AMAZON MINING - TSXV: AMZ - Verde Potash

STOCK NEWS by Rogerio Tippe10/27/2009 Phone: 604-699-0826 email: rogerio_tippe@canaccord.comAMAZON MINING - TSXV: AMZFor the past months I have been in contact withAmazon Mining President and CEO Cristiano Veloso,a Brazilian with an entrepreneurial spirit and keensense for business, and with Jed Richardson, aformer Sprott Securities Analyst and now a VP ofBusiness Development at AMZ.Amazon Mining (TSXV: AMZ) is a mineralexploration company with assets in the MinasGerais estate in Brazil. The Cerrado Verde projectcontains a potash rich rock called verdete slate.Amazon plans to produce a slow-release, nonchloride,multi-nutrient, fertilizer product.To understand Brazil's Potash needs, it's important tounderstand its agricultural business first.Brazil is one of the top producers and exporters ofcommodities like coffee, sugar, orange juice, cotton,and tobacco. Agribusiness in Brazil accounts forapproximately 25% of the GDP and 1 in 3 Braziliansare directly or indirectly involved in this business.Brazilian soils are known for being light in nutrients sothe demand for rich fertilizers is enormous. TodayBrazil is the second largest importer of Potash in theworld, just behind China and the fourth largest user.Approximately 90% of the Potash comes mainly fromCanada and Russia, making one of the mostimportant imports by dollar value.Because the price of Potash in the market has gonefrom $150/t to $600/t, farmers have been using lowconcentrations of fertilizers given its high price,transportation costs and duties paid.The agricultural sector is key to Brazil’s economicgrowth and I believe the demand for potash willdefinitely continue to grow substantially.In addition, high oil prices and increasing concernsabout carbon emissions have driven the subsequentconsumption of ethanol as an alternative energysources. This biofuel is produced from sugar canecrop and due to the ever decreasing amount ofagricultural lands and the need to increase cropyields, the demand for potash will continue to grow.Also this new demand for cropsAmazon Mining – current price: $1.1052 week range: $0.07 to $1.32Shares outstanding: 28,300,000puts an upward pressure on crop prices, directlyincreasing the demand for potash.If you have a solution for this complex issue, Brazil islistening.I believe Amazon Mining plays an important role in thefuture of Brazil's potash supply.AMZ's project is located in the Savannah region, insouthwest Brazil, called Cerrado by locals.Amazon's potash occurs at the surface, as opposed toconventional potash where deep holes must be drilledin order to determine its extent and quality. Surfacemining is also advantageous since it requires a lowcapex compared to its peers.Further, this deposit is a non salt potash rich rock andwhen heated up with limestone produce an effectivefertilizer, through a process developed over 25 years.Amazon believes that this fertilizer has substantialupside.The slow controlled release characteristics allow thefertilizer to stay in the soil until needed by the plant. It

Rogerio Tippe (604) 699-0826 rogerio_tippe@canaccord.comis environmentally friendly as it doesn’t pollute thewater table.The limitation to the project would be that furtherresearch is needed to fully master the process and thefact that power is a large part of the operating costs.However, recently Brazil’s Centre for MineralTechnology (CETEM), a government sponsoredresearch and development institute, agreed to fundmetallurgical tests on verdete from Amazon’s CerradoVerde Project.Verdete: the potash rockIn my last conversation with Jed Richardson, hementioned that substantial gas exploration ishappening near their project and he hopes that apipeline could be built soon. This would be a suitablesolution to the energy required to heat up the rock.The company announced in late September 2009 thatit has joined forces with Arcelor Mittal, a majorBrazilian steelmaking company with vast eucalyptusplantation areas, as a way to help fund trials for thefertilizer. Both companies will be sharing all theinformation for the trials.The question that remains is: Will the ThermoPotashcost be competitive? The company and managementbelieve so and are working on determining operatingcosts and capital expenditure, understanding both thepotential and the challenges.When evaluating a company, I look for 3 importantfactors: Management, Structure and Assets.Lead by Cristiano Veloso, Amazon has influentialBrazilian names on its board of directors.Dr. Getulio Lamartine de Paula Fonseca, Dr. HenriqueBrandão Cavalcanti, Dr. Renato Gomes all held keypositions in several important ministries anddepartments in Brazil, which brings Amazon an indepthknowledge of the Brazilian market, alongwith political influence.On the Canadian side, Amazon has Peter Gundyserving as the Chairman of the board and JedRichardson, VP of Business Development.Peter Gundy was the Executive Vice President,Finance of Potash Corporation of Saskatchewan andJed Richardson was an analyst at Sprott Securities.AMZ has a market cap of approximately $30MM, withjust 28.3MM shares outstanding, making it a very tightstructure. They have $8MM in cash at the bank anddo not need any immediate financing.Amazon Mining expects its 43-101 resource andscoping study by Q1 of 2010.The influence and experience of Amazon’s board ofdirectors in conjunction with Brazil's need for potashmay result in positive changes in the legislation, aswhat happened with Ethanol years ago.Tax incentive or removal may also be considered.Furthermore, the government has been cooperativeand has offered loans to fund the company’s futureresearch.As a native Brazilian, I have a strong understanding ofthe Brazilian markets, challenges and needs.Amazon Mining Management is building a strongcompany and they have made very good progressduring 2009. I am confident they will continue toidentify ways to improve their business and become astronger organization, providing great value for itsshareholders.