strategy.

“I’m excited to take on the challenge and privilege of joining Verde at this key juncture in its trajectory. The Company has an explosive mix of ingredients in its carbon capture potential and sustainable agriculture nature that will allow it to take off in Brazil and the global stage,” affirmed Mr. Nagumo.

Mr. Nagumo holds postgraduate degrees in marketing and service management and a B.A. in advertising, both from the Escola Superior de Propaganda e Marketing, considered the leading institution for marketing and advertising education in Brazil.[4] He has also pursued specialized studies in controller and strategic business management, through various courses throughout his career at institutions such as the Miami Ad School and Hyper Island.

Corporate restructuring

As part of the corporate senior management restructuring strategy, the hiring of Mr. Nagumo represents another step in the Company’s commitment to establish a senior commercial team to support Verde’s growth plans. This senior team will shoulder the responsibility of steering the Company towards the milestone of 50 million tonnes of annual production, while concurrently working to expedite the development of one of the world’s largest carbon capture projects.

“After announcing our plans to enter the carbon markets through the sale of carbon credits,[5] Verde has reached a juncture where we need to enhance our corporate structure and bring on expanded expertise. As part of our corporate restructuring strategy, Verde plans to announce the hiring of a Chief Revenue Officer and a Vice-President of Corporate Development in the near future. These positions will also play a pivotal role in executing corporate decisions and strategies to blitzscale the Company’s growth,” explained Mr. Veloso.

Among their responsibilities, Verde’s CRO and VP of Corporate Development will oversee operational processes across the organization, identify avenues for improvement, refine project protocols in alignment with quality standards and business requirements, and chart new paths for revenue while building the necessary mechanisms to attain these goals.

About Verde AgriTech

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®. In 2022, it became Brazil’s largest potash producer by capacity.[7] 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).[8] 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[9].

Corporate Presentation

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

https://verde.docsend.com/view/7r546idj7tphn478

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

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.

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

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] See “Verde’s Products Remove Carbon Dioxide From the Air”: https://investor.verde.ag/verdes-products-remove-carbon-dioxide-from-the-air/

[2] For further information, see: Asia // The Experience Co., Africa, Heads, JWT, Dentsu, and W/Brasil.

[3] For further information, see: https://grupodeplanejamento.com/

[4] ESPM’s Accreditations & Rankings: https://international.espm.br/accreditations-rankings/

[5] See “Verde to Sell Carbon Credits”: https://investor.verde.ag/verde-to-sell-carbon-credits/

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

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

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

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

The post Verde Appoints Chief Marketing Officer appeared first on Verde AgriTech.

Verde achieves C$10.3 million revenue, 81% gross margin and C$2.1 million EBITDA in the second quarter of 2023

Investor Relations Verde AgriTech — Mon, 14 Aug 2023 10:53:11 +0000

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q2 2023: C$1.00 = R$3.76)

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce its financial results for the second quarter ended June 30, 2023 (“Q2 2023”).

“We are reassured by Verde’s renewed net profit despite the most challenging fertilizer market conditions in recent years. Brazilian farmers have grappled with the convergence of the highest interest rates since 2006 and their dependence on credit. This peaked in Q2 2023, period when farmers must acquire inputs for the upcoming planting season, a challenge compounded by the dip in agricultural commodity prices exactly when their crops should be marketed. In this extraordinary context, foreign fertilizer companies with lower capital cost can offer better terms to Brazilian farmers, who have a difficult choice between the products they want to buy and the ones they can afford to finance”, commented Cristiano Veloso, Founder, President & CEO of Verde.

Q2 2023 Financials

Sales of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”) by volume in Q2 2023 were 107,000 tonnes, compared to 202,000 tonnes in Q2 2022.
Revenue in Q2 2023 was $10.3 million, compared to $24.9 million in Q2 2022.
Cash and trade receivables held by the Company in Q2 2023 were $23.8 million, compared to $22.1 million in Q2 2022
EBITDA before non-cash events in Q2 2023 was $2.1 million, compared to $10.8 million in Q2 2022.
Total non-current assets in Q2 2023 were $69.6 million, compared to $40.9 million in Q2 2022.
Net profit in Q2 2023 was $0.2 million, compared to a $9.6 million profit in Q2 2022.
In Q2 2023, 8,480 million tonnes of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride (“KCl”) fertilizers.[1] A total of 129,682 tonnes of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production.[2]

“Amidst this landscape of market downturns, we acknowledge the potential for even greater performance in this quarter had Verde been able to compete on level ground with companies boasting larger financial resources and consequentially better credit terms for farmers. Achieving a profitable quarter in the face of adversities underscores our Company’s resilience and ability to navigate intricate markets, demonstrating our capacity to not only survive but also thrive under conditions where smaller players would often falter.”, stated Mr. Veloso.

“Currently, the agricultural market is showing early signs of recovery. Agricultural commodity prices are no longer experiencing a rapid decline and interest rates in Brazil have started to decrease from their elevated levels. We anticipate that these shifts will soon mitigate the extraordinary distortions that temporarily favoured competitors with lower capital costs, thereby easing the challenges of this competitive market environment,” concluded.

Subsequent Events

In July 2023, the Company announced the carbon capture properties of its Products 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 (“CO₂”) capture is inherent to the Products and is estimated at 120kg per tonne. The CO₂removal does not require any change to the Products’ production and farmland application methods, nor does it change the nutritional benefits to plants. As a result, in the production scenario of 50Mtpy,[3] Verde would be one of the world’s largest carbon capture projects with a total of 6 million tonnes of CO₂ permanently subtracted from the atmosphere every year.
In July 2023, Verde announced that it is in advanced negotiations to sell carbon credits to major international corporations that are established purchasers of permanent carbon offset. Currently, carbon credits for permanent carbon offset similar to Verde’s are being sold at prices up to US$500 per tonne.[4]

Market Overview

Commodity Prices

The agricultural commodities market has been experiencing significant fluctuations on a downward trend for the last months, impacting the fertilizers’ market worldwide. The table below shows the shifts in the price of some of the main commodities in Brazil:

2022-2023 variance in Brazilian commodities prices (% R$)^[5]

Month	YoY ∆
Month	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%
H1 (Jan/Jun) ∆	-19%	-22%	-20%	-36%

Notably:

Soybean: Average price experienced a 19% decline in H1 2023 compared to H1 2022, and a further decrease of 27% in Q2 2023 compared to Q2 2022.
Corn: Average price experienced a 20% decline in H1 2023 compared to H1 2022, and a further decrease of 28% in Q2 2023 compared to Q2 2022.
Coffee: Average price experienced a 22% decline in H1 2023 compared to H1 2022, and a decrease of 20% in Q2 2023 compared to Q2 2022.
Cotton: Average price experienced a 36% decline in H1 2023 compared to H1 2022, and a further decrease of 46% in Q2 2023 compared to Q2 2022.

Brazilian Economy

On August 5, 2023, the Central Bank of Brazil (the “Bank”) lowered its monetary policy interest rate (“SELIC”) by 0.5%, from 13.75% to 13.25%.[6] On August 7, 2023, the Boletim Focus, a weekly report released by the Bank and representing the collective outlook of financial institutions regarding crucial economic indicators, projected that the SELIC rate will reach 11.75% per annum by the end of 2023.

The most recent instance of the Bank reducing the SELIC occurred in August 2020, when the rate decreased from 2.25% to 2% per annum as a response to the economic downturn induced by the COVID-19 pandemic. Following this, the Monetary Policy Committee (“Copom”) of the Bank initiated a sequence of 12 consecutive rate hikes, commencing in March 2021. This series unfolded against the backdrop of escalating prices in essential commodities like food, energy, and fuel. Since August of the preceding year, the rate has remained fixed at 13.75% per annum for seven consecutive periods[7].

Looking ahead to the conclusion of 2024, the projection envisages a decline in the SELIC rate to 9% per annum. Both 2025 and 2026 are forecasted to witness a rate of 8.5% per annum.[8]

The latest economic activity indicators consistently align with a scenario of deceleration. Annual inflation has eased to 3.99% in the last 12 months.[9] 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[10]

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	13.25%
2023 Forecast	11.75%
2024 Forecast	9.00%
2025 Forecast	8.50%

Agricultural Inputs Market and Credit Crunch

The current agricultural market landscape presents enormous challenges. We are observing exceptional and extreme circumstances characterized by a sharp depletion of farmers’ working capital due to a significant plunge in agricultural commodity prices, occurring precisely when farmers are ready to bring their crops to market.

As the prices of commodities initiated their downward trajectory in 2023, many farmers chose to delay their crop sales, anticipating a market rebound that would fetch more favourable prices. Unfortunately, the market continued to witness a persistent decline in commodity prices.

This convergence aligns precisely with the timeframe when farmers need to buy essential agricultural inputs, including fertilizers, for the upcoming planting season. Consequently, farmers are grappling with challenges in financing their planting activities.

As a result, they 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.

Global Market Competition and Financing

Amidst the most challenging conditions experienced by the fertilizer market in recent years, we are grappling with a convergence of two critical factors: the highest interest rates since 2006 and the pressing credit requirements of farmers. These farmers are facing the dilemma of diminished working capital just when they need to acquire inputs for the imminent planting season. This challenge stems from the notable decline in agricultural commodity prices, which coincides with the period when their crops are due to be marketed.

Verde’s average cost of debt is 16.6%[11]. To incentivize sales, Verde 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 18.6% for credit-based purchases. The Company’s ability to provide financing with longer tenors is considerably lower compared to international players[12], 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.

On the other hand, Verde’s international competitors benefit from significantly lower financing costs within their respective countries, along with larger financial capacities. This enables them to provide more attractive interest rates and commercial conditions to farmers, effectively conferring them a competitive advantage, as depicted in the following table, which compares major NPK producers and trading companies’ finance costs to Verde’s:

Comparative Proxy of Finance Costs Between International Major Players and Verde[13],[14]

Company	Cost of Finance (% annual rate in local currency)
Cargill	5.0%
Nutrien	5.2%
Bunge	5.2%
Mosaic	5.7%
Yara	6.2%
Verde (Average cost of debt)	16.6%[15]

In this context, the competition within the agricultural inputs market grows more intense, and Verde’s capacity to offer competitive credit terms faces constraints due to its higher cost of debt relative to its larger competitors.

The convergence of all the aforementioned factors during a specific timeframe within crop cycles characterizes the current scenario as an atypical and extreme circumstance for Verde and for the agricultural sector in general.

Average KCl Price

The price of potassium chloride (KCl) has exhibited a consistent downward trend since H2 2022. The Average KCl CFR declined by 67% in Q2 2023, compared to Q2 2022, with a sharp 40% decrease from January to July 2023.

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

KCl Brazil CFR average spot price (US$)[16]

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	–	–
September	711	–	–
October	624	–	–
November	571	–	–
December	513	–	–

Exchange Rate

The fluctuation in the exchange rate between the US dollar and the Brazilian Real during the quarter also influences the Company’s results. As the US dollar weakened by 10% against the Brazilian Real during the year, Verde’s sales revenue, priced based on potassium chloride, suffered a decline when converted to Brazilian Real.

Canadian dollar devaluated by 6% versus Brazilian Real in Q2 2023, with and average exchange rate of R$3.76 in the quarter, compared to R$3.99 in Q2 2022.

Mr. Veloso commented: “The confluence of these numerous factors gives rise to an exceptional scenario, not only for Verde but also for the broader agricultural sector. It is crucial to highlight though that these market conditions would not present the same level of challenge to us if it were not for the constraints on farmers’ working capital”.

Selected Annual Financial Information

The table below summarizes Q2 2023 financial results compared to Q2 2022:

All amounts in CAD $’000	3 months ended Jun 30, 2023		3 months ended Jun 30, 2022	6 months ended Jun 30, 2023	6 months ended Jun 30, 2022
Tonnes sold ‘000		107	202	215	314
Average Revenue per tonne sold $ er tonne sold		96	123	99	115
Average Production cost per tonne sold $		(18)	(26)	(26)	(25)
Average Gross Profit per tonne sold $ s fit per t		79	97	74	90390
Gross Margin		81%	79%	74%	78%

Revenue		10,305	24,861	21,430	36,165
Production costs i⁽¹⁾ on costs		(1,914)	(5,332)	(4,623)	(7,987)
Gross Profit		8,391	19,529	16,807	28,178
Gross Margin		81%	79%	78%	78%
Sales and marketing expenses		(1,124)	(1,070)	(2,331)	(2,028)
Product delivery freight expenses		(3,723)	(7,040)	(7,590)	(10,013)
General and administrative expenses		(1,442)	(655)	(2,814)	(1,696)
EBITDA ⁽²⁾		2,102	10,764	4,072	14,441
Share Based and Bonus Payments (Non-Cash Event)⁽³⁾		144	(40)	116	(104(1(104))
Depreciation, Amortisation and P/L on disposal of plant and equipment ⁽³⁾		(968)	(38)	(1,880)	(64)
Operating Profit after non-cash events		1,278	10,686	2,308	14,273
Interest Income/Expense ⁽⁴⁾		(951)	(245)	(1,993)	(4(430)
Net Profit before tax		327	10,441	315	13,843
Income tax ⁽⁵⁾		(86)	(816)	(182)	(1,18(1,186))
Net Profit		241	9,625	133	12,657

⁽¹⁾ – C$1,770,000 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

For further details, please refer to the Market Overview section (page 03):

Q2 2023 compared with Q2 2022

EBITDA and EPS

The Company had an EBITDA of $2,102,000 in Q2 2023, compared to $10,764,000 in Q2 2022. This decrease can be mainly attributed to the factors below, outlined in greater detail within the Market Overview section (please refer to page 03):

Extreme market conditions and working capital crunch: The current agricultural market scenario is characterized by extreme challenges, including a working capital crunch for 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 credit constraints: 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 favourable 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 favourable credit options. The convergence of these factors magnifies the challenge posed by the extreme agricultural market conditions outlined earlier.

Potassium chloride price decline: The average price of KCl CFR Brazil experienced a substantial 67% decrease in the quarter, with a sharp 40% decrease from January to July 2023.
Exchange rate fluctuations: The fluctuation in the US dollar to Brazilian Real exchange rate during the quarter also impacted the Company’s results. As the US dollar depreciated by 10% against the Brazilian Real during the year, the value of sales in Brazilian Real prices decreased.
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 15% to 8% in the second quarter of 2023.

Basic earnings per share was $0.005 for Q2 2023, compared to earnings of $0.189 for Q2 2022.

Product Sales

Sales by volume decreased by 47% in Q2 2023, to 107,000 tonnes sold, compared to 202,000 tonnes sold in Q2 2022, due to the circumstances summarized below. This decrease can be mainly attributed to the factors below, outlined in greater detail within the Market Overview section (please refer to page 03):

Extreme market conditions and working capital crunch: The agricultural market faces unprecedented challenges, driven by low commodity prices and financial instability. Farmers struggle to secure financing for planting activities, leading them to opt for extended payment terms from suppliers, combined with the most competitive interest rates achievable.
Intensified competition and credit constraints: Verde’s international competitors benefit from lower financing costs and larger balance sheets, allowing them to offer better credit terms to farmers. Verde’s higher cost of debt limits its ability to match these offers, accentuating the challenge posed by extreme market conditions.
Potassium chloride price decline: The average price of Potassium Chloride (KCl) CFR Brazil saw a significant 67% decline in the quarter, with a sharp 40% drop from January to July 2023.
Exchange rate fluctuations: Shifting exchange rates, with the US dollar depreciating by 10% against the Brazilian Real, impacted Verde’s sales value in Brazilian Real prices.

The conjunction of these factors brought specific challenges for Verde and impacted its Product sale during the quarter.

Revenue

Revenue from sales decreased by 59% in Q2 2023, to $10,305,000 from the sale of 107,000 tonnes of Product, at average $96 per tonne sold; compared to $24,861,000 in Q2 2022 from the sale of 202,000 tonnes of Product, at average $123 per tonne sold.

Average revenue per tonne excluding freight expenses (FOB price) decreased by 31% in Q2 2023, to $61 compared to $88 in Q2 2022 mainly due to the decrease in Potassium Chloride CFR Brazil, from US$1040-US$1270 per tonne in Q2 2022 to US$315-US$430 per tonne in Q2 2023.[17] This reduction was partially offset by the 6% appreciation of the Brazilian Real against the Canadian Dollar.

Production costs

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

Micronutrients added to BAKS® increase its production cost, rendering K Forte® less expensive to produce.
Production costs vary based on packaging type, with bulk packaging being less expensive than Big Bags.
Plant 1 produces K Forte® Bulk, K Forte® Jumbo Bag (sold in 1-tonne 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 tonne of product projected for 2023^[18] (C$)	Cash cost	Assets depreciation	Total cost expected for 2023^[19]	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)^[20] 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%

Production costs decreased by 64% in Q2 2023, to $1,914,000 compared to $5,332,000 in Q2 2022. Average cost per tonne decreased by 32% in Q2 2023, to $18 compared to $26 in Q2 2022.

Despite a 47% decrease in sales volume, to 107,000 tonnes in Q2 2023 compared to 202,000 tonnes in Q2 2022, the average production cost in Brazilian Reais decreased to R$66.73 in Q2 2023, compared to R$105.18 in Q2 2022, excluding cost depreciation.

This cost reduction can be mainly attributed to changes in the sales mix of packaging type, with a decrease in the percentage of Products sold in Jumbo Bags to 21% in Q2 2023, compared to 39% in Q2 2022.

Similarly, the sales mix between BAKS® and K Forte® also underwent a shift, with the percentage of BAKS® sales decreasing to 8% in Q2 2023, compared to 15% in Q2 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	3 months ended Jun 30, 2023	3 months ended Jun 30, 2022	6 months ended Jun 30, 2023	6 months ended Jun 30, 2022
Sales and marketing expenses	(1,030)	(711)	(2,100)	(1,533)
Fees paid to independent sales agents	(94)	(359)	(231)	(495)
Total	(1,124)	(1,070)	(2,331)	(2,028)

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 increased by 45% in Q2 2023 to $1,030,000 compared to $711,000 in Q2 2022.

This increase can be primarily attributed to the implementation of a field sales team, which resulted in expenses related to salaries car rentals and travel. Additionally, the Company made additional investments in events and media, as part of its sales strategy.

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 decreased by 74% in Q2 2023, to $94,000 compared to $359,000 in Q2 2023, in accordance with the decrease in revenue for the quarter.

Product delivery freight expenses

Product delivery freight expenses decreased by 47% in Q2 2023, to $3,723,000 compared to $7,040,000 in Q2 2022. This reduction can be attributed to the lower sales volume on a Cost Insurance and Freight (CIF) basis, which decreased to 73,000 tonnes in Q2 2023, down from 138,000 tonnes in Q2 2022. Notably, the volume sold as CIF as a percentage of the total sales in the quarter remained stable at 68% during this period.

In Q2 2023, the average freight cost per tonne of the product sold on a CIF basis was $34.53, slightly lower compared to $34.81 in the previous year.

General and Administrative Expenses

CAD $’000	3 months ended Jun 30, 2023	3 months ended Jun 30, 2022	6 months ended Jun 30, 2023	6 months ended Jun 30, 2022
General administrative expenses	(888)	(389)	(1,809)	(799)
Legal, professional, consultancy and audit costs	(290)	(77)	(607)	(488)
IT/Software expenses	(231)	(185)	(343)	(390)
Taxes and licenses fees	(33)	(4)	(56)	(19)
Total	(1,442)	(655)	(2,814)	(1,696)

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 128% in Q2 2023, to $888,000 compared to $389,000 in Q2 2022. This increase can primarily be attributed to severance costs, with an expected cumulative annual cost reduction of $588,000.

Furthermore, in Q2 2023, the Company set aside a bad debt provision of $25,000, within the total revenue of $75,000,000 generated over the preceding 12 months. As outlined in Verde’s sales policy, any outstanding customer payments overdue for more than 12 months are required to be provisioned.

Legal, professional, consultancy and audit costs

Expenses increased by 278% in Q2 2023, to $290,000 compared to $77,000 in Q2 2022. The primary reason for this increase can be attributed to higher expenditures linked to the Company’s re-domiciliation to Singapore. This transition encompassed the engagement of Singaporean accounting, auditing, legal, and corporate secretariat service firms as third-party corporate support providers after July 2022.

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 25% in Q2 2023, to $231,000 compared to $185,000 in Q2 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 licences

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

Expenses increased in Q2 2023, to $33,000 compared to $4,000 in Q2 2022 and increase of $29,000. This increase was mainly driven by the application of federal taxes on the Company’s financial revenues. Additionally, in Q2 2023, there were reclassifications of tax expenses that had been inaccurately categorized as costs to General and Administrative expenses, aiming to align with proper accounting standards.

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 Q2 2023 decreased by $184,000 with a credit balance of $144,000 compared to $40,000 expense in Q2 2022. The decrease is a result of the reversal of the Q4 2022 equity compensation of $178,000 which has subsequently been settled with stock options issued to directors rather than share issues.

Liquidity and Cash Flows

For additional details see the consolidated statements of cash flows for the quarters ended June 30, 2023 and June 30, 2022 in the quarterly financial statements.

Cash received from / (used for): CAD $’000	3 months ended Jun 30, 2023	3 months ended Jun 30, 2022	6 months ended Jun 30, 2023	6 months ended Jun 30, 2022
Operating activities	(3,597)	8,189	(6,874)	11,473
Investing activities	(329)	(12,480)	(2,218)	(15,862)
Financing activities	5,777	1,507	13,940	4,312

On June 30, 2023, the Company held cash of $6,227,000, an increase of $4,633,000 on the same period in 2022.

Trade and other receivables increased by 35% in Q2 2023, to $27,749,000 compared to $20,528,000 in Q2 2022. Trade and other payables decreased by 42% in Q2 2023 to $6,912,000 compared to $11,839,000 in Q2 2022.

Q2 2023 Results Conference Call

The Company will host a conference call on Tuesday, August 15, 2023, at 08:00 am Eastern Time, to discuss Q2 2023 results and provide an update. Subscribe using the link below and receive the conference details by email.

Date:	Tuesday, August 15, 2023
Time:	08:00 am Eastern Time
Subscription link:

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

The Company’s first quarter financial statements and related notes for the period ended March 31, 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 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.[21] 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.[22] 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).[23] 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[24].

Corporate Presentation

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

https://verde.docsend.com/view/hdn7hqh4kc7hdnps

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

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.

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

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] 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.

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.

[2] 1 tonne of Product (10% K₂O) has 0.1 tonnes of K₂O, which is equivalent to 0.17 tonnes of potassium chloride (60% K₂O), containing 0.08 tonnes of chloride.

[3] For further information on Verde’s NI 43-101 Pre-Feasibility Technical Report, see the press release at:  https://investor.verde.ag/wp-content/uploads/2022/05/Verde-AgriTech-Press-Release-Pre-Feasibility-Results-May-16-2022.pdf

[4] Source: Quantum Commodity Inteligence. Enhanced rock weathering credits offered at up to $536/t. Available at: https://www.qcintel.com/carbon/article/enhanced-rock-weathering-credits-offered-at-up-to-536-t-14332.html

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

[6] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/detalhenoticia/17942/nota

[7] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/estatisticas/grafico/graficoestatistica/metaselic

[8] Source: Brazilian Central Bank. Available at: https://www.bcb.gov.br/publicacoes/focus/25112022

[9]Source: Brazilian Institute of Geography and Statistics (IBGE). Available at: https://www.ibge.gov.br/explica/inflacao.php

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

[11] Considers average cost of debt related to working capital loans with maturity from September 2023 onwards as of Q2 2023.

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

[13] Source: Bloomberg, as of July 24th, 2023.

[14] Considers each Company most traded bond, which differs considerably from Verde’s tenors. This is likely to imply that large international players have an even lower cost of finance.

[15] Considers average cost of debt related to working capital loans with maturity from September 2023 onwards as of Q2 2023.

[16] Acerto Limited Report.

[17] Source: Acerto Limited Report.

[18] 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 U$/bbl) = US$80.00. Diesel price = U$$1.26. Currency exchange rate: US$1.00 = R$5.25; C$1.00 = R$4.20. Total cost per tonne includes all costs directly related to production and feedstock extraction in addition to assets depreciation.

[19] Total cost per tonne 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.

[20] 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.

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

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

[23] 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

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

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

The post Verde achieves C$10.3 million revenue, 81% gross margin and C$2.1 million EBITDA in the second quarter of 2023 appeared first on Verde AgriTech.

Verde to Sell Carbon Credits

Investor Relations Verde AgriTech — Thu, 27 Jul 2023 12:12:33 +0000

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce that it is in advanced negotiations to sell carbon credits to major international corporations that are established purchasers of permanent carbon offset. Currently, carbon credits for permanent carbon offset similar to Verde’s are being sold at prices up to US$500 per tonne.^[1] The Company is able to generate up to 300,000 tonnes of carbon credit annually via its existing production facilities.

Verde’s silicate rock is rich in the mineral glauconite (the “Rock”), which once processed and applied to the soil removes carbon dioxide (“CO₂“) from the air through a process called Enhanced Rock Weathering (“ERW”).[2] ERW permanently locks CO₂ into the new mineral structure.[3] In 2022 the carbon credit markets totalled US$ 909 billion in transactions.[4]

The Company is fully permitted and equipped to mine and process up to 2.8 million tonnes per year of Rock. To build its mines, Verde acquired farmland that had previously been deforested to open area for pastureland, as its mining progresses Verde fully recovers the land back to original native forests. To date, the Company has planted over 30,000 native and endangered trees.

Verde expects to close its first sales of carbon credit in Q3 2023.

About Verde AgriTech

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.[5] 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.[6] 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).[7] 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[8].

Corporate Presentation

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

https://verde.docsend.com/view/3tv6fma5vq3wsxmn

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

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.

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

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] https://www.qcintel.com/carbon/article/enhanced-rock-weathering-credits-offered-at-up-to-536-t-14332.html

[2] See “Verde’s Products Remove Carbon Dioxide From the Air”, Verde AgriTech. Available at: https://investor.verde.ag/verdes-products-remove-carbon-dioxide-from-the-air/

[3] See e.g. Criteria for High-Quality Carbon Dioxide Removal (microsoft.com), page 36.

[4] “Global carbon markets value hit record $909 bln last year”, VERMA, S.; CHESTNEY, N. Reuters, 2023. Available at: https://www.reuters.com/business/sustainable-business/global-carbon-markets-value-hit-record-909-bln-last-year-2023-02-07/

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

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

[7] 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

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

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

The post Verde to Sell Carbon Credits appeared first on Verde AgriTech.

Verde’s Products Remove Carbon Dioxide From the Air

Investor Relations Verde AgriTech — Wed, 19 Jul 2023 11:12:47 +0000

Independent research shows potential carbon capture of 120kg per tonne of Verde’s Products

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce the carbon capture properties of its K Forte® and Super Greensand® (“Products”), as detailed by an independent study conducted at Newcastle University under the leadership of Prof. David Manning, PhD, a renowned soil scientist (the “Study”). The carbon dioxide (“CO₂”) capture is inherent to the Products and is estimated at 120kg per tonne. The CO₂ removal does not require any change to the Products’ production and farmland application methods, nor does it change the nutritional benefits to plants. As a result, in the production scenario of 50 million tonnes per year (“Mtpy”),[1] Verde would be one of the world’s largest carbon capture projects with a total of 6 million tonnes of CO₂ permanently subtracted from the atmosphere every year.

The Science on Enhanced Rock Weathering and the Study Findings

Enhanced Rock Weathering (“ERW”) is a naturally occurring process whereby CO₂ is removed from the atmosphere when it reacts with silicate minerals present within certain types of rocks. In other words, through weathering, certain types of minerals naturally absorb CO₂ from the air and store it permanently as part of the new mineral structure.

Over many years, Verde’s prospecting led to the identification of a silicate mineral that is rich in glauconite (the “Rock”). It is distinctive in its faster weathering rate compared to other minerals used in ERW schemes, such as basalt, which allows the Rock to capture CO₂ more rapidly. In a parallel benefit, the Rock is a source of several plant nutrients including potassium (represented on the periodic table as “K“), which is a crucial element for plant growth, and is a proven substitute for Potassium Chloride (“KCl”).

To evaluate Verde’s Products, the Company engaged Professor David Manning Ph.D., who is a leading expert in ERW. Dr. Manning has been a member of the Institution of Geologists since 1979, was the president of the Geological Society of London from 2014-2016, member of Council of the European Federation of Geologists (“EFG”) and chaired the EFG’s Panel of Experts on Soil Protection. He has extensive publications on the topic of soil and its role in combating climate change.[2]^,[3]

Analyses performed on Verde’s Products at Newcastle University have confirmed its efficiency to extract CO₂ from the atmosphere at a ratio of 120kg of CO₂ per 1 tonne of Product, based on a well-established scientific calculation formula.[4] In conclusion, Verde’s Rock undergoes ERW to permanently capture atmospheric CO₂ while releasing K and other plant nutrients.

Previously, following extensive geological research of the Rock, including over 40,000 meters of drilling and chemical analyses, Verde had 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).[5] This amounts to 295.70 million tonnes of potash equivalent in K₂O. For context, in 2021 Brazil’s total consumption of potash in K₂O was 6.57 million.[6]

Professor David Manning commented on the findings: “For over 40 years I have devoted the bulk of my research to how we can exploit soil processes to mitigate the effects of anthropogenic greenhouse gas emissions. More specifically, I use my research-based understanding of how soils and their constituent minerals interact with the biosphere in the context of carbon capture and plant nutrient supply. It was therefore no surprise when our research demonstrated the potential of Verde’s Products to absorb CO₂. More impressive is Verde’s total mineral resources’ potential to remove around 398 million tonnes of CO₂ from the atmosphere,[7] in what will be a significant contribution to global efforts to reduce atmospheric CO₂ levels.”

Verde’s ERW Carbon Capture Potential

Scalable and cost-effective ERW carbon capture projects depend on farmers’ willingness to apply minerals on a large scale over their farmland. In that sense, Verde’s has multiple advantages in ERW:

The Products have fast dissolution rate, as evidenced by agronomic trials and potassium release.
The Products are sources of essential macronutrients for plants, which creates significant motivation for farmers to adopt them in place of traditional chemical fertilizers;
The Products have certified mineral reserves proving reliably consistency in their mineralogy, carbon capture effectiveness and absence of deleterious elements;
The Products are certified organic by several governmental and non-governmental organizations, including some of the most stringent global standards such as the Washington State Fertilizer Registration and the California Department of Food & Agriculture;
The Products undergo meticulous particle size control when of its manufacturing process, guaranteeing a consistent particle size distribution. This is advantageous because particle size is essential for optimal carbon capture and its calculation.

Few carbon capture projects based on ERW showcase all, if any, of the above advantages which are consistently delivered by Verde.

Cristiano Veloso, Verde’s Founder and CEO, commented: “This is a disruptive moment for agriculture in general and Verde in particular because it marks the point when plant nutrition can be directly and quantifiably linked to permanent carbon capture. As a company and team, at Verde we have always been committed to sustainable and environmentally friendly solutions for agriculture. We are now devoting significant energy and resources to the Life Cycle Analysis, which will determine our products’ carbon footprint – if there is any and how best to pursue monetization from potential carbon credits. Verde is uniquely positioned to help feed the world and reduce greenhouse gases in our atmosphere.”

Next Step: Life Cycle Analysis and Carbon Credits Studies

Verde has commissioned a leading Canadian consultancy firm to conduct a comprehensive Life Cycle Analysis (LCA) of its Products. The LCA will provide a more complete understanding of the overall carbon footprint of Verde AgriTech’s products, from mining through processing and delivery, thereby allowing for an exact calculation of CO₂ captured. The fact that 100% of the electricity used by the Company comes from renewable zero emission hydropower will contribute to ensure a negative carbon footprint.

The Company will also determine how its Products can meet the requirements necessary to generate carbon credits. In 2022 the global market for carbon credits totalled US$ 909 billion.[8]

KCl Compared to Verde’s Product

Potassium chloride (KCl) is the conventional source of potassium, produced mostly in Canada, Russia, and Belarus. Brazil is highly dependent on imported KCl, accounting for over 96% of the total potassium used in the country’s crops. Despite its effectiveness as a potassium fertilizer, the production and use of KCl have resulted in significant environmental and social costs. The manufacturing process of KCl, has been linked to devastating effects, including human fatalities, large-scale water pollution due to chloride contamination, and the formation of sinkholes leading to the destruction of an entire city.

Contrary to KCl, Verde’s Product is economically more viable and sustainable because it does not contain chlorine, has gradual release, does not leach out with rain or irrigation water, and does not cause soil salinization. Verde’s Products have a much smaller carbon footprint compared to KCl because it does not need to be transported over transcontinental distances, being produced close to its finally point of application, rely on electricity produced from renewable sources, and once applied to soils it captures carbon.

In Q1 2023, 8,559 tonnes of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride fertilizers.[9]^,[10] A total of 121,201 tonnes of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production. Once it achieves the production capacity of 50 million tonnes per year, the Company aims to mitigate the application of approximately 94.5 billion tonnes of chloride into soils over time[11] in collaboration with its customers.

Furthermore, Verde’s Products are produced close to its finally point of application, rely on electricity produced from renewable sources, and once applied to soils they capture carbon.

Finally, KCl is not approved for organic farming due to its harmful impacts on the environment. Its extensive use has been associated with damaging effects on soil health and microbiome balance, as well as contributing to chloride leaching into water systems. Whereas Verde’s products are certified organic.

Verde plans to use carbon credits to reduce the price of the Product to farmers while increasing overall profitability, therefore further incentivizing the substitution of KCl.

Select Historic Overview of Verde’s Environmental Initiatives

Verde has an extensive history of commitments towards sustainable and productive agriculture. Below are some of the highlights of recent years that help ensure that the carbon capture initiative of the Company is buttressed by best-in-class environmental practices.

In September 2019, the Company was awarded the “Good Environmental Practices Award”, promoted by the State System of Environment and Water Resources (SISEMA, in Portuguese) in the category “Best Practice of Mineral Solid Waste Management”. The Company has presented its sustainable mining project that is intended to improve the health of people and of the planet.

In June 2021, the Company launched N Keeper, a proprietary processing technology for the Rock that alters its physical-chemical properties to enable ammonia retention for use as a calibrated additive in Nitrogen fertilizers. N Keeper leads to the reduction of Nitrogen volatilization loss, which provides the efficiency of crop fertilization increase, mitigation of environmental impacts, and reduction of climate changes.[12]

In April 2022, Bio Revolution, Verde’s technology that enables the incorporation of microorganisms to mineral fertilizers, was launched by the Company. K Forte® is the first fertilizer in the world to use Bio Revolution technology. Bacillus aryabhattai, a bacterial strain widely renowned in agriculture for its multiple benefits, is the first microorganism to be incorporated into Verde’s Product.[13]

In February 2022, the Company’s Brazilian subsidiaries, Verde Fertilizantes LTDA and FVS Mineração LTDA, earned ISO 9001 and ISO 14001 certifications.

ISO 9001 is the international standard that specifies requirements for a Quality Management System, demonstrating good management practices throughout the Company’s processes. This certification reflects Verde’s commitment to meeting the highest standards of environmental protection and adopting a responsible approach to environmental issues in our operational activities.

ISO 14001 is an international standard that sets out the requirements for an environmental management system. It helps Verde to improve our environmental performance through more efficient use of resources and reduction of waste.

Through the implementation of the Environmental Management System in accordance with ISO 14000, Verde has established and maintains specific policies and procedures for identifying, monitoring, and controlling the environmental aspects of our operations, with the aim of minimizing negative impacts on the environment, preventing pollution, and promoting sustainability.

Moreover, we continue to actively seek opportunities to improve our environmental performance, through training and awareness programs developed for our employees, as well as the pursuit of technological innovations and more sustainable practices in our operations.

ISO 14001 certification shows Verde’s commitment to protecting the environment and operating transparently and responsibly regarding environmental issues.

Furthermore, Verde’s mining and processing do not require tailings dams. Its mined area is mainly composed of degraded pasturelands that, once mined, Verde transforms into tropical forest. To that end, the Company planted 4,300 trees in 2019, 5,000 in 2020, 9,888 in 2021 and 10,341 in 2022, totaling over 29,500 trees planted. All planted species are native to the region located around the Company’s production area.

Over the past few years, the company has contributed resources to expand production. Since last year, with the start of operation of the second plant, Verde AgriTech has become the company with the largest potash production capacity in Brazil. At 3Mtpy production, which can be achieved at its existing production facilities with issued permits and licenses, Verde can capture 360,000 tonnes of CO₂.

In June 2023, Verde’s shareholders voted overwhelmingly to approve the Company’s proposal to ban sales to Amazon Rainforest regions in a commitment to combat deforestation.[14]

About Verde AgriTech

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.[15] 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.[16] 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).[17] 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[18].

Corporate Presentation

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

https://verde.docsend.com/view/49z9mmp6zfq8dgak

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

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.

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

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 on Verde’s NI 43-101 Pre-Feasibility Technical Report, see the press release at:  https://investor.verde.ag/wp-content/uploads/2022/05/Verde-AgriTech-Press-Release-Pre-Feasibility-Results-May-16-2022.pdf

[2] See, generally: https://www.scopus.com/authid/detail.uri?authorId=7201460937

[3] Source: Times Higher Education (THE). “Impact Rankings 2023”. Available at: https://www.timeshighereducation.com/impactrankings

[4] RENFORTH, P. “The negative emission potential of alkaline materials”. Nature Communications,

10:1401, 2019. Available at: https://www.nature.com/articles/s41467-019-09475-5.

[5] 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

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

[7] Verde’s mineral resources consist of a combined measured and indicated mineral resource of 1.47 billion tonnes, along with an inferred mineral resource of 1.85 billion tonnes. In total, Verde possesses 3.32 billion tonnes of rock. Notably, the CO₂ extraction ratio for this resource is estimated at 120kg of CO₂ per tonne, totalling 398 million tonnes of CO₂ removal potential.

[8] VERMA, S.; CHESTNEY, N. “Global carbon markets value hit record $909 bln last year”. Reuters, 2023. Available at: https://www.reuters.com/business/sustainable-business/global-carbon-markets-value-hit-record-909-bln-last-year-2023-02-07/

[9] Verde’s Product is a salinity and chloride-free replacement for KCl fertilizers. 1 tonne of Product (10% K₂O) has 0.1 tonnes of K₂O, which is equivalent to 0.17 tonnes of potassium chloride (60% K₂O), containing 0.08 tonnes of chloride.

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, regarding 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.

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

[11] Based on the 50Mtpy production scenario of the NI 43-101 Pre-Feasibility Technical Report. See the PFS for further information: https://investor.verde.ag/wp-content/uploads/2022/05/NI-43-101-Pre-Feasibility-Technical-Report-for-the-Cerrado-Verde-Project.pdf

[12] See the press release at: https://investor.verde.ag/verdes-n-keeper-technology-to-boost-agricultural-productivity-and-help-fight-climate-change/

[13] See the press release at: https://investor.verde.ag/verde-launches-bio-revolution/

[14] See the press release at: https://investor.verde.ag/verdes-shareholders-to-vote-on-proposal-to-ban-sales-to-amazon-rainforest-regions-in-a-commitment-to-combat-deforestation/

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

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

[17] 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

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

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

The post Verde’s Products Remove Carbon Dioxide From the Air appeared first on Verde AgriTech.

Verde’s shareholders to vote on proposal to ban sales to Amazon Rainforest regions in a commitment to combat deforestation

Investor Relations Verde AgriTech — Wed, 24 May 2023 10:43:26 +0000

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce the proposal of a resolution to be voted on at the upcoming 2023 General and Special Meeting of Shareholders (the “Meeting”) to stop all sales of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”), to 218 municipalities, totalling 2.23 million km², covered predominantly by Amazon rainforest (the “Resolution”).^[1] If the resolution is approved, to those municipalities the Company will only sell the Product for reforestation projects that plant native trees.

“The Amazon rainforest is a vital ecosystem to the globe, providing essential functions such as carbon sequestration, biodiversity preservation, and climate regulation. Sadly, the Amazon faces a grave threat from illegal deforestation, which often times is committed for the purposes of replacing it with farmland. This proposed Resolution aligns with Verde’s core values and underscores our unwavering commitment to sustainable practices in Brazilian agriculture, which mostly already abides by high standards of sustainability. Brazilian farmers outside of the Amazon region have demonstrated remarkable technological advancements and achieved record productivity in recent years, showcasing their dedication to efficient and sustainable food production, while preserving huge areas of native vegetation,” comments Cristiano Veloso, Verde AgriTech’s Founder and CEO.

“This Resolution is not expected to impact Verde’s revenue in the medium to long run, but it serves as a powerful testament to our enduring dedication to environmental responsibility and will hopefully help set an example to be followed by other companies,” concluded Mr. Veloso.

Recognizing the paramount importance of safeguarding the Amazon rainforest, Verde’s Board of Directors (the “Board”) has unanimously recommended that shareholders vote in favor of the Resolution proposed by the Company’s executives.

Aligned with the Company’s purpose of improving the health of all the people and the Planet, the Resolution represents a significant step in the ongoing battle against deforestation in one of the world’s most biologically rich regions.

Overall, the initiative will protect a territory encompassing a total of 2.23 million km².[2] To put its magnitude into perspective, this area surpasses the combined size of Japan, Germany, the United Kingdom, France, and Italy, nations that collectively rank among the top ten largest economies worldwide.

If approved at the Meeting, the Resolution shall promptly come into effect, and the Board will conduct annual reviews to ensure its unwavering efficacy in upholding the Company’s commitment to sustainability and the preservation of the Amazon rainforest.

To date, Verde has invested over C$111 million in research and development, construction of Plant 1 and Plant 2, and access improvement. In 2022, the Company became Brazil’s largest potash producer by capacity, being able to produce up to 3 million tonnes of Product per year. The Company is also the world’s largest manufacturer of potash fertilizers approved for organic agriculture.

Enhanced Rock Weathering

Verde has been assessing the carbon capture potential of its Products, through independent studies conducted at Newcastle University. The studies are evaluating a natural process termed Enhanced Rock Weathering (“ERW”), whereby CO₂ is permanently removed from the atmosphere by reacting with the decomposition of silicate minerals present within the Product’s raw material.

2023 Annual General and Special Meeting of shareholders

The 2023 Annual General and Special Meeting of shareholders of the Company will be held on June 22, 2023 at 6 p.m. (SGT), at 16 Collyer Quay, #17-00, Singapore, 049318. Shareholders will be able to observe the Meeting virtually utilizing ZOOM and are invited to submit questions in advance, through the following links:

Join the Meeting:
Submit questions in advance:

The Meeting’s Management Information Circular are available on SEDAR at www.sedar.com and on the Company’s website at www.investor.verde.ag.

About Verde AgriTech

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].

Corporate Presentation

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

https://verde.docsend.com/view/3i28qwrquwjznrin

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

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.

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

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

[1] The states of Amazonas, Acre, Roraima, and Amapá were entirely considered as Amazon Rainforest. For states that include partial forest areas, municipalities with less than 500 hectares of planted area were considered predominantly Amazon Rainforest.

[2] Source: Brazilian Institute of Geography and Statistics (IBGE), Municipal Digital Mesh of the Brazilian Political-Administrative Division (2022). Available at: https://www.ibge.gov.br/geociencias/organizacao-do-territorio/malhas-territoriais/15774-malhas.html?edicao=36516&t=acesso-ao-produto

[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

The post Verde’s shareholders to vote on proposal to ban sales to Amazon Rainforest regions in a commitment to combat deforestation appeared first on Verde AgriTech.

Verde achieves C$11.1 million revenue, 76% gross margin and C$2.0 million EBITDA in the first quarter of 2023

Investor Relations Verde AgriTech — Tue, 16 May 2023 10:16:30 +0000

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q1 2023: C$1.00 = R$3.84)

Singapore. Verde AgriTech Ltd (TSX: “NPK”) (“Verde” or the “Company”) is pleased to announce its financial results for the first quarter ended March 31, 2023 (“Q1 2023”).

Q1 2023 Financials

Sales of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”) by volume were 108,000 tonnes, compared to 112,000 tonnes in Q1 2022 and 16,558 tonnes in Q1 2021.
Revenue in Q1 2023 was $11.1 million, compared to $11.3 million in Q1 2022 and $0.8 million in Q1 2021.
Cash and other receivables held by the Company in Q1 2023 were $3 million, compared to $22.3 million in Q1 2022 and $4.8 million in Q1 2021.
EBITDA before non-cash events in Q1 2023 was $2.0 million, compared to $3.7 million in Q1 2022 and a $0.8 million loss in Q1 2021.
Total non-current assets in Q1 2023 were $68.3 million, compared to $30.1 million in Q1 2022 and $21.4 million in Q1 2021.
Net loss in Q1 2023 was $0.1 million, compared to a $3.0 million profit in Q1 2022 and a $1.0 million loss in Q1 2021.
In Q1 2023, 8,559 million tonnes of chloride have been prevented from being applied into soils by farmers who used the Product in lieu of potassium chloride (“KCl”) fertilizers.[1] A total of 121,201 tonnes of chloride has been prevented from being applied into soils by Verde’s customers since the Company started production.[2]

“In Q1 2022, our sales grew by an impressive 574%, and our revenue increased by an astonishing 1,260% compared to Q1 2021. Achieving virtually the same volume as last year in markets that experience the strongest downturns of the last few years in the fertilizer industry is a remarkable accomplishment. The price of soybeans, which represents a major portion of Verde’s sales, has declined by 33% in the past 12 months, with a substantial 21% drop in the last three months alone.[3] Additionally, potash prices have seen a significant decrease of 67% over the past year, with a sharp decline of 22% in the last three months.[4] Despite these challenging market conditions, Verde’s performance in Q1 2023, delivering results comparable to those achieved in Q1 2022, demonstrates the unwavering commitment and strategic approach of our team, and underscores our ability to thrive in an exceptionally difficult market landscape,” stated Cristiano Veloso, Founder, President & CEO of Verde.

Selected Annual Financial Information

The table below summarizes Q1 2023 financial results compared to Q1 2022:

All amounts in CAD $’000	Q1 2023	Q1 2022
Tonnes sold ‘000	108	112
Average revenue per tonne sold $	103	101
Average production cost per tonne sold $	(25)	(24)
Average gross profit per tonne sold $	78	77
Average gross margin	76%	77%

Revenue	11,125	11,304
Production costs ⁽¹⁾	(2,710)	(2,654)
Gross Profit	8,415	8,650
Gross Margin	76%	77%
Sales and marketing expenses	(1,207)	(958)
Product delivery freight expenses	(3,867)	(2,973)
General and administrative expenses	(1,372)	(1,041)
EBITDA ⁽²⁾	1,969	3,678
Share Based, Equity and Bonus Payments (Non-Cash Event) ⁽³⁾	(28)	(64)
Depreciation and Amortisation⁽³⁾	(911)	(26)
Operating Profit after non-cash events	1,030	3,588
Interest Income/Expense ⁽⁴⁾	(1,042)	(185)
Net (Loss) / Profit before tax	(12)	3,403
Income tax ⁽⁵⁾	(96)	(370)
Net Profit	(108)	3,033

⁽¹⁾ – C$864,000 of depreciation 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 in Q1 2023 Management’s Discussion and Analysis

External Factors

Revenue and costs are affected by external factors including changes in the exchange rates between the C$ and R$ along with fluctuations in potassium chloride spot CFR Brazil.[5] The table below summarizes these changes:

	% Δ	Q1 2023	Q1 2022
Canadian Dollar (C$) Average Exchange Rate	-7%	R$3.84	R$4.12
Potassium Chloride CFR Brazil Lowest Price	-39%	US$455	US$750
Potassium Chloride CFR Brazil Highest Price	-57%	US$520	US$1,200

Q1 2023 compared with Q1 2022

EBITDA and EPS

The Company had an EBITDA of $1,969,000 in Q1 2023, compared to $3,678,000 in Q1 2022. This decrease can be mainly attributed to two factors:

Higher average freight cost: In Q1 2023, the average freight cost per tonne of Product sold on a CIF (Cost, Insurance, and Freight) basis increased from $44 to $53. This increase was driven by a higher percentage of sales being made to the northern region of Mato Grosso state, which is located farther away from Verde’s production facilities. As a result, the weighted average distance of Product delivered increased by 12% in the quarter compared to the previous year, with a $600,000 impact in Q1 2023.
Reduction in potassium chloride (KCl) CFR Brazil price compared to the previous year: The drop in KCl prices resulted in a 16% decrease in revenue per tonne excluding freight expenses (FOB price) in Brazilian Reais, from R$308 per tonne in Q1 2022 to R$259 per tonne in Q1 2023. As a result, this had a $435,000 impact on the Company’s quarterly results.

Basic loss per share was $0.002 for Q1 2023, compared to earnings of $0.06 for Q1 2022.

Product Sales

Sales by volume decreased by 4% in Q1 2023, to 108,000 tonnes sold, compared to 112,000 tonnes sold in Q1 2022, due to the circumstances summarized below.

At the onset of the Ukrainian war in February 2022, concerns arose regarding potential geopolitical sanctions against Russia and their potential impact on the availability of potash fertilizers. This led to a surge in customer orders during the first and second quarters as they sought to stockpile fertilizers for the upcoming crop season.

However, these concerns proved unfounded as the market actually experienced an oversupply of potash due to increased availability. Coupled with a 15% decrease in potash consumption in Brazil throughout 2022, this resulted in a 23% increase in year-end potash stock in Brazil, highlighting the lower overall demand for the product during the year.[6]

As a consequence, potash prices have significantly declined, witnessing a 67% decrease over the past year, with a sharp 22% decline in the first three months of 2023.[7] This has prompted farmers to delay their agricultural input purchases as they anticipate further price drops, thereby reducing the demand for fertilizers in Q1 of 2023.

Furthermore, the price of soybeans, which represents the major portion of Verde’s sales, has declined by 33% over the past 12 months, with a significant drop of 21% in the last three months.[8]

Despite the exceptional market circumstances witnessed in Q1 2021 and Q1 2022, Verde delivered in Q1 2023 results comparable to those achieved in the previous year.

Revenue

Revenue from sales decreased by 2% in Q1 2023, to $11,125,000 from the sale of 108,000 tonnes of Product, at average $103 per tonne sold; compared to $11,304,000 in Q1 2022 from the sale of 112,000 tonnes of Product, at average $101 per tonne sold.

The increase in average revenue per tonne was mainly due to the higher percentage of CIF sales in the quarter, with 68% in Q1 2023, compared to 60% in Q1 2022.

Average revenue per tonne excluding freight expenses (FOB price) decreased by 10% in Q1 2023, to $67 compared to $75 in Q1 2022 mainly due to the decrease in Potassium Chloride CFR Brazil, from US$750-US$1200 per tonne in Q1 2022 to US$455-US$520 per tonne in Q1 2023[9]. This reduction was partially offset by the 7% appreciation of the Brazilian Real against the Canadian Dollar.

Production costs

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

Micronutrients added to BAKS® increase its production cost, rendering K Forte® less expensive to produce.
Production costs vary based on packaging type, with bulk packaging being less expensive than Big Bags.
Plant 1 produces K Forten® Bulk, K Forte® Big Bag, BAKS® Bulk, and BAKS® Big 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 tonne of product projected for 2023^[10] (C$)	Cash cost	Assets depreciation	Total cost expected for 2023^[11]	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® Big Bag (Plant 1)	30.4	2.8	33.2	71%
BAKS® (2%S 0.2%B)^[12] Bulk (Plant 1)	42.1	3.8	45.9	81%
BAKS® (2%S 0.2%B) Big Bag (Plant 1)	51.3	3.8	55.0	85%

Production costs increased by 2% in Q1 2023, to $2,710,000 compared to $2,654,000 in Q1 2022. Average cost per tonne increased by 6% in Q1 2023, to $25 compared to $24 in Q1 2022.

Despite a 4% decrease in sales volume, from 112,000 tonnes in Q1 2022 to 108,000 tonnes in Q1 2023, Verde was able to reduce the average production cost in Brazilian Reais. In Q1 2023, the average production cost was R$96.47, compared to R$98.03 in Q1 2022. This cost reduction can be attributed primarily to a shift in the sales mix of packaging types, with a decrease in the percentage of Big Bag sales from 39% in Q1 2022 to 24% in Q1 2023.

Sales Expenses

CAD $’000	Q1 2023	Q1 2022
Sales and marketing expenses	(1,070)	(822)
Fees paid to independent sales agents	(137)	(136)
Product delivery freight expenses	(3,867)	(2,973)
Total	(5,074)	(3,931)

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.

This increase can be primarily attributed to the implementation of a field sales team, which resulted in expenses related to car rentals and travel. Additionally, the Company made additional investments in media and third-party marketing agencies as part of a strategic initiative to attract new customers.

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 increased by 1% in Q1 2023, to $137,000 compared to $136,000 in Q1 2022, in line with Q1 2023 sales.

Product delivery freight expenses

Product delivery freight expenses increased by 30% in Q1 2023, to $3,867,000 compared to $2,973,000 in Q1 2022, as the Company has significantly increased the volume sold as CIF (Cost Insurance and Freight), up from 60% of total sales in Q1 2022 to 68% in Q1 2023.

Sales made to states that are situated at a greater distance from Verde’s production facilities had a notable effect on the logistics costs. In Q1 2023, the average freight cost per tonne of Product sold on a CIF (Cost, Insurance, and Freight) basis increased from $44 to $53, compared to the previous year. This increase was driven by a higher percentage of sales being made to the northern region of Mato Grosso state, which is located farther away from Verde’s production facilities. As a result, the weighted average distance of Product delivered increased by 12% in Q1 2023 compared to Q1 2022, with a $600,000 impact in the quarter.

General and Administrative Expenses

CAD $’000	Q1 2023	Q1 2022
General administrative expenses	(920)	(410)
Legal, professional, consultancy and audit costs	(317)	(411)
IT/Software expenses	(112)	(204)
Taxes and licenses fees	(23)	(16)
Total	(1,372)	(1041)

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 125% in Q1 2023, to $920,000 compared to $410,000 in Q1 2022.

Prior to Q4 2022, administrative employees working at the offices situated within Verde’s production facilities were accounted for as part of the personnel production costs. However, in Q1 2022, an adjustment was implemented to ensure alignment with accounting standards. This adjustment involved shifting the cost centre for expenses associated with 33 employees who met that criterion. As a result, a total of $222,000 was reallocated from production costs to general administrative expenses in the quarter.

Furthermore, additional rental expenses were incurred in Plant 2, which involved the rental of water trucks and metallic structures to support operations.

Additionally, the Company made the decision to outsource cleaning and maintenance services for Plant 1, Plant 2, and Verde’s administrative office in São Gotardo. Previously, these services were handled by employees of the Company.

Legal, professional, consultancy and audit costs

Expenses decreased by 23% in Q1 2023, to $317,000 compared to $411,000 in Q1 2022. The decrease was mainly due to 2022 costs relating to the re-domiciliation of the Company to Singapore.

IT/Software expenses

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

Expenses decreased by 45% in Q1 2023, to $112,000 compared to $204,000 in Q1 2022. Q1 2022 was higher as the Company was implementing the change in its accounts from ERP to SAP Business One. This has now been concluded.

Taxes and licences

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

Expenses increased in Q1 2023, to $23,000 compared to $16,000 in Q1 2022 and increase of $7,000.

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 decreased by 56% in Q1 2023, to $28,000 compared to $64,000 in Q1 2022. The decrease is a result of a reduction on share based payments in the quarter.

Liquidity and Cash Flows

For additional details see the consolidated statements of cash flows for the quarters ended March 31, 2023 and March 31, 2022 in the quarterly financial statements.

Cash received from / (used for): CAD $’000	3 months ended Mar 31, 2023	3 months ended Mar 31, 2022
Operating activities	(450)	3,284
Investing activities	(1,889)	(3,382)
Financing activities	5,336	2,805

On March 31, 2023, the Company held cash of $4,289,000, a decrease of $4,684,000 on the same period in 2022.

Trade and other receivables increased by 70% in Q1 2023, to $29,996,000 compared to $17,618,000 in Q1 2022. Trade and other payables decreased by 6% in Q1 2023 to $9,494,000 compared to $10,071,000 in Q1 2022.

Q1 2023 Results Conference Call

The Company will host a conference call on Wednesday, May 24, 2023, at 10:00 am Eastern Time, to discuss Q1 2023 results and provide an update. Subscribe using the link below and receive the conference details by email.

Date:	Wednesday, May 24, 2023
Time:	10:00 am Eastern Time
Subscription link:

The questions can be submitted in advance through the following link up to 48 hours before the conference call: .

About Verde AgriTech

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.[13] 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.[14] 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).[15] 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[16].

Corporate Presentation

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

https://verde.docsend.com/view/hx6998vbxy6vy49x

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

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.

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

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

[2] 1 tonne of Product (10% K₂O) has 0.1 tonnes of K₂O, which is equivalent to 0.17 tonnes of potassium chloride (60% K₂O), containing 0.08 tonnes of chloride.

[3] Soybeans (Paranaguá) price went from US$40.36 in April 2022 to US$26.93 in April 2023, and from US$34.21 in February 2023 to US$26.93 in April 2023. Source: Economic Research Center of the ESALQ/University of São Paulo. Available at: https://www.cepea.esalq.usp.br/br/indicador/soja.aspx

[4] Potassium Chloride CFR Brazil price went from US$1200 in April 2022 to US$400 in April 2023, and from US$515 in February 2023 to US$400 in April 2023. Source: Acerto Limited Report.

[5] Source: Acerto Limited Report.

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

[7] Potassium Chloride CFR Brazil price went from US$1200 in April 2022 to US$400 in April 2023, and from US$515 in February 2023 to US$400 in April 2023. Source: Acerto Limited Report.

[8] Soybeans (Paranaguá) price went from US$40.36 in April 2022 to US$26.93 in April 2023, and from US$34.21 in February 2023 to US$26.93 in April 2023. Source: Economic Research Center of the ESALQ/University of São Paulo. Available at: https://www.cepea.esalq.usp.br/br/indicador/soja.aspx

[9] Source: Acerto Limited Report.

[10] 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 U$/bbl) = US$80.00. Diesel price = U$$1.26. Currency exchange rate: US$1.00 = R$5.25; C$1.00 = R$4.20. Total cost per tonne includes all costs directly related to production and feedstock extraction in addition to assets depreciation.

[11] Total cost per tonne 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.

[12] 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.

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

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

[15] 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

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

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

The post Verde achieves C$11.1 million revenue, 76% gross margin and C$2.0 million EBITDA in the first quarter of 2023 appeared first on Verde AgriTech.

OTCMKTS:VNPKF Archives - Verde AgriTech

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

Q3 2023 Financials

Carbon Capture Potential

Subsequent Events

Market Overview

Agricultural Inputs Market

Commodity Prices

Working capital constraints for Brazilian farmers

SELIC interest rates[28]

Global Market Competition and Financing

Exchange Rate

Market Outlook

Selected Annual Financial Information

External Factors

Q3 2023 compared with Q3 2022

EBITDA and EPS

Product Sales

Revenue

Production costs

Sales Expenses

Sales and marketing expenses

Fees paid to independent sales agents

Product Delivery Freight Expenses

General and Administrative Expenses

General administrative expenses

Bad Debt Provision

Legal, professional, consultancy and audit costs

IT/Software expenses

Taxes and licenses

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

Liquidity and Cash Flows

Q3 2023 Results Conference Call

About Verde AgriTech

Corporate Presentation

Investors Newsletter

Cautionary Language and Forward-Looking Statements

Verde to Present at the LD Micro Main Event XVI

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

Verde’s Carbon Capture Potential

Investor day

About Verde AgriTech

About LD Micro

Corporate Presentation

Investors Newsletter

Cautionary Language and Forward-Looking Statements

Automatic Securities Disposition Plan Established by Verde AgriTech Chief Executive Officer

About Verde AgriTech

Corporate Presentation

Investors Newsletter

Cautionary Language and Forward-Looking Statements

Railway to freight up to 50Mtpy of Verde’s Product granted construction permit

Verde’s Carbon Capture Potential

Railway’s Next Steps

Railway’s Capital Expenditure

About Verde AgriTech

Corporate Presentation

Investors Newsletter

Cautionary Language and Forward-Looking Statements

Verde Appoints Chief Marketing Officer

Newton Nagumo brings over two decades of successful communication and marketing planning expertise to boost Verde’s market strategy

Corporate restructuring

About Verde AgriTech

Corporate Presentation

Investors Newsletter

Cautionary Language and Forward-Looking Statements

Verde achieves C$10.3 million revenue, 81% gross margin and C$2.1 million EBITDA in the second quarter of 2023

Q2 2023 Financials

Subsequent Events

Market Overview

Commodity Prices

Brazilian Economy

Agricultural Inputs Market and Credit Crunch

Global Market Competition and Financing

Average KCl Price

Exchange Rate

Selected Annual Financial Information

External Factors

Q2 2023 compared with Q2 2022

EBITDA and EPS

SELIC interest rates^[28]

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