Investor Presentation May 2011


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Investor Presentation May 2011

  1. 1. TSX.V:
  2. 2. DisclaimerThis presentation contains certain “forward looking statements”, which include but is not limited to, statements withrespect to the future financial or operating performance of Verde Potash Plc (the “Company”), its subsidiaries andits projects, statements regarding use of proceeds, exploration prospects, identification of mineral reserves, costsof and capital for exploration projects, exploration expenditures, timing of future exploration and permitting,requirements for additional capital, government regulations of mining operations, environmental risks, reclamationexpenses, title disputes or claims, and limitations of insurance coverage. Forward looking statements cangenerally 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” orvariations 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 Companyto be materially different from any future results, performance or achievements expressed or implied by saidstatements. There can be no assurances that forward-looking statements will prove to be accurate, as actualresults and future events could differ materially from those anticipated in said statements. Accordingly, readersshould not place undue reliance on forward-looking statements.Total resources include all categories unless otherwise stated. All currency are in Canadian $ unless otherwisestated. TSXv : NPK 2
  3. 3. Verde PotashBrazilian fertilizer company• Founded and led by strong and successful Brazilian team• Listed on the Toronto Venture Exchange (NPK : TSX-V)Cerrado Verde Potash Project• 105.1Mt @ 10.3% K2O of Potash inferred resource• ThermoPotash • Low Capex: US$196.8m • Strong Economics: US$445.5M• Conventional Potash - KCl • New technology under development • University of Cambridge partnershipInvestment Highlights• High grade potash at surface• Close proximity to fertilizer distribution and farms• Strong government support: tax advantages and potential financing Potash rock at surface grading 11% K2O TSXv : NPK 3
  4. 4. Capital Structure & Share PriceShares Issued 32,122,769 Share Price $12.00 0.9 0.8Options 2,862,136 $10.00 0.7 $8.00 0.6 0.5 $6.00Warrants 208,686 0.4 $4.00 0.3 0.2 $2.00Diluted 35,193,591 0.1 $0.00 052 week: Hi/Lo C$10.95/C$0.93Market Cap (at $7.40) C$237 million Analyst Coverage Salman Partners Jaret AndersonAverage Volume (3 mo.) 126,526 Wellington West Robert WinslowCash Position ~C$14 million Ocean Equities Natasha Liddell Octagon Capital Max VichniakovDebt 0 Bottom Fish Kaiser Bottom Fish (John Kaiser) John Kaiser TSXv : NPK 4
  5. 5. Brazil’s Agribusiness: Feeding the World •Brazil has almost 20% of world‟s •The great agricultural frontier is Brazil‟s undeveloped potential arable land Cerrado, or Savannah away from the Amazon forest Undeveloped Potential Arable Land 600 Amazon 500 Available BrazilMillions of Hectares 400 Planted 300 Cerrado 200 100 South 0 Brazil US Russia China India America Source: Food and Agriculture Organization, UN •Brazil has world‟s largest renewable fresh •Climate allows for multiple crops during water reserve the year TSXv : NPK 5
  6. 6. Brazil’s Fertilizer Supply & Consumption Evolution of Agribusiness • Brazil is the world‟s fastest growing potash consumer • Brazil‟s poor soils and crop mix make potash a very important nutrient Dependency on Imported Potash • Potash ranks in the top ten of Brazilian imports by dollar value (2008 #6, 2009 #10) • Brazilian government targets 2020 to be fertilizer-independent • Brazil is to be ranked #1 globally for potash imports in 2020 at 7.2 million tonnes of K2O1 Source: FAO,UN Note 1Source: FERTECON report (FERTECON, 2009, /15/) TSXv : NPK 6
  7. 7. Management and DirectorsManagement Independent DirectorsCristiano Veloso Founder, President, CEO Peter Gundy Chairman• 12 years experience; Brazilian entrepreneur ex Banco do • Former Chairman of Neo Materials Technologies Inc.; VP of Brasil S/A, CEMIG; LL.B, LL.M International Business Law Brascan Inc; Executive VP, Finance of Potash Corporation of Saskatchewan Limited and Chairman of RenaissanceMaurício Sampaio VP Operations Securities Inc. Currently co-proprietor of Veritprop Ltd. In• 30 years experience; ex President of Brazilian Agribusiness Toronto Association, Operations and Marketing Director for Bunge Fertilizantes and Operations Director for Fertiza Dr Getulio Lamartine de Paula Fonseca • Former General Director National Department of Power &Pedro Ladeira VP Engineering Water Supply; Executive-Secretary Industry & Commerce• 17 years experience; ex Operations Director at Cementos Ministry; Served as a member of the advisory boards of Minetti; Process and Production Manager for Holcim Brazil Vallourec & Mannesmann, CPRM & FerbasaYsao Munemassa Exploration Manager• 41 years experience; ex BP Minerals, VALE, Union Dr Henrique Brandão Cavalcanti Carbide, INCO, Teck Cominco, Newmont Gold • Former Brazil‟s Minister of the Environment (1994), Deputy Minister of Mines Energy (1967-69), Deputy Minister ofDr Derek Fray Metallurgical Consultant Interior (1969-74). Has held senior posts at SIDERBRAS• 45 years experience; University of Cambridge Professor & Brazilian Steel Corporation, International Environmental Director of Research Bureau in Geneva and CAEMI. Has Represented Brazil at the United Nations and World Health OrganizationJed Richardson VP Corporate Development• 10 years experience; ex Mining Analyst with Dr Renato Gomes Sprott/Cormark and RBC Capital Markets, Mining engineer • Director of the ABCI Institute (Brazilian International Trade with Alcan Aluminium Scholars) Lawyer and member of Brazilian and Portuguese Bar Associations TSXv : NPK 7
  8. 8. Location, Location, Location ~ 60% of Brazil’s fertilizer consumption takes place in Minas Gerais state where Verde’s projects are located and adjacent states TSXv : NPK 8
  9. 9. Transportation AdvantageFrom Saskatchewan to Brazil $43.29 1 $30-35 $80-115Saskatchewan /tonne Port of Vancouver /tonne Port of Santos /tonne NPK Blenders Total: $153-193/tonne Verde Potash Transportation Cost 2 Cerrado Verde to NPK Mixers (per tonne) Minas Gerais $22.27 Mato Grosso $59.72 Goias $29.66 Parana $67.33 Mato Grosso do Sul $57.27Cerrado Verde Bahia $47.63 NPK Blenders Sao Paulo $40.85 1Government of Canada, Ministry of Transportation 2 Agroconsult TSXv : NPK 9
  10. 10. Potash at SurfaceGrowing Resource• Initial NI 43-101 Inferred Resource of 105.1Mt @ 10.3% (7.5% cut-off)• Potassium rich rock (Muscovite and Microcline) distributed over an area approximately: 100km x 10km x 20m to 80m thick• 26,000m drilling program underway (see press release dated May 9, 2011)Low-Cost Mining• High Grade• Open Pit• Drilling Results include up to 64m @ 10.3% K2O Potash rock at surface being drilled TSXv : NPK 10
  11. 11. Cerrado Verde Project – Business PlanThermoPotash Conventional Potash - KCl• Developed in the 70‟s • New technology under development• Potash rich rock mixed with limestone • Patent application filed in Dec/10 for the and heated produces ThermoPotash production of KCl• Slow-release, non-chloride, multi- • Developed by Dr. Derek Fray, Professor nutrient fertilizer and Director of Research (University of• Ideal fertilizer for Brazil‟s nutrient poor, Cambridge, UK) well drained, acidic soils TSXv : NPK 11
  12. 12. ThermoPotash Scoping StudyNI 43-101 Preliminary Economic Production Rate 1.1Mtpy2 2.2Mtpy2 (Brazil market share of (2%) (4%)Assessment Completed Potash “K2O”)• PEA completed by SRK Consulting (U.S.), Inc. studied open pit mining NPV (10%) US$445.5m US$844.1m and pyrometallurgy process to create the ThermoPotash fertilizer NPV (12%) US$331.6m US$642.0m IRR 32.7% 40.0%Potential Cost Savings Operational Cost US$41.80/t US$36.36/t• Use of natural gas or eucalyptus charcoal instead of pet coke as CapEx US$155.3m US$218.4m heating fuel source Contingency US$23.3m US$32.8m• Utilization of Amazon‟s potential Pre-construction US$18.2m US$18.2m limestone source Total CapEx US$196.8m US$269.4m• Reduction of ICMS1 value-added Payback 2.38 years 1.87 years taxes• Flow sheet Optimization NOTE 12 1 Tax on the Circulation of Goods, Interstate and intercity Transportation and Communication Services 2 These figures can be found on page IV of the Preliminary Economic Assessment available on SEDAR published on December 13, 2010 TSXv : NPK
  13. 13. ThermoPotash : BenefitsBenefits to farmers• Provides potash in a slow release form• Provides substantial doses of other macronutrients• Reduces limestone use for pH correction• No change to final fertilizer application quantities or techniquesBenefits to fertilizer blenders• Overseas imports price is set 2 months before it arrives at facility, plus possible port delays• 60% of fertilizer consumption occurs in 4 month window• Transport distance creates unusable powder from granules• Potential to replace 581,236 tonnes of imported KCl in the region Port of Santos TSXv : NPK 13
  14. 14. ThermoPotash Agronomic ResultsNutrient Availability Tests Limestone Replacement Tests(See August 11, 2010 release) (See October 14, 2010 release)• Tests showed that ThermoPotash • Every tonne of ThermoPotash used (TK) provided statistically equivalent reduces limestone required by 490 nutrients to plants as KCl kgSlow and Controlled Release(See October 15, 2010 release)• Resin tests confirmed slow release properties of ThermoPotash (best suited for Brazilian soils) Potassium Leaching Tests (See December 16, 2010 release) • TK suffers minimal nutrient loss as a result of leaching, whereas KCl loses 26% under the same conditions Carrot‟s planted at Sekita using TK & KCl: statistically inconclusive results TSXv : NPK 14
  15. 15. Conventional Potash - KClNew Technology has potential to revolutionize Potash industry• Method invented for reacting Verde‟s potassium rich rock with a simple mixture of salts to form water-soluble potash• Invented by Dr. Derek Fray, Professor and Director of Research at the University of Cambridge, UK, sponsored by Verde• Reactions occur at moderate temperatures of 800-1000°C• The route allows for the production of SOP and KCl• Verde has commissioned a leading commercial lab to scale up the current Potassium rich rock processing concept to industrial levels• If the process proves economic it could revolutionize the Potash market Dr Derek Fray, University of Cambridge, UK TSXv : NPK 15
  16. 16. Apatita Phosphate Project• 30km of mineralized phosphate with widths between 1km and 5km (see November 8, 2010 release)• Average grade of 7.13% P2O5 from 435 surface grab samples• 12 hole, 1,022m drilling program provided encouraging results at two prospect regions: • Alto da Serra zone - high grade potential of 2m at 9.49% P2O5 • Nau de Guerra zone - high grade potential of 1m at 8.43% P2O5 and 3m at 6.35% P2O5• First concentration test result: 29.8% P2O5 with significant potential for improvement TSXv : NPK 16
  17. 17. Brazilian Government CommitmentMemorandum of Understanding (“MOU”) Signedwith State of Minas Gerais(see April 7, 2011 release)• Potential financing for working capital and fixed investment support; funds administered by the Development Bank of Minas Gerais (BDMG)• Secretary of Finance‟s approval of special tax treatment defined as: • Suspension of “ICMS” tax payable on: a) imports of foreign goods; b) imports of foreign raw materials; c) purchases of domestic raw materials • Eeffective tax load of 4% payable on sales of fertilizer products• Tax benefit will reduce: • capital and operational expenditures for the Minas Gerais State Governor, Antonio Augusto, and Cristiano Veloso, Verde Potash‟s CEO proposed TK production • sales tax on TK 17
  18. 18. Key Milestones 2011 2012 2013 2014 Milestones Q2 Q3 Q4 Cerrado Verde Potash Updated Resource Calculation TK Pre-Feasibility TK Registration TK Feasibility Study TK Construction TK Commissioning Cambridge Technology Other Apatita Phosphate Resource Calculation Limestone Resource Calculation TSXv : NPK 18
  19. 19. Appendix 19
  20. 20. Time for Something Different Verde‟s Carnallite Sylvinite K RockDepth 0m 500 - 1000m 1000 - 1500m Open Pit Mining Solution Mining Conventional UndergroundGrade 10-13% K2O 10-14% K2O 20-25% K2OTime 2 yrs 5-7 years 7-10 yearsCap-Ex $200 million $1-2 billion $2-3 billion Energy Costs Fluid and Boreholes Conventional MiningOp Cost Low mining costs Solution Separation Flotation SeparationProduct ThermoPotash KCl KCl TSXv : NPK 20
  21. 21. Process and Operating CostsThermoPotash Production Process Estimated Operating Cost1. Mining (1.1mtpy) 1 • Potassium rich rock comes from open pit and •Energy the limestone comes from suppliers in the $18.45 •petroleum coke, electricity surrounding area or Verde‟s quarry •Raw Materials2. Grinding $2.35 •limestone • Potassium rock and limestone are ground by upright rod mill •Labour $8.913. Mixing • The ground rock and limestone are mixed •Maintenance and 4% moisture is added $1.804. Pelletization and Drying • Material is rolled into pellets by disc •Equipment Operation $5.50 pelletizers, and dried by exhaust gas from the rotary kiln •Marketing $1.765. Rotary Kiln and Quenching • After drying, pellets go into the rotary kiln to •Non-Operating Expenses be heated to 1250oC and rapidly cooled $3.04 •administration6. Packaging of ready ThermoPotash product US$41.80/tonne 1These figures can be found on pages 17-15 & 17-16 of the Preliminary Economic Assessment available on SEDAR published on December 13, 2010 TSXv : NPK 21
  22. 22. Pricing Estimates Mato Bahia 325,18tyMarketing Study Grosso $141.61 895,043t/y Goias $93.98• Agroconsult conducted an independent $189.85 $130.13 495,68t/y $142.64 Minas market study to understand potential sale $112.98 Gerais 896,051t/y price and market size of ThermoPotash $182.31 Cerrado Verde $160.04• Prices derived exclusively on how blenders can optimize NPK formulas using Mato Grosso do Sul ThermoPotash and keep raw material costs 246,621t/y Parana $179.47 778,17t/y Sao Paulo equal $122.20 $131.01 722,513t/y $63.68 $131.77 $90.92 Optimized Formulation vs. Standard Formulation in 4-20-20 Fertilizer4 Highlighted Standard - w/o TK Optimized Formulation - w/ TK Market Weight Price N P K Weight Price N P K Annual Market (kg) (US$) (kg) (US$)Am. Sulphate 74.2 19.18 1.48% 0.00% 0.00% 5.6 1.45 0.11% 0.00% 0.00% Potential: 4,359,267(US$258.52/t) tonnesSSP 352.8 89.28 0.00% 7.06% 0.00% 0 0.00 0.00% 0.00% 0.00% Potential Sale Price:(US$253.07/t) US$179.47/t3MAP 239.7 123.22 2.52% 12.94% 0.00% 370.4 190.41 3.89% 20.00% 0.00% Delivery-adjusted(US$514.06/t)KCl 333.3 171.83 0.00% 0.00% 20.00% 288.6 148.79 0.00% 0.00% 17.32% Price: US$122.20/t3(US$515.55/t)ThermoPotash 0 0 0.00% 0.00% 0.00% 335.5 61.16 0.00% 0.00% 2.68%($182.31/t)Total Weight 1000 403.53 4.00% 20.00% 20.00% 1000 401.81 4.00% 20.00% 20.00% NOTE 1 Price currently paid by blenders for fertilizers delivered at Uberaba fertilizer complex, Minas Gerais state. 2 Expected sale price for Minas Gerais State 3 Weighted-average of the highlighted market TSXv : NPK 22 4 Agroconsult (see press release dated October 26, 2010)
  23. 23. Why It Hasn’t Been Done Before? 1200 120 Potash Shipments (MMt) 1000 Shipments Brazil 100 Potash Price ($/t) 800 China 80 600 60 400 40 200 20 0 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 2003 2004 2005 2006 2007 2008 2009 2010EPotash price was too low Existing Production Gov’t Built• When Verdete was first tested KCl • Large conventional mines are was only $70/t privatized government assets• In 2007 KCl price was still $200/t • No new large mines since 1980‟s reaching $1100/t during 2008 • Now it would cost billions with long• Now $400/t FOB, $600/t in Brazil lead times to production TSXv : NPK 23
  24. 24. ThermoPotash Partnerships ArcelorMittal to Fund Agronomic Trials (See Sept. 22, 2009 release) • Agreement represents a first step in developing corporate demand for ThermoPotash. ArcelorMittal has 170,000ha of cultivated eucalyptus forests for charcoal production. Agrifirma to Undertake Agronomic Trials (See Nov. 24 & Dec. 9, 2009 release) • Agreement secures real world field trials of ThermoPotash for use in corn and soy plantation, also as part of process for conversion of Cerrado scrubland for commercial cultivation. Agrifirma is a Jersey- based land fund with 42,000ha of farmland in Brazil Sekita to Fund Agronomic Trials (See March 22, 2010 release) • Agreement establishes a relationship with one of the largest Brazilian vegetable producers. ThermoPotash to be tested in real world conditions for use with various vegetables. Its farms are located less than 10km from the Cerrado Verde Project Included in Sugarcane Fertilizer Taskforce (See August 4, 2009 release) • ROCKAPL („Rock‟ Arranjo Produtivo Local) is a collaborative effort between government and private enterprise focused on developing fertilizer alternatives for sugarcane destined for ethanol production University of Uberlandia Undertakes Agronomic Trials (See December 2009 release) • Agreement with Dr. Gaspar Korndörfer, Professor of Agriculture at the Universidade Fedederal deUniversidade Fedederal de Uberlandia Uberlandia, secures initial agronomic studies used for the planning of Amazon‟s metallurgical test work and laboratory scale tests on the application of ThermoPotash University of Lavras Agreement (See August 31, 2009 release) • Agreement with the University of Lavras to complete a full slate of tests to register the ThermoPotash product as a fertilizer in Brazil TSXv : NPK 24
  25. 25. Phosphate in Brazil Avg Production Resource 1 Reserve 2 Grade P2O5 Capacity4 Company Project Status Type (Mt) (Mt) P2O5 (%) Concentr.3 (ktpy) Fosfertil/Vale Tapira Operating Carbonatite 1,309.2 7.69 35.5 2,030Copebras/Anglo Ouvidor Operating Carbonatite 256.7 7.63 38.0 1,300 Vale Araxa Operating Carbonatite 88.7 11.12 35/33 910 Fosfertil/Vale Catalao Operating Carbonatite 223.6 8.96 36/34 1,209 Vale Cajati Operating Carbonatite 85.1 5.45 36.0 528 Fosfertil/Vale Patos Operating Metasediments 304.6 12.36 24.0 150 Fosfertil/Vale Salitre Implementati Carbonatite 852.0 10.74 - 1,600 forecast on Vale Anitapolis Implementati Carbonatite 54.0 9.01 - 300 forecast on MBAC5 Itafos Operating Metasediments 44.0 5.39 28/30 50 Notes 1 Resource and Grades: Salitre-DNPM 1975/Anitapolis:, DOU 1980 (DOU = Official Diary of Brazil) 2 Reserve and Grades: DNPM 2006 Mineral Annuary 3 Concentration/Production: ANDA Annuary 2008 4 Major Phosphate Rock Producer by Bete,Inc. for Cargill Fertilizer, inc 1998. Values updated to 2010 including exchange variation and inflation 5 BMO – MBAC report figures April 2010 and Website info September 2010 TSXv : NPK 25
  26. 26.