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AgriTech Company Hitting Its Stride

Streetwise Reports, Streetwise Reports
0 Comments| July 12, 2018

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An agritech company announces its newest processing plant will be fully operational in early third quarter of 2018.

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Verde AgriTech Plc (NPK:TSX; AMHPF:OTCQB) is advancing on many fronts. The company recently announced that its on-site plant assembly in São Gotardo, located in the Brazilian state of Minas Gerais, has begun. On June 25, the company announced that a major Brazilian client placed a large purchase of one of its most popular products. And the company has just been accepted as a member of Bonsucro, an organization that promotes sustainable sugar can production. Verde AgriTech is known for its innovative products that promote sustainable agriculture.

One product that stands out is Verde AgriTech's Super Greensand. Super Greensand is a premium multi-nutrient natural fertilizer developed to improve the soil and boost plant nourishment. It contains 68 minerals and trace elements, including potassium, iron, magnesium and manganese. According to the company, the product increases the soil's capacity to retain water and nutrients. Super Greensand has no additives, no salt, and no chlorine (unlike most potassium fertilizers). Both the Organic Materials Review Institute (OMRI) and the California Department of Food and Agriculture (CDFA) have approved it for organic production.

The plant construction agreement was initially announced in March 2018. And now, the company has concluded all site preparations and structural foundations. Most of the plant equipment was delivered to site, and its assembly has begun.

Verde's Expectations for the Processing Plant

Verde AgriTech added $500,000 to its budget for the creation of this processing plant. And the company has high hopes for the plant's future.

Verde AgriTech adds that "Verde is on schedule and on budget to be fully operational in early Q3 2018."

The company projects a 45-ton-per-hour production of Super Greensand at the processing plant. When the company announced its pre-feasibility study results in later November 2017, the numbers were attention-getting. The results showed a post-tax value discounted at 8% of US$ 1.98 Billion and internal rate of return of 290%.

The company explains that having this fully operational plant will help it save money, compared to the present third-party plant that it has been using for its mining operations and production.

Verde President and CEO Cristiano Veloso commented on the production, "The markets in Brazil and the U.S. have warmly welcomed our Super Greensand, as we expected, given the long series of agronomic tests conducted on the product. Now, we are working hard to ensure that we can increase production as soon as possible. Our first wholly owned plant will ensure greater supplies at a lower per-ton cost, so we are excited to see that work is progressing along the tight schedule we established."

Membership in Bonsucro

On July 11, Verde announced that is has been accepted as a member of Bonsucro, an international nonprofit organization to promoted sustainable sugar cane production. Some 52 sugar cane mills are certified in Brazil by Bonsucro.

Veloso stated, "It is an honor to receive a Bonsucro Membership. Super Greensand brings several solutions to the 21st Century challenges in sustainable sugarcane production. In Brazil alone, Bonsucro certified mills have the potential to consume about 1 million tons of Super Greensand as they migrate from conventional potash salt source to our sustainable product. We are eager to help the environment by serving this important market."

According to Verde, potassium chloride is the most commonly used fertilizer for the supply of potash. "Chloride is a harmful chemical across the whole sugar production chain: it harms the development of sugarcane roots; it kills beneficial soil microorganisms; and it has disastrous effects in the sugar industry, where it catalyzes aggressive corrosion of machinery, leading to its premature replacement," the company noted.

Verde emphasized that Super Greensand is rich in silicon and chloride-free. Sugar cane, the company noted, "is known as a silicon-accumulating crop, which means that it extracts large quantities of this element from the soil. Silicon is responsible for increasing the natural resistance of plants against pests, diseases, drought, large temperature variations, salinity, etc."

A Major Purchase

Verde AgriTech is beginning to scale up. The company released on June 25 that one of its repeat Brazilian customers bought a large purchase—3,250 tons—of Super Greensand after a much smaller purchase of 198 tons in 2017.

According to the company, "In this sale, the price per ton of Super Greensand was higher than the reference price adopted in the pre-feasibility study, announced in November 27, 2017; this reflects the increase in potash prices in global markets."

"Since its inception, all the way through Verde's 10-year history as a public company that went into mineral production, the company has only issued some 40 million shares having meticulously invested over US$ 50 million. We will continue to guide Verde with same principles and financial discipline of calculated investment and minimal shareholder dilution. Verde will grow organically to maximize shareholder value," commented Veloso.

Verde's shares are sitting at around CA$0.90.

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