The results from the pre-feasibility study were quite positive, with a projected post-tax net present value of $2.91B for Plant 3, indicating an internal rate of return of 427.2%. Its capital expenditures are expected to be covered by cash flow generated by sales until Q2 2023, and no debt or equity financings are expected. Currently, Plant 1 has a capacity of 0.6 million tonnes per year (Mtpy), Plant 2 is anticipated to bring on 2.4Mtpy effective Q3 2022, and Plant 3 is expecting to add 10Mtpy in 2023. This would represent significant growth in the company's operations, and with management's conservative estimates on potash prices and expected returns, we feel that the company is heading in the right direction.
Provided by the team at 5iResearch.
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10:07 AM EDT, 05/24/2022 (MT Newswires) -- Verde AgriTech Plc (NPK.TO), which lost 6.5% last Friday, before the holiday weekend in Canada, has recovered all of that and some more on Tuesday after announcing that it will re-domicile to Singapore. The Independent Special Committee of the board of directors believes this move will offer access to new markets, while helping in the implementation of the Paid for Growth (P4G) strategy, a cornerstone program aimed at distributing gains to shareholders while maintaining Verde's expansion without shareholder dilution.
Verde is currently domiciled in the United Kingdom, a country with which it has no other business connection beyond its incorporation address and the relatively high costs of reporting and compliance under local regulations. The UK also bars companies from making any type of payment to shareholders while there are no distributable reserves available in the parent company.
The committee, working alongside Verde management, determined that ongoing and expanding sales is expected to generate enough accumulated cashflow in the second half of 2022 to warrant returning gains to shareholders in the coming months. By year end 2022, Verde expects to be able to return at least $10 million to shareholders while maintaining $30 million in cash and receivables.
For 2023, Verde expects to continue returning gains to shareholders while maintaining $30 million in cash and receivables, in addition to fully self-funding Plant 3, without need for equity or debt financing.
In 2021, the company had its second profitable year due to sales of 400,133 tonnes of multinutrient potassium products, sold internationally as Super Greensan Verde's latest 2022 guidance provides for sales of 1 million tonnes of product, with projected revenue of $109.09 million, EBITDA of $49.06 million and net earnings per share of $0.87, as reported on May 3.
The P4G strategy is not intended to conflict with Verde's accumulated cashflow funded construction of Plant 3, which is planned for 2023 and is expected to add 10 million tonnes per year (Mtpy) production capacity. Plant 3's post-tax net present value is projected at US$2.91 billion (8% discount rate) with an internal rate of return of 427.17%, assuming a potash price at less than a third of current potassium chloride (KCl) prices and those adopted by Verde. Currently, Verde operates Plant 1 with a capacity of 0.6Mtpy, with Plant 2 on track for commissioning in Q3 2022, with an additional capacity of 2.4Mtpy.
Price: 10.18, Change: +0.93, Percent Change: +10.05