This purchase underscores an increasing demand for potash-containing fertilizers.
Potash producer Verde AgriTech Plc (NPK:TSX; AMHPF:OTCQB) received from an existing customer an order that is 15 times larger than its previous one. This time, the Brazilian agricultural producer ordered 3,250 tons of Super Greensand versus 198 tons in 2017, according to a news release. The product's sale price this time around was higher than that indicated in Verde's November 2017 prefeasibility study (PFS), due to higher potash prices.
Verde's president and CEO Cristiano Veloso noted that receiving a second, much larger order from the client was gratifying. He added that "this growth in demand for Super Greensand is what we expect from the market, both from famers that run a trial over a harvest period and from farmers that learn about prior success from neighboring farms."
Verde had begun working with this customer back in 2014 to help meet the needs for potash across the plantations and kept the buyer updated about the various field tests done on Super Greensand.
As for progress on its Cerrado Verde project in Brazil, Verde is constructing a production plant from which it "intends to produce solutions for crop nutrition, crop protection, soil improvement and increased sustainability," the release described. The plant is expected to be operating in H2/18.
There, the company should ultimately be able to process about 300 thousand tons per year (300 Kt/year), which equals a rate of roughly 45 tons per hour, at a cost of $500,000. The project PFS outlined that production would ramp up in three phases: 600 Kt/year to 5 million tons per year (5 Mt/year) to 25 Mt/year.
The PFS also showed for Cerrado Verde a net present value of $1.98 billion and an internal rate of return of 290%.