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Verde Potash PLC

Verde Agritech looks to shift the dial for farmers and food consumers with Super Greensand

The world population is expected to balloon by over one third, or 2.3bn by 2050..

Verde Agritech shifting the dial for farmers and food consumers with Super Greensand
Ripe for picking: Agriculture is having to reinvent itself these days.

How to feed a growing global population in a sustainable and healthy way must be one of the biggest questions of our time.

The world population is expected to balloon by over one third, or 2.3bn by 2050, mainly in developing countries, and challenges for food producers include rising costs, nutritional quality, shrinking workforces and climate change.

Toronto-listed Verde Agritech PLC (TSE:NPK) and its Cerrado Verde project in Brazil seems to have come along at exactly the right time.

Chief executive Cristiano Veloso says its flagship Verde Agritech PLC Super Greensand fertilizer product will not only help investors in his company make money, but can potentially improve the health of humanity.

A bold claim..

A bold claim undoubtedly, but one which he can flesh out with details and background.

"Until recently, it was very difficult for science to understand the importance of micro-organisms, not only in agriculture but also for our own bodies," he says.

"Because of this very recent knowledge, agriculture is having to reinvent itself and this reinvention is taking it away from chemical and salt based products towards natural and sustainable products."

So, put simply, these are products, which do less damage to the ground and produce crops with more nutritional value.

Included in these, is Verde's Super Greensand.

The fertilizer he says, is a multi-nutritional fertilizer, for use on all crops, containing 70 elements and trace minerals including potash, potassium, magnesium, manganese and plant-available silicon.

The latter, explains Veloso, is particularly significant, as it increases protection for crops against pests, diseases and extreme weather.

Currently farmers are rewarded for the weight and appearance of fruit and vegetables, rather than nutritional content, he says, so years' of using only NPK chemical fertilizers, pesticides and fungicides to produce crops, has left soil and its produce starved of nutrients.

Changing the cycle?

Veloso says Greensand can change this cycle, offering farmers an economical way to fertilize land and give back the nutrients to food and the soil.

And it should benefit the whole food-chain too, because not just humans eat crops, but farmers' arable yields are used in animal feed.

"I'm very pleased about the overall benefit the product will have to the world," says Veloso.

Clearly, Verde's product has advantages over traditional fertilizers, like potassium chloride and sulfate of potash and salt based products like Polyhalite.

Veloso has said previously: "For example, if you look at the conventional source of potash, ie, potassium chloride, it also contains chloride. And this chloride creates a lot of problems, not just for certain types of crops but also for the environment and for the soil.

"Applying one pound of potassium chloride to the soil, equals applying about 1 gallon of Clorox to your soil. So you really have a devastating impact on soil microorganisms which were essential for the environment, for the ecosystem, and for your yields if you’re a farmer.

"The other big difference is salinity. So if you look at salinity, which is also a major problem, the best way for you to compare fertilizer salinity is to divide the total product salinity by its potassium content.

"And when you do that, our salinity’s very low, our salinity’s less than 1%. Polyhalite is the worst at over 5!" he added.

Super Greensand is currently being sold in Brazil, the largest food exporter on the planet, at US$40 per tonne and in 20kg bags on Amazon for US$69.

It is worth noting that last year, when the group just begun production racked up around US$400,000 worth of sales and Veloso says there is a great deal of interest from farmers in Brazil and elsewhere

The firm's focus is on commercial agriculture in Brazil and sustainable and organic farming in Canada and USA.

The company owns 100% of the Cerrado Verde project in the South American country, which consists of 30 granted exploration permits covering a total area of 52,274 hectares.

So far, Verde has pumped in US$60mln and the company has a market cap of around US$33mln.

Nice looking PFS..

A November 2017 pre-feasibility report threw up some nice looking numbers.

When the processing plant (now under construction and fully financed)  is up and running, earmarked for the third quarter this year, output of the product will go from ten tonnes per hour (t/h) to 45 t/h.

The facility is costing US$500,000.

The project's net present value (NPV) with an 8% discount rate was put at around US$2bn and an IRR (internal rate of return) of 287% after tax.

That valuation is based on a mine life of 36 years, 777 Mt (metric tonnes dry) of product produced with an average operating cost of US$8.16per tonne. Total capital expenditure was put at US$369.6 million

The project will be phased in three stages, with the first seeing output at 600,000 t (tonnes) of final product per year for the first two years, then  phase 2 is five Mt of final product per year, from year three to six.

The third phase is 25 Mt (million tonnes) of final product per year for the remainder of the life of the mine.

Veloso highlights that the PFS was based on the price of the lowest price of potash on the market (potassium chloride) and so all the other nutrients available in Greensand are available for free. He noted that the price in Brazil for a tonne of potash was also notably now higher, US$320 now vs US$250 when the study was made.

He also drew attention to the long life of the Cerrado deposit, which has an  eye-watering total resource of 3bn tonnes (700mln of which is proven and probable reserves.).

The potash resource alone is about 300mln tonnes, which Veloso, says would meet Brazilian annual consumption alone for 50 years.

So Verde Agritech is looking at a huge opportunity and holds a massive deposit so this year it is likely to be a company worth watching.

Veloso says investors should look out for progress on the plant build, a sales update and plans for 2019 as news milestones to come this year.

Quick facts: Verde Potash PLC

Price: $0.80

Market: TSX
Market Cap: $36.75 m
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Verde AgriTech's fertiliser 'highly disruptive and beneficial to farmers'

Agriculture-tech group Verde Agritech PLC (TSE:NPK), the producer of the  Super GreenSand fertiliser,  has a product, which is highly disruptive in the space and beneficial to farmers, according to founder and CEO Cristiano Veloso. The pre-feasibility study for the project in...

on 23/5/18

5 min read