Verde fertilizantes - Verde Potash Plc

Conventional
Potash from
Open Pit project
in the Heart of Brazil’s
Agriculture Region
TSX: NPK
www.verdepotash.com August/2012

Disclaimer
This presentation contains certain “forward looking statements”, which include but is not limited to, statements with
respect to the future financial or operating performance of Verde Potash Plc (the “Company”), its subsidiaries and
its projects, statements regarding use of proceeds, exploration prospects, identification of mineral reserves, costs
of and capital for exploration projects, exploration expenditures, timing of future exploration and permitting,
requirements for additional capital, government regulations of mining operations, environmental risks, reclamation
expenses, title disputes or claims, and limitations of insurance coverage, statements with respect to the results of
the PEA, anticipated production levels and timing of commencement of production, long term KCl prices,
production life, and costs and completion of a feasibility study. Forward looking statements can generally be
identified by the use of words such as “plans”, “expects”, or “does not expect” or “is expected”, “anticipates” or
“does not anticipate”, or “believes”, “intends”, “forecasts”, “budget”, “scheduled”, “estimates” or variations of such
words or phrases or state that certain actions, event, or results “may”, “could”, “would”, “might”, or “will be taken”,
“occur” or “be achieved”. Forward looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by said statements. There can be no
assurances that forward-looking statements will prove to be accurate, as actual results and future events could
differ materially from those anticipated in said statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
Total resources include all categories unless otherwise stated. All currency are in Canadian $ unless otherwise
stated.
TSX : NPK
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Verde: Made in Brazil, listed on TSX (NPK)
• ~ C$29 Million in Cash, no debt
• Significant South America based ownership including entrepreneurs behind
one of the world’s most successful fertilizer companies
• 40,235,077 shares fully diluted
• 52 week: Hi/Lo C$9.37/C$2.67
• 11 independent analysts with share price targets up to C$20
• Management Team has successfully built and operated similar projects
TSX: NPK
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Management
Cristiano Veloso Founder, President, CEO
• 13 years experience; Brazilian entrepreneur ex Banco do Brasil S/A, CEMIG; LL.B, LL.M International Business Law
Pedro Ladeira Chief Operating Officer
• 17 years experience; ex Operations Director, Process and Production Manager for Holcim Brazil
Rubens Mendonça VP Mining
• 27 years experience; ex Senior Mining Engineer at Vale; consultant at Snowden Mining and Paulo Abib Engenharia S.A.
Patricia Radino -Rouse VP Engineering
• 40 years experience; ex Senior Process Engineer and manager for Paulo Abib Engenharia, responsible for supervision of
a 1.5Mtpy feasibility study for potassium sulphate project for Petrobras
Jed Richardson VP Corporate Development
• 10 years experience; ex Mining Analyst with Sprott/Cormark and RBC Capital Markets, Mining engineer with Alcan
Aluminium
Ysao Munemassa Exploration Director
• 41 years experience; ex BP Minerals, VALE, Union Carbide, INCO, Teck Cominco, Newmont Gold
Derek Fray Metallurgical Consultant
• 45 years experience; University of Cambridge Professor & Director of Research
Rodolfo Silva Pilot Plant Manager
• 17 years experience; past experience includes work with Usiminas S/A, Magnesita Refratários S/A, Vilma Alimentos and
AMBEV
Eduardo Spolidorio Marketing Manager
• 14 years experience; past experience includes work with Honeywell, Bunge, Mosaic and Heringer
TSX : NPK
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Independent Directors
Peter Gundy Chairman
• Former Chairman of Neo Materials Technologies Inc.; VP of Brascan Inc; Executive VP, Finance of
Potash Corporation of Saskatchewan Limited
Richard Garnett
• PhD. in Economic Geology (Royal School of Mines, UK), MBA (Cranfield University, UK); Mining
Engineer. Has held senior positions with Rio Tinto, Anglo American, Hudson Bay Mining and Diamond
Fields Resources
Getulio Lamartine de Paula Fonseca
• Former General Director National Department of Power & Water Supply; Executive-Secretary Industry
& Commerce Ministry
Henrique Brandão Cavalcanti
• Former Brazil’s Minister of the Environment (1994), Deputy Minister of Mines Energy (1967-69), Deputy
Minister of Interior (1969-74).
Renato Gomes
• Director of the ABCI Institute (Brazilian International Trade Scholars) Lawyer and member of Brazilian
and Portuguese Bar Associations
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2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
'000 tonnes nutrients
Millions of Hectares
Brazil’s Growing Potash Consumption
Brazil KCl consumption
(last 30 years)
600
Undeveloped Potential Arable Land
9,000
8,000
7,000
6,000
CAGR: 7.00%
500
400
Available
Planted
5,000
4,000
3,000
2,000
1,000
-
300
200
100
0
Brazil US Russia China India
Source: FAO 2000 Land Resource Potential – Terrastat database
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Brazil imports more than 90% of its Potash Consumption
SOC.QUIM.MIN.CHILE
PCS
KALI UND SALZ
2011 Consumption
Imports: 7.4M
Domestic: 0.6M
IBER POTASH
DEAD SEA WORKS
CLEVELAND POTASH
CANPOTEX
BPC
AMEROPA
0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000
Source: Sindicato da Industria de Adubos e Corretivos Agricolas no Estado de Sao Paulo.
Volume (mt)
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Verde has Enough Potash in the Brazilian Cerrado
from Surface for Decades
Mineral Resources Tonnage (Mt) Avg. K 2 O Grade
Total Indicated
(7.5% K 2 O cut off grade)
Total Inferred
(7.5% K 2 O cut off grade)
71.08 9.2%
2,763.8 8.9%
TSX: NPK
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Location, Location, Location
9

Production Process: Keep it Simple
Open Pit Mine
Operation
Rotary Kiln
Evaporation/
Crystallization Plant
KCl Product
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Tested from Lab to Industrial Scale
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$3.3 Billion NPV, 27% IRR and $598M initial CAPEX
Base Case Scenario
Total KCl Production: 3 Mtpy
Capex per Phase (USD million)
Capex for Total Production (USD
million) (excludes sustaining
capital)
Phase 1 (2015)
0.6 Mtpy
Phase 2 (2017)
+ 1.0 Mtpy
Phase 3 (2019)
+ 1.4 Mtpy
598 732 1,008
2,338
Operating Costs (USD/t KCl)
IRR (%)
After Tax NPV (USD million), at
10% discount rate
285
27
3,367
• Completed by SRK Consulting Feb 2012
• Production of 100% granular fertilizer grade KCl (60% K 2 O)
• CAPEX includes 25% contingency
• Study assumes an average long term Vancouver FOB KCl granular price of US$559 per tonne and
US$475 from 2015-20 (CRU Market Research 2012)
TSX: NPK
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Capital Cost ($/mt)
$192
$375
$375
$433
$500
$506
$540
$550
$573
$625
$714
$714
$739
$790
$794
$833
$850
$928
$938
$943
$967
$986
$1,037
$1,067
$1,071
$1,120
$1,136
$1,150
$1,176
$1,200
$1,372
$1,383
$1,388
$1,400
$1,500
$1,556
$1,750
…. Cheaper to Build and Scalable
$2,000
$1,800
Greenfield
Brownfield
$1,600
$1,400
$1,200
$1,000
Greenfield Average: US$ 980.50/mt
Average: US$ 923.54/mt
$800
Brownfield Average: US$ 818.38/mt
$600
$400
$200
$0
Source: Scotia Capital
TSX: NPK
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Imported KCl is expensive to deliver in the Brazilian
Cerrado
• Blenders in Brazil incur significant transportation costs in importing KCl from
foreign producers
Shipping from Saskatchewan to Blenders in Brazil ($/tonne)
Demurrage
$5-10
AFRMM
$43 1 $33 $44-108
$8
Saskatchewan Port of Vancouver Port in Brazil 3
NPK Blenders
Port Costs
$26-43 2
Financial Cost
$10
1
Government of Canada, Ministry of Transportation
2
Santos Port = $43; Paranaguá Port = $26
3
AFRMM = Additional Freight for Renewal of the Merchant Navy : an extra tax imposed by the Brazilian government payable
upon inbound freights
4
CRU
Total: $174-249/tonne 4
In addition to the price of KCl, blenders
pay additional shipping costs when
purchasing KCl from Saskatchewan
producers
TSX : NPK
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US$ (Billions)
Brazilian Government Commitment
100
BNDES Gross Lending
90
80
70
60
50
40
30
20
10
0
2007 2008 2009 2010 2011
Minas Gerais State Governor, Antonio Augusto, and
Cristiano Veloso, Verde Potash’s CEO
TSX : NPK
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Key Milestones
2012 2013 2014 2015
Q2 Q3 Q4 Q1 Q2 Q3 Q4
Preliminary Environmental Permit
Studies and work prior to the
Definitive Feasibility Study
DFS
Installation Permit
Funding
Basic Engineering
Detailed Engineering
Operation Permit
Equipment Procurement
Construction
Project Start-up
16

Why Invest?
• Project offers robust economics
• No need to raise funds until construction decision
• Location, Location, Location
• Project construction and operation expertise
• Scalable project
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Appendix
18

Analyst Coverage
Company Analyst Contact Details
AltaCorp Capital John Chu +1 (647) 776-8236
Fraser Mackenzie Peter Prattas +1 (416) 560-3275
GMP Securities Anoop Prihar +1 (416) 367-8600
Kaiser Research John Kaiser +1 (925) 631-9748
Mackie Research Capital Jaret Anderson +1 (416) 860-6784
MGI Securities Corey Dias +1 (416) 864-2619
National Bank Robert Winslow +1 (416) 847-3403
Ocean Equities Adam Lucas +44 (0) 207 786 4370
Paradigm Capital Spencer Churchill +1 (416) 361-6056
Salman Partners Andrea Rubakovic +1 (416) 861-9387
Stifel Nicolaus Nick Morton +1 (416) 815-1546
19

Crawling
University of Cambridge - UK
20

Walking
Hazen Research – Denver, CO
21

Jogging
Verde Potash – Pilot Plant in Brazil
22

Running
FLSmidth – Allentown, PA
23

Verde’s KCl Cost Breakdown
Raw Materials
TSX : NPK
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High Quality Limestone for KCl Production
Resource
Category
Tonnage
(Mt)
Avg. Grade
(CaO)
Indicated 89 54.71%
Inferred 180 54.65%
Limestone drill core
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Potash is essential for energy in Brazil
Sugarcane
• Uses 160kg/ha of potash
per year, 55% of total
nutrient required (In
comparison, corn uses
140kg/ha of potash, 31%
of req’d nutrient)
• Sugarcane is grown in
about 8 million hectares of
land, of which 55% of the
harvest is used for ethanol
production
Milling and Refining
• Once harvested, sugarcane
is milled to collect the
juice that contain 10-15%
sucrose
• Juice is filtered and refined
Ethanol Production
• Ethanol is produced by
microbial fermentation of
the sugar
• Water is removed by
distillation and dehydration
Electricity Generation
•Bagasse is burned to generate
electricity for production
plant and grid
Ethanol
replaces about
50% of the fuel
needed to
operate light
vehicles on
gasoline
Bagasse power
generation
represents
4.1% of total
installed
capacity
Ethanol Production Cost
Sugarcane (Brazil): $0.83
Corn (US): $1.14
Ratio energy input to manufacture
to energy output of ethanol
Sugarcane (Brazil): 1:9.3
Corn (US): 1:1.4
Sources: Renewable Fuels Association, World Bank, Wikipedia
TSXv : NPK
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Potash Rock vs. Oil Sands
Oil Sands
Potash Rock
Commodity Crude oil Potash
Potential Resource 170 billion barrels of oil equivalent 2.68 billion tonnes
Cause for
development
Life Stage
Key Companies
• Dependence on oil imports in the 1970s
• Rising price of oil making the projects
economic
45 companies developing 82 projects;
25 projects in operation
Major International Oil Companies
Suncor, Nexen, Cenovus, Husky
• Dependence on potash imports in
Brazil with growing agriculture
industry
Verde: feasibility study in development
Verde Potash
Sector Value C$120 billion C$275 million
Oil sands
• Oil sands now an accepted source of crude oil shows the potential our new source of potash
• Oil sands deposits were developed because of increasing dependence on oil imports; Brazil’s
dependence on potash imports can be reduced by this development
• In 30 years, oil sands emerged from a niche technology to a mainstream source of oil, supplying
6.6% of U.S. oil consumption. Our potash rock may follow suit, providing an answer for growing
global potash need in the future
Sources: Canadian Association of Petroleum Producers, Wikipedia
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KCl vs ThermoPotash
Why the shift in focus from ThermoPotash?
1) ThermoPotash is an excellent project which Verde intends to produce
alongside KCl;
2) ThermoPotash is an excellent business, but it is a materially smaller
business than KCl:
‣ A two million tonne per year ThermoPotash operation could generate
approximately US$300 million of revenue;
‣ A three million tonne per year KCl operation could generate closer to
US$2.0 billion of revenue;
3) KCl is a well understood product with well-established demand (55Mt of
global demand). ThermoPotash is an innovative product and although we
have received positive feedback from Brazilian farmers and blenders,
there is currently no established demand for ThermoPotash.
28

TSX-V:NPK
www.verdepotash.com
TSX:NPK
www.verdepotash.com