TORONTO, August 21, 2013 /PRNewswire/ --
Verde Potash (TSX: "NPK")
("Verde" or the "Company") is pleased to announce the Company's new
strategic plan to advance the Cerrado Verde Potash Project. This
new strategy replaces the Company's previous plan to proceed
directly towards the implementation of a capital intensive, larger
scale, production facility. Verde's new plan is premised on
the technical practicality of the project's staged scale-up in
order to reduce risk and to accelerate cash flow generation from
its large potash resource in Brazil. The new strategy will comprise two
phases. In Phase 1 the Company intends to build a plant (the 'Flex
Plant') with a capacity of approximately 1,000 tonnes per day
("tpd") for the production of ThermoPotash. The Flex Plant
will also be operated to process KCl in order to further develop
scale-up and commercialization of the process and with the intent
of securing performance guarantees on a 12,000 tpd kiln for KCl
production. Phase 2, developed in parallel with Phase 1, would
focus on large scale KCl production. This two-phased strategy
expects to reduce up front capex by initially establishing the less
capital intensive ThermoPotash product.
Next Steps
The Company and its engineering partners are moving forward with
a Flex Plant design for Phase 1. The proposed Flex Plant would have
a capacity of approximately 1,000 tpd and the capability of both
producing ThermoPotash and running the pyro stage of a KCl
production route. The successful operation of the pyro stage of KCl
production seeks to obtain the desired performance guarantees for
Phase 2. By ramping-up production with ThermoPotash in Phase 1, the
Company (i) expects a lower initial capital cost compared to the
previous strategy to go directly to a large scale production
facility, (ii) anticipates cash generation from the sale of
ThermoPotash and (iii) expects a reduction in the scale-up risk of
KCl production from its potassium silicate resource. The Company
expects to publish a prefeasibility study ("PFS") in Q1 2014 for
Phase 1 and Phase 2.
ThermoPotash
ThermoPotash is a controlled-release, non-chloride,
multi-nutrient fertilizer that is ideally suited for Brazilian
soils. It is a new product, which is expected to compete with other
premium, multi-nutrient, non-chloride fertilizers currently in the
Brazilian market, such as potassium sulphate (SOP) and potassium
nitrate (NOP). ThermoPotash delivers potassium without the negative
effects of chlorine, while the limestone content addresses the high
acidity of Brazil's soils.
Research on the use of Cerrado Verde's potassium silicate rock
to produce ThermoPotash began in the early 1980s by academics.
Since 2009, with the help of a multitude of parties, Verde built on
that earlier research through its own studies, development and
successful agronomic field trials. Agronomic trials have been
conducted in conjunction with the University of Uberlândia, the
University of Lavras, the University of São Paulo, Empresa de
Pesquisa Agropecuária de Minas Gerais (EPAMIG), ArcelorMittal
BioFlorestas and a number of large corporate growers in
Brazil. The production process for
ThermoPotash is similar to the pyro portion of the production
process the Company has developed for KCl. The Company's potassium
silicate rock is heated in a rotary kiln along with limestone to
produce ThermoPotash. Given that a ThermoPotash production facility
requires a rotary kiln but no evaporation or crystallization
equipment, capex for a ThermoPotash plant is expected to be
materially lower than that for a KCl plant producing equivalent
tonnage.
ThermoPotash was approved for use as a potash fertilizer by the
Brazilian Ministry of Agriculture ("MAPA") on June 24, 2013 - its registration number is MG -
90. 773 10000-3. The product is now eligible for sale in
Brazil. Over the past four years
the Company and a number of research partners have conducted 41 lab
tests and 15 field tests with 12 different crops on more than 23
hectares (230,000m2). The results of these tests have
demonstrated the product's efficacy as a source of potassium,
silicon and calcium, as well as its ability to address the acidity
of Brazilian soils.
Balance sheet
The Company's balance sheet remains strong with CDN$13.3 million in cash as of June 30, 2013. The Company's burn rate in recent
months has been approximately CDN$600,000 per month. Management is confident
that cash on hand is sufficient to allow the Company to complete
its PFS and a Definitive Feasibility Study without raising
additional equity.
Verde has been engaged in discussions with Brazilian
institutions regarding debt finance for Phase 1 and continues to
believe that Brazilian federal and state development banks will
play an important role in funding Cerrado Verde. Securing debt
finance for the project is important as it can allow the Company to
continue to advance the project with minimal or no shareholder
dilution - a goal to which management remains committed.
Environmental permit
The Company will provide supplementary information to SUPRAM
(Superintendências Regionais de Regularização Ambiental), the state
environmental agency for Minas Gerais state, to reflect revisions
to the project. Verde is undertaking to meet the demands of the
regulator in order to receive all necessary environmental approvals
in a timely manner so that permitting will not act to delay the
project. The Company will first request an environmental permit for
a rotary kiln Flex Plant (i.e. Phase 1 of the project) with a
capacity of approximately 1,000 tpd because the reduced
environmental impact for this phase allows for an accelerated
application process.
Project background
On February 28, 2012, the Company
published a PEA for the Cerrado Verde Project focusing on KCl
production. The February PEA structured the project in three
phases: Phase 1, 600,000 tonnes of KCl production; Phase 2, an
incremental 1.0 million tonnes of KCl production; Phase 3, an
incremental 1.4 million tonnes of KCl production. Total plant
capacity at the conclusion of Phase 3 was planned as 3.0 million
tonnes of KCl production. The Company currently expects to complete
a PFS that will include Phase 1 ThermoPotash production and Phase 2
KCl production.
About Verde
Potash
Verde Potash, a Brazilian
fertilizer development company, is focused on advancing the Cerrado
Verde project located in the heart of Brazil's largest agriculture market. Cerrado
Verde is the source of a potash-rich deposit from which the Company
intends to produce both ThermoPotash and potassium chloride (KCl).
ThermoPotash is a controlled-release, non-chloride, multi-nutrient
fertilizer that is ideally suited for Brazilian soils. In addition,
the Company is developing its Calcario limestone project, limestone
being a key raw material in the Company's process to produce both
ThermoPotash and KCl.
About the Cerrado Verde Potash
Project
Cerrado Verde is a unique project: 1) its high grade potash rock
outcrops and is amenable to strip mining, allowing fast
construction of a scalable operation; 2) it is located in the midst
of the world's third largest and fastest growing fertilizer market;
3) it connects to Brazil's largest
fertilizer distribution districts via existing and high quality
infrastructure; 4) it has the potential to supply both ThermoPotash
and KCl to Brazil's local
agriculture market from its large potash-rich deposit.
Forward Looking Information
This news release contains certain forward-looking information,
which includes but is not limited to, statements with respect to
the Company's new strategy, the commercial production of
ThermoPotash and KCl, design and building of a Flex Plant, timing
and completion of a prefeasibility study, receipt of environmental
permits, and the generation of cash flow from Phase 1 of the new
strategy. Forward-looking information involves known and
unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements of the Company to
differ materially from the forward-looking information.
Material risk factors that could cause actual results to differ
materially from such forward-looking information include, but are
not limited to, the failure to obtain necessary regulatory
approvals, risks associated with the mining industry in general
(e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
estimates and projections relating to production, costs and
expenses, and health, safety and environmental risks), commodity
price, demand for ThermoPotash and KCl in Brazil, exchange rate fluctuations and other
risk factors set out in the Company's most recently filed Annual
Information Form under the heading "Risk Factors". Currently,
ThermoPotash is not commercially produced or sold in Brazil. As a consequence, there is no current
market for this product. Should commercial demand for ThermoPotash
fail to develop, the Company's business model may not be
appropriate. Accordingly, readers should not place undue reliance
on such forward-looking information. Material factors or
assumptions used to develop such forward-looking information
include, but are not limited to, the demand for ThermoPotash
and KCl in Brazil, the ability to
secure necessary environmental and mining permits, the ability to
secure financing, and other assumptions set out in the Company's
current technical report. The Company does not currently
intend to update forward-looking information in this news release
except where required by law.
Cristiano Veloso,
President & Chief Executive Officer
Tel: +55(31)3245-0205; Fax: +55(31)3245-0205;
Email: cv@verdepotash.com
http://www.verdepotash.com
Jaret Anderson, CFA, VP
Corporate Development
Tel: +1-416-866-2966; ext. 223; Fax: +1-416-866-8829;
Email: ja@verdepotash.com