investor presentation july 2011
DESCRIPTION
TRANSCRIPT
TSX.V: NPKwww.verdepotash.com
2
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. 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.
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Verde Potash
Brazilian 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
•Phase 1 : ThermoPotash
• Low Capex: US$196.8m
• Strong Economics: NPV : US$445.5M
•Phase 2: Conventional Potash - KCl
• New technology under development
• University of Cambridge partnership
Investment 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
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Capital Structure & Share Price
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Shares Issued 32,122,769
Options 2,862,136
Warrants 208,686
Diluted 35,193,591
52 week: Hi/Lo C$10.95/C$1.32
Market Cap (at $7.95) C$255 million
Average Volume (3 mo.) 90,040
Cash Position ~C$13.6 million
Debt 0
Share Price
Salman Partners
Wellington West
Ocean Equities
Octagon Capital
Kaiser Bottom Fish (John Kaiser)
Analyst Coverage
Salman Partners Jaret Anderson
Wellington West Robert Winslow
Ocean Equities Natasha Liddell
Octagon Capital Max Vichniakov
GMP Securities Anoop Prihar
Bottom Fish John Kaiser
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Management & Directors
Management
Cristiano Veloso Founder, President, CEO• 12 years experience; Brazilian entrepreneur ex Banco do
Brasil S/A, CEMIG; LL.B, LL.M International Business Law
Maurício Sampaio VP Operations• 30 years experience; ex President of Brazilian Agribusiness
Association, Operations and Marketing Director for BungeFertilizantes and Operations Director for Fertiza
Pedro Ladeira VP Engineering• 17 years experience; ex Operations Director at Cementos
Minetti; Process and Production Manager for Holcim Brazil
Ysao Munemassa Exploration Manager• 41 years experience; ex BP Minerals, VALE, Union Carbide,
INCO, Teck Cominco, Newmont Gold
Dr Derek Fray Metallurgical Consultant• 45 years experience; University of Cambridge Professor &
Director of Research
Jed Richardson VP Corporate Development• 10 years experience; ex Mining Analyst with Sprott/Cormark
and RBC Capital Markets, Mining engineer with AlcanAluminium
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Peter Gundy Chairman
• Former Chairman of Neo Materials Technologies Inc.; VP of
Brascan Inc; Executive VP, Finance of Potash Corporation of
Saskatchewan Limited.
Dr. Getulio Lamartine de Paula Fonseca
• Former General Director National Department of Power &
Water Supply; Executive-Secretary Industry & Commerce
Ministry;
Dr. Henrique Brandão Cavalcanti
• Former Brazil‟s Minister of the Environment (1994), Deputy
Minister of Mines Energy (1967-69), Deputy Minister of Interior
(1969-74).
Dr. Renato Gomes
• Director of the ABCI Institute (Brazilian International Trade
Scholars) Lawyer and member of Brazilian and Portuguese Bar
Associations
Dr. 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
Independent Directors
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Brazil’s Agribusiness: Feeding the World
•Brazil has almost 20% of world‟s
undeveloped potential arable land
•Brazil has world‟s largest renewable fresh
water reserve
•The great agricultural frontier is Brazil‟s
Cerrado, or Savannah away from the
Amazon forest
•Climate allows for multiple crops during
the year
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Amazon
Cerrado
Brazil
South
America0
100
200
300
400
500
600
Brazil US Russia China India
Millio
ns o
f H
ecta
res
Undeveloped Potential Arable Land
Available
Planted
Source: Food and Agriculture Organization, UN
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Brazil’s Fertilizer Supply & Consumption
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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
Note1Source: FERTECON report (FERTECON, 2009, /15/)
Source: FAO,UN
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Location, Location, Location
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~ 60% of Brazil’s
fertilizer consumption
takes place in Minas
Gerais state where
Verde’s projects are
located and adjacent
states
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Transportation Advantage
From Saskatchewan to Brazil
Verde Potash
Saskatchewan Port of Vancouver Port of Santos NPK Blenders$43.29 1
/tonne
$30-35
/tonne
$80-115
/tonne
Total: $153-193/tonne
Cerrado Verde NPK Blenders
Minas Gerais $22.27
Mato Grosso $59.72
Goias $29.66
Parana $67.33
Mato Grosso do Sul $57.27
Bahia $47.63
Sao Paulo $40.85
Transportation Cost 2
Cerrado Verde to NPK Mixers (per tonne)
TSXv : NPK1 Government of Canada, Ministry of Transportation
2 Agroconsult
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Potash at Surface
Growing 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
from surface
Potash rock at surface being drilled
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Verde’s Advantage
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Verde‟s K Rock
0 m
Open Pit Mining
10-13% K2O
2 yrs
$200 million
Energy Costs
Low mining costs
ThermoPotash
Carnallite
500 - 1000m
Solution Mining
10-14% K2O
5-7 years
$1-2 billion
Fluid and Boreholes
Solution Separation
KCl
Sylvinite
1000 - 1500m
Conventional Underground
20-25% K2O
7-10 years
$2-3 billion
Conventional Mining
Flotation Separation
KCl
Depth
Grade
Time
Cap-Ex
Op Cost
Product
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ThermoPotash Scoping Study
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NI 43-101 Preliminary Economic Assessment Completed•PEA completed by SRK Consulting
(U.S.), Inc. studied open pit mining and
pyrometallurgy process to create the
ThermoPotash fertilizer
Potential Cost Savings•Use of natural gas or eucalyptus
charcoal instead of pet coke as heating
fuel source
•Utilization of Verde‟s potential
limestone source
•Reduction of ICMS1 value-added taxes
•Flow sheet Optimization
NOTE1 Tax on the Circulation of Goods, Interstate and intercity Transportation and Communication Services2 These figures can be found on page IV of the Preliminary Economic Assessment available on SEDAR published on December 13, 2010
Production Rate
(Brazil market share of
Potash “K2O”)
1.1Mtpy2
(2%)
2.2Mtpy2
(4%)
NPV (10%) US$445.5m US$844.1m
NPV (12%) US$331.6m US$642.0m
IRR 32.7% 40.0%
Operational Cost US$41.80/t US$36.36/t
CapEx
Contingency
Pre-construction
Total CapEx
US$155.3m
US$23.3m
US$18.2m
US$196.8m
US$218.4m
US$32.8m
US$18.2m
US$269.4m
Payback 2.38 years 1.87 years
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Benefits 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 techniques
ThermoPotash : Benefits
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Benefits 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
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Beyond ThermoPotash: Conventional KCl
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New 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
processing concept to industrial levels
• If the process proves economic it could
revolutionize the Potash market
Potassium rich rock
Dr Derek Fray, University of Cambridge, UK
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Brazilian Government Commitment
Memorandum of Understanding (“MOU”) Signed with 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
proposed TK production
• sales tax on TK
Minas Gerais State Governor, Antonio Augusto, and
Cristiano Veloso, Verde Potash‟s CEO
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Milestones2011 2012 2013 2014
Q2 Q3 Q4
Cerra
do
Verd
e P
ota
sh
Updated Resource
Calculation
TK Pre-Feasibility
TK Registration
TK Feasibility Study
TK Construction
TK Commissioning
Cambridge Technology
Oth
er
Apatita Phosphate Resource
Calculation
Limestone Resource
Calculation
Key Milestones
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Potash Rock vs. Oil Sands
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
Oil Sands Potash Rock
Commodity Crude oil Potash
Potential Resource 170 billion barrels of oil equivalent 15 billion tonnes
Cause for development
• Dependence on oil imports in the 1970s
• Rising price of oil making the projects
economic
• Dependence on potash imports in
Brazil with growing agriculture
industry
Life Stage 45 companies developing 82 projects;
25 projects in operation
Verde: market and product development
stage
Key Companies Major International Oil Companies
Suncor, Nexen, Cenovus, Husky
Verde Potash
Sector Value C$120 billion C$200 million
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Why Potash is Important: Potash is Energy
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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
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Process and Operating Costs
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ThermoPotash Production Process
1. Mining
• Potassium rich rock comes from open pit and
the limestone comes from suppliers in the
surrounding area or Verde‟s quarry
2. Grinding
• Potassium rock and limestone are ground by
upright rod mill
3. Mixing
• The ground rock and limestone are mixed
and 4% moisture is added
4. Pelletization and Drying
• Material is rolled into pellets by disc
pelletizers, and dried by exhaust gas from the
rotary kiln
5. Rotary Kiln and Quenching
• After drying, pellets go into the rotary kiln to
be heated to 1250oC and rapidly cooled
6. Packaging of ready ThermoPotash product
$18.45
•Energy
•petroleum coke, electricity
$2.35
•Raw Materials
•limestone
$8.91•Labour
$1.80•Maintenance
$5.50•Equipment Operation
$1.76•Marketing
$3.04
•Non-Operating Expenses
•administration
Estimated Operating Cost
(1.1mtpy) 1
US$41.80/tonne
1 These figures can be found on pages 17-15 & 17-16 of the Preliminary Economic Assessment
available on SEDAR published on December 13, 2010
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Minas
Gerais
896,051t/y
$182.31
$160.04
Sao Paulo
722,513t/y
$131.77
$90.92
Bahia
325,18ty
$141.61
$93.98
Parana
778,17t/y
$131.01
$63.68
Goias
495,68t/y
$142.64
$112.98
Mato Grosso
895,043t/y
$189.85
$130.13
Mato Grosso
do Sul
246,621t/y
$179.47
$122.20
Cerrado Verde
Pricing Estimates
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Highlighted MarketAnnual Market Potential:
4,359,267 tonnes
Potential Sale Price:
US$179.47/t1
Delivery-adjusted Price:
US$122.20/t1
Marketing Study
• Agroconsult conducted an
independent market study to
understand potential sale price and
market size of ThermoPotash
• Prices derived exclusively on how
blenders can optimize NPK formulas
using ThermoPotash and keep raw
material costs equal
NOTE
1 Weighted-average of the highlighted market
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Pricing Estimates
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NOTE
1 Agroconsult (see press release dated October 26, 2010)
Optimized Formulation vs. Standard Formulation in 4-20-20 Fertilizer1
Standard - w/o TK Optimized Formulation - w/ TK
Weight
(kg)
Price
(US$)
N P K Weight
(kg)
Price
(US$)
N P K
Am. Sulphate
(US$258.52/t)
74.2 19.18 1.48% 0.00% 0.00% 5.6 1.45 0.11% 0.00% 0.00%
SSP
(US$253.07/t)
352.8 89.28 0.00% 7.06% 0.00% 0 0.00 0.00% 0.00% 0.00%
MAP
(US$514.06/t)
239.7 123.22 2.52% 12.94% 0.00% 370.4 190.41 3.89% 20.00% 0.00%
KCl
(US$515.55/t)
333.3 171.83 0.00% 0.00% 20.00% 288.6 148.79 0.00% 0.00% 17.32%
ThermoPotash
($182.31/t)
0 0 0.00% 0.00% 0.00% 335.5 61.16 0.00% 0.00% 2.68%
Total Weight 1000 403.53 4.00% 20.00% 20.00% 1000 401.81 4.00% 20.00% 20.00%
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ThermoPotash Agronomic Results
Nutrient Availability Tests
(See August 11, 2010 release)
• Tests showed that ThermoPotash
(TK) provided statistically equivalent
nutrients to plants as KCl
Limestone Replacement Tests
(See October 14, 2010 release)
• Every tonne of ThermoPotash used
reduces limestone required by 490
kg
Slow 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
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Carrot‟s planted at Sekita using TK & KCl: statistically inconclusive results
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Why It Hasn’t Been Done Before?
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Potash price was too low
• When Verdete was first tested KClwas only $70/t
• In 2007 KCl price was still $200/treaching $1100/t during 2008
• Now $400/t FOB, $600/t in Brazil
Existing Production Gov’t Built
• Large conventional mines areprivatized government assets
• No new large mines since 1980‟s
• Now it would cost billions with longlead times to production
0
20
40
60
80
100
120
0
200
400
600
800
1000
1200
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2002 2003 2004 2005 2006 2007 2008 2009 2010E
Po
tash
Sh
ipm
en
ts (
MM
t)
Po
tash
Pri
ce (
$/t
)
Shipments Brazil
China
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ThermoPotash Partnerships
ArcelorMittal to Fund Agronomic Trials (See Sept. 22, 2009 release)
• Agreement represents a first step in developing corporate demand for ThermoPotash. ArcelorMittalhas 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 aspart 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 arelocated 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 privateenterprise focused on developing fertilizer alternatives for sugarcane destined for ethanol production
University of Uberlandia Undertakes Agronomic Trials (See December 9, 2009 release)
• Agreement with Dr. Gaspar Korndörfer, Professor of Agriculture at the Universidade Fedederal deUberlandia, secures initial agronomic studies used for the planning of Amazon‟s metallurgical testwork and laboratory scale tests on the application of ThermoPotash
University of Lavras Agreement (See August 31, 2010 release)
• Agreement with the University of Lavras to complete a full slate of tests to register the ThermoPotashproduct as a fertilizer in Brazil
Universidade Fedederal de Uberlandia
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Apatita Phosphate Project
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• 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
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Phosphate in Brazil
Company Project Status Type
Resource 1
(Mt)
Reserve 2
(Mt)
Avg
Grade
P2O5 (%)
P2O5
Concentr.3
Production
Capacity4
(ktpy)
Fosfertil/Vale Tapira Operating Carbonatite 1,309.2 7.69 35.5 2,030
Copebras/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
on
Carbonatite 852.0 10.74 - 1,600 forecast
Vale Anitapolis Implementati
on
Carbonatite 54.0 9.01 - 300 forecast
MBAC5 Itafos Operating Metasediments 44.0 5.39 28/30 50
Notes1 Resource and Grades: Salitre-DNPM 1975/Anitapolis:, DOU 1980 (DOU = Official Diary of Brazil)2 Reserve and Grades: DNPM 2006 Mineral Annuary3 Concentration/Production: ANDA Annuary 20084 Major Phosphate Rock Producer by Bete,Inc. for Cargill Fertilizer, inc 1998. Values updated to 2010 including exchange variation and inflation5 BMO – MBAC report figures April 2010 and Website info September 2010 TSXv : NPK