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16/10/2012

Verde Potash looks ahead to BFS

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Additional Information
Market: TSX
Sector: General Mining
EPIC: NPK
Latest Price: 1.10  (5.77% Ascending)
52-week High: 4.90
52-week Low: 1.01
Market Cap: 41.29M
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Verde Potash
www.verdepotash.com

Verde Potash, founded by Brazilians, is a mineral exploration and development company focused on fertilizers. The Company is developing the Cerrado Verde project in Brazil, a source of potash-rich rock from which Verde plans to produce a slow-release, non-chloride, multi-nutrient, fertilizer product named ThermoPotash.

Full Verde Potash profile here
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Verde Potash hopes to benefit from Brazilian government's incentive plans

25th Sep 2012, 4:14 am by Giles Gwinnett
Verde Potash hopes to benefit from Brazilian government's incentive plans

Plans by the Brazilian government to bolster the fertiliser industry in the country could prove significant for Verde Potash (CVE:NPK).

The company is focused on the south-American country and is focused on unconventional technology to produce potash - used in fertilisers.

The news could mean a boon to the firm's growth and project economics.

On Friday last week, it emerged that the Brazilian government had launched measures to incentivise the fertiliser industry, among others.

These are aimed at encouraging the growth of Brazil's own industry - rather than relying on imports. The measures will be introduced in 2013.

Conventional potash deposits lie in remote parts of Canada and the former Soviet Union and are buried deep below the surface, requiring billions of dollars of capital to develop.

They are also thousands of miles from their key market – usually Brazil – which adds hugely to the delivered cost of this industrial mineral. 

But Verde has perfected a process that creates the potassium chloride that occurs in sylvinite from a potassium silicate rock that is found in abundance and at surface on its Cerrado Verde project, in Minas Gerais State. 

The finished product is identical to imports from Russia or Canada.

The fact that Verde’s resource is easy to extract makes it less capital intensive than conventional potash mines.

Last month, Proactive Investors reported that Verde's initial phase will cost US$598 million to bring into production, which is currently slated for the second half of 2015.

Starting with 600,000 tonnes a year, Cerrado Verde will add a further 1 million tonnes, with the output eventually hitting 3 million tonnes. 

Expansion will be financed via a mix of debt and cashflow.

The mine gate cost of around US$300 per tonne makes Verde’s product look expensive when compared to its Canadian counterparts, which is usually extracted for a cost of around US$80-$120 per tonne.

However this is an industrial mineral. 

And for industrial minerals the key component of the cost equation is transportation, which can add between US$174 and US$249 a tonne to the delivered price, Verde estimates.

Verde’s transportation costs are a fraction of its rivals’ at US$10 to US$20 a tonne.

 

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