ORIGINAL: Railway to freight up to 50Mtpy of Verde's Product granted construction permit
2023-09-12 10:30 ET - News Release
SINGAPORE, Sept. 12, 2023 (GLOBE NEWSWIRE) -- Verde AgriTech Ltd (TSX: “NPK”) ("Verde” or the “Company”) is pleased to announce that the National Land Transport Agency (“ANTT”, from Agncia Nacional de Transportes Terrestres) and the Brazilian Ministry of Infrastructure have authorized Verde to build a railway branch line (the “Railway”) to transport up to 50 million tonnes per year (“Mtpy”) of Verde’s multinutrient potassium products, BAKS® and K Forte®, sold internationally as Super Greensand®, (the “Product”).
The Railway will connect Verde’s production facilities to a railway node part of the Ferrovia Centro Atlntica ("FCA"), effectively linking the municipalities of So Gotardo and Ibi, both in the state of Minas Gerais. FCA is the largest railroad network in Brazil, interconnecting seven states and the Federal District. The FCA railways are the main freight route between the Southeast, Northeast and Midwest regions in Brazil.1
“Verde's mining sites hold Brazil's largest identified potash deposit, boasting resources of 3.32 billion tonnes, compliant with the NI 43-101 standard.2 By connecting our production facilities to the country's main potash consumption hubs, the Railway will provide farmers with access to a more reliable and increased Product supply. This represents another important milestone in Verde's dual objectives: reduce Brazil's dependence on imported potash and expand Verde's capability to every year capture up to 6.0 million tonnes of carbon dioxide (CO2) every year,3 thereby making a true contribution to mitigating climate change," commented Cristiano Veloso, Verde’s founder and CEO.
Verde’s Carbon Capture Potential
With Verde’s carbon capture technology, the Company’s current installed production capacity of 3.00 million tonnes per year has the capability to capture and offset up to 0.36 million tonnes of CO2 annually.
In the Company's 50.00 million tonnes production scenario, we aim to emerge as one of the world's largest carbon capture projects, with a substantial total of 6.00 million tonnes of CO2 permanently removed from the atmosphere each year. Verde's 3.32 billion tonnes of mineral resources hold the total carbon removal potential of 0.40 gigatonnes of CO2.
Railway’s Next Steps
With the authorization of ANTT and the Brazilian Ministry of Infrastructure granted, a contract between ANTT and Verde authorizing the exploration of the Railway in a private regime shall be subsequently signed. After that, the Company will start the environmental and engineering studies for this project.
Based on the studies for the Pre-Feasibility Study filed by the Company in 2022 (the “PFS”), Verde has determined the viability of using road haulage for distribution logistics of up to 23Mtpy of Product. A rail spur will only be necessary for logistics of production exceeding such amount.
Railway’s Capital Expenditure
The PFS estimates a CAPEX of US$283.02 million4 for the construction of a railway from So Gotardo to Ibi to transport up to 50Mtpy of Product. The total CAPEX estimated in the PFS for the 50Mtpy Scenario is US$ 553.99 million, which includes the railway branch line, processing costs, road improvement, licensing, technical studies and projects, land purchase, equipment, personnel mobilization and demobilization, and a 15% contingency amount.
The table below shows the summary of the financial-economic analysis for the 50Mtpy Scenario:
| 50Mtpy Scenario |
| Description | Unit | Value |
| Proven and probable reserves | million tonnes | 1,297.66 |
| K2O grade | % | 9.19 |
| Capex | US$ million | 553.99 |
| Operating cost | US$/tonne of Product | 8.06 |
| General and Administrative Expenses | US$/tonne of Product | 2.01 |
| Sustaining capital | US$/tonne of Product | 0.50 |
| |
| Product composition | Unit | K2O | K2O + S | K2O + S +
Micronutrients |
| Product Sale Price | US$/tonne of Product | 74.05 | 84.79 | 92.05 |
| NPV after-tax | US$ billion | 9.34 | 11.50 | 13.54 |
| NPV discount rate | % | 8.00 | 8.00 | 8.00 |
| IRR after-tax | % | 167.86 | 196.19 | 227.08 |
| Cumulative Cash Flow | US$ billion | 22.74 | 28.04 | 32.98 |
As stated in the press release published by the Company on May 16, 2022,5 FCA, the railway operator, is expected to assume the investment costs for the construction of the railway branch. Verde is studying the possibility of potential partnerships for technical support in the Railway implementation and logistics operation.
About Verde AgriTech
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its 100% owned mineral properties, then sells and distributes the Product.