MBAC secures $1.6-million (U.S.) from lender

2014-10-08 07:04 ET - News Release

 

Mr. Cristiano Melcher reports

MBAC FERTILIZER PROVIDES PRODUCTION AND CORPORATE UPDATE

MBAC Fertilizer Corp. today provided an update on the production and operational activities completed in September (through Sept. 30) at its Itafos operations in Brazil:

 

  • Produced approximately 22,000 tonnes of single super phosphate;
  • Produced approximately 10,500 tonnes of sulphuric acid;
  • Established a daily production record of 1,700 tonnes of SSP, exceeding the expected daily production volume that Itafos was originally designed for.

 

Subsequent to Sept. 30, MBAC has:

 

  • Secured access to $1.6-million (U.S.) in new working capital from a lender based in Brazil with a long-standing relationship with the company;
  • Commenced purchasing phosphate rock from third parties for use as feedstock in the production of SSP at Itafos, thereby lowering production costs and derisking the ramp-up in production.

 

"Since resuming continuous production, we have made considerable progress towards our short-term goal of achieving commercial production of 25,000 tonnes of SSP per month," said Cristiano Melcher, president and chief executive officer of MBAC Fertilizer. "Our production totals and the positive customer feedback received to date suggest a number of encouraging signs. The most important being that we are building momentum and executing against our strategic plan."

Given its recent production output and quality of SSP produced, the company also announced that it is continuing to explore a number of options to ramp up its operations and strengthen its working capital position. As part of this strategic review process, MBAC has initiated the purchase of phosphate rock from third parties to serve as feedstock for the company's production of SSP. MBAC believes that the purchase of third party phosphate rock allows the company to immediately reduce production costs, accelerate production, generate positive cash flow in the near term, as well as exceed nominal capacity of 500,000 tonnes per year in the longer term.

As previously noted, the company has been attempting to address its liquidity issues through various strategic efforts to date. Concurrent with the review of new strategic alternatives, the company continues to seek financing to address its near-term liquidity issues. The company's ability to continue as a going concern in the short term is dependent on the company obtaining additional working capital facilities in the immediate term, combined with the reprofiling of the existing secured facilities. Documentation on the reprofiling is currently being finalized. The company is also engaged in discussions with its senior lenders in relation to its short-term financing requirements. As a result of these discussions, the company announced that it has secured access to a $1.6-million (U.S.) working capital loan from one of its senior lenders. The working capital will be used primarily to purchase phosphate rock, supplies and spare parts needed for SSP production. Discussions for additional working capital facilities required for ensuring operational continuity are under way and are expected to be announced shortly.