Verde Agritech Ltd (TSX: “NPK”)
("
Verde” or the “
Company”)
announces its financial results for the period ended June 30, 2024
(“
Q2 2024”).
Verde’s financial results for the second quarter
of 2024 were adversely influenced by climatic events in Brazil,
primarily driven by the El Niño phenomenon.1 This included periods
of drought accompanied by high temperatures in the northern and
central-western areas 2. These adverse weather conditions have had
a profound impact on both the agricultural and livestock sectors.3
This challenging climate scenario has resulted in Brazilian farmers
becoming increasingly cautious, prompting them to postpone any type
of investment in their lands to the greatest extent possible.4
Consequently, the fertilizer market in Brazil is experiencing
significant delays in farmers' purchases of these products and the
demand for fertilizers has been hindered by a combination of
factors, including climate uncertainties, financial constraints
faced by farmers, and high-interest rates. According to StoneX5
consultancy, by the end of the first two months of 2024, the
Brazilian market had purchased only 20% of the expected fertilizer
volume for the year, half of the percentage usually sold by this
time in previous years. Moreover, the agricultural sector continues
to struggle with an unfavorable market. Logistic issues, stringent
regulations, and economic instability further exacerbate the
situation, harming both production and profitability for
farmers.6
"Despite the challenging events beyond our
control, I am encouraged by several positive developments over the
quarter. Independent agronomic research on our existing products,
as well as new products and technologies, has shown highly
promising results. Above all, we have received overwhelmingly
positive feedback from farmers, highlighting the significant
benefits they are experiencing with our products. These
advancements reflect the growing trust and value our clients place
in Verde's solutions,” said Cristiano Veloso, CEO of Verde
Agritech.
The Company is currently engaged in
renegotiating its loan obligations. Discussions are advancing
positively, and the Company expects to secure significant
improvements in the terms of its debt, including a substantial
extension of the repayment period, a grace period, and a reduction
in interest rates.
Second Quarter 2024
Highlights
Operational and Financial Highlights
- Sales in
Q2 2024 were 85,000 tons, compared to 107,000 tons in Q2 2023.
- Revenue
in Q2 2024 was $6.5 million, compared to $10.3 million in Q2
2023.
- Cash and
other receivables held by the Company in Q2 2024 were $15.3
million, compared to $23.8 million in Q2 2023.
- EBITDA
before non-cash events was null in Q2 2024, compared to $2.1
million in Q2 2023.
- Net loss
in Q2 2024 was -$ 2.64 million, compared to a $0.2 million net
profit in Q2 2023.
Other Highlights
- The
Product sold in Q2 2024 has the potential to capture up to 5,561
tons of carbon dioxide (“CO2”) from the atmosphere via Enhanced
Rock Weathering (“ERW”).7 The potential net amount of carbon
captured, represented by carbon dioxide removal (“CDR”), is
estimated at 2,935 tons of CO2.8 In addition to the carbon removal
potential, Verde’s Q2 2024 sales avoided the emissions of 1,402
tons of CO2e, by substituting potassium chloride (“KCl”)
fertilizers9.
- Combining
the potential carbon removal and carbon emissions avoided by the
use our Product since the start of production in 2018, Verde’s
total impact stands at 272,377 tons of CO210
- 6,736
tons of chloride have been prevented from being applied into soils
Q2 2024, by farmers who used the Product in lieu of KCl
fertilizers.11 A total of 160,035 tons of chloride has been
prevented from being applied into soils by Verde’s customers since
the Company started production 12
"I am optimistic about the significant
strengthening of our commercial team. We have welcomed four new
Sales Directors during the second quarter, who are focused on
agricultural markets closer to our production plant. They lead 22
field sales managers who also mainly joined Verde in the last
quarter. Each of these professionals brings extensive experience, a
strong sense of purpose, and determination to their roles. These
strategic additions position us well for future growth and
success," complemented Cristiano Veloso, CEO of Verde Agritech.
Update on Carbon Capture and Emissions
Avoidance Data for Q1 2024
The Company has identified discrepancies in
previously disclosed carbon capture data for Q1 2024 caused by a
spreadsheet formula mistake. The table below highlights the correct
figures:
|
Metric |
Previously Stated |
Correct Figures |
|
Total CO2 Capture Potential via Enhanced Rock Weathering from Q1
2024 sales13 |
1,131 |
4,815 |
|
Estimated Net Carbon Dioxide Removal (CDR) for Q1 2024 (tons of
CO2)14 |
716 |
3,168 |
|
Emissions Avoided by Substituting KCl for Verde’s Products in Q1
2024 (tons of CO2)15 |
316 |
1,498 |
|
Total Impact Since 2018, combining the potential carbon removal and
carbon emissions avoided by the use of Verde’s Product since the
start of production (tons of CO2)16 |
260,341 |
265,207 |
Q2 2024 in Review
Financial Outlook
In the second quarter of 2024, the Company
initiated a Strategic Debt Restructuring Plan, which includes
seeking specific Preliminary Judicial Relief to obtain temporary
protection against actions and foreclosures by seven banks. This
measure aims to ensure stability while we renegotiate terms with
our financial creditors. In the meantime, the Company has made
significant improvement in the negotiations with its creditors and
expects further announcement in the upcoming weeks. It is important
to emphasize that this measure does not affect the Company's
operations, nor does it compromise our contractual obligations to
suppliers. Negotiations are progressing constructively, and the
Company anticipates achieving a significant improvement in debt
terms, including a substantial extension of the payment period, a
grace period, and a reduction in interest rates.
Agricultural Market
Following the onset of the Ukraine-Russia
conflict in early 2022, the agricultural sector experienced a
historic surge in the prices of inputs and commodities. Notably,
the average potash price jumped by 212% in Q2 2022, peaking at
US$1,200 per ton in April 2022, compared to an average of US$384 in
Q2 2021.17 This spike in KCl CFR prices in 2022 was so significant
that, despite a downward trend beginning in the latter half of the
year, the market in 2023 still benefited the effects of the
record-high levels reached in 2022. The average KCl CFR price in Q2
2024 had dropped by 17% compared to Q2 2023, and by 74% compared to
Q2 2022.
In the second quarter of 2024, the Brazilian
potash fertilizer market experienced a notable reduction in sales
to farmers, primarily attributed to the severe drought conditions
that have persisted across the country. This environmental
challenge has significantly slowed fertilizer purchases, leading to
an estimated 4% decrease in national demand for potash
fertilizer18.
The market prices for Brazil's main crops
remained stable in Q2 2024 with minor variations, although they
continued to be significantly lower than the levels observed in Q2
2022 and Q2 2023. A sack of corn, previously valued at an average
of R$62.68 in the market, is now trading below R$58.88.19
Meanwhile, the price of a sack of soybeans has dropped from an
average of R$139.83 to R$133.9120.
Global market competition
In 2022, Brazil experienced its highest interest
rates since 2006, a situation that has been showing signs of
improvement since Q2 2023 but still impacts the Company's financing
conditions.
The current SELIC interest rate is 10.50%21. The
Central Bank of Brazil projects the SELIC rate to be 10.50% by the
end of 2024, 9.75% by the end of 2025, and 9.00% by the end of
2026.22 Annual inflation forecast for 2024 and 2025 are 4.1% and
4.0% respectively.23
Brazilian farmers have continued to struggle
with limited working capital amid challenging market conditions in
2024. They have increasingly sought input suppliers offering the
most favorable payment terms and interest rates, allowing them to
defer payment until after the harvest, typically between 9 to 12
months later. However, Verde’s ability to provide financing with
longer tenors remains considerably lower compared to international
players24, making its terms less competitive for its customers.
Unlike its competitors, Verde does not have the option to incur
most of its cost of debt in US dollar-denominated liabilities.
Overall, the Company is only able to provide financing up to 20% of
its revenue due to constraints related to lines of credit.
Verde’s average cost of debt is 15.6% per annum.
To incentivize sales, the Company offers its customers a credit
line that charges a spread to its finance cost to comprise
operational costs, provisions, and expected credit losses, leading
to an average lending cost of 17.5% for credit-based purchases.
While this approach is necessary in the agricultural sector, it
increases the risk of non-payment for suppliers such as fertilizer
companies, reflecting the heightened financial pressures within the
sector.
Currency exchange rate
The Canadian dollar valuated by 4% versus
Brazilian Real in Q2 2024 compared to the same period from last
year.25
Q2 2024 Results Conference Call
The Company will host a conference call on
Friday, August 16, 2024, at 10:00 am Eastern Time, to discuss Q2
2024 results and provide an update. Subscribe using the link below
and receive the conference details by email.
|
Date: |
Friday, August 16, 2024 |
|
Time: |
10:00 am Eastern Time |
|
Subscription link: |
https://bit.ly/Q2-2024_ResultsPresentation |
The questions must be submitted in advance
through the following link up to 48 hours before the conference
call: https://bit.ly/Q2-2024-ResultsPresentationQuestions
The Company’s first second financial statements
and related notes for the period ended June 30, 2024 are available
to the public on SEDAR at www.sedar.com and the Company’s website
at www.investor.verde.ag/.
Results of Operations
The following table provides ended June 30,
2024, as compared to the three months ended June 30, 2023
information about three months. All amounts in CAD $’000.
|
All amounts in CAD $’000 |
3 months endedJun 30, 2024 |
3 months endedJun 30, 2023 |
6 months endedJun 30, 2024 |
6 months endedJun 30, 2023 |
|
Tons sold ‘000 |
85 |
|
107 |
|
170 |
|
215 |
|
|
Average Revenue per ton sold
$$ |
76 |
|
96 |
|
68 |
|
99 |
|
|
Average Production cost per ton sold $ |
(21 |
) |
(18 |
) |
(21 |
) |
(26 |
) |
|
Average Gross Profit per ton sold $ s
fit per |
55 |
|
79 |
|
47 |
|
74 |
|
|
Gross Margin |
72 |
% |
81 |
% |
69 |
% |
75 |
% |
|
|
|
|
|
|
|
Revenue |
6,480 |
|
10,305 |
|
11,548 |
|
21,430 |
|
|
Production
costs(1) on
costs |
(1,815 |
) |
(1,914 |
) |
(3,486 |
) |
(4,623 |
) |
|
Gross Profit |
4,665 |
|
8,391 |
|
8,062 |
|
16,807 |
|
|
Gross Margin |
72 |
% |
82 |
% |
70 |
% |
79 |
% |
|
Sales and marketing expenses |
(979 |
) |
(1,124 |
) |
(1,949 |
) |
(2,331 |
) |
|
Product delivery freight expenses |
(2,541 |
) |
(3,723 |
) |
(4,137 |
) |
(7,590 |
) |
|
General and administrative expenses |
(1,145 |
) |
(1,442 |
) |
(2,646 |
) |
(2,814 |
) |
|
EBITDA
(2) |
0 |
|
2,102 |
|
(670 |
) |
4,072 |
|
|
Share Based and Bonus Payments (Non-Cash
Event)(3) |
(265 |
) |
144 |
|
(2,042 |
) |
116 |
|
|
Depreciation, Amortization and P/L on disposal of
plant and equipment
(3) |
(802 |
) |
(968 |
) |
(1,721 |
) |
(1,880 |
) |
|
Operating Profit after non-cash events |
(1,067 |
) |
1,278 |
|
(4,433 |
) |
2,308 |
|
|
Interest Income/Expense (4) |
(1,564 |
) |
(951 |
) |
(2,941 |
) |
(1,993 |
) |
|
Net Profit before tax |
(2,631 |
) |
327 |
|
(7,374 |
) |
315 |
|
|
Income tax (5) |
(8 |
) |
(86 |
) |
(17 |
) |
(182 |
) |
|
Net Profit |
(2,639 |
) |
241 |
|
(7,391 |
) |
133 |
|
(1) – Non GAAP measure(2) – Included in General and
Administrative expenses in financial statements (3) – Included in
General and Administrative expenses and Cost of Sales in financial
statements (4) – Please see Summary of Interest-Bearing Loans and
Borrowings notes(5) – Please see Income Tax notes
External Factors
Revenue and costs are affected by external
factors including changes in the exchange rates between the C$ and
R$ along with fluctuations in potassium chloride spot CFR Brazil,
agricultural commodities prices, interest rates, among other
factors. For further details, please refer to the Q2 2024 Review
section:
Financial and operating results
In Q2 2024, revenue from sales fell by 37%,
accompanied by a 21% reduction in the average revenue per ton
compared to Q2 2023. Excluding freight expenses (FOB price), the
average revenue per ton decreased by 25% in Q2 2024 compared to Q2
2023. The proportion of products sold in jumbo bags, which command
a higher sales price per ton compared to bulk, represented 9% of
the Company's total volume sold, down from 21% in Q2 2023. This
shift and KCl CFR decreased price all around the world further
affected the average revenue per ton in Q2 2024.
Sales declined by 21% in Q2 2024 compared to Q2
2023, due to the conditions outlined in the Q2 2024 Review
section.
As a consequence of the points mentioned above,
the Company's EBITDA before non-cash events was null in Q2 2024
compared to $2.1 million in Q2 2023.
The Company generated a net loss of -$2.6
million in Q2 2024, compared to a net profit of $0.2 million in Q2
2023.
Basic loss per share was $0.050 for Q2 2024,
compared to earnings of $0.005 for Q2 2023.
Production costs
In Q2 2024, production costs per ton increased
by 17% compared to Q2 2023, influenced by the decrease in sales
volume and higher sales of BAKS compared to K Forte bulk, with 18%
in Q2 2024 compared to 8% sold in the same period last year.
Production costs include all direct costs from
mining, processing, and the addition of other nutrients to the
Product, such as Sulphur and Boron. It also includes the logistics
costs from the mine to the plant and related salaries.
Sales, General and Administrative
Expenses:
SG&A represents a non-operating segment that
includes corporate and administrative functions, essential for
supporting the Company's operating segments.
Sales Expenses
|
CAD $’000 |
3 months ended |
3 months ended |
6 months ended |
6 months ended |
|
June 30, 2024 |
June 30, 2023 |
Jun 30, 2024 |
Jun 30, 2023 |
|
Sales and marketing expenses |
(896 |
) |
(1,030 |
) |
(1,733 |
) |
(2,100 |
) |
|
Fees paid to independent sales agents |
(83 |
) |
(94 |
) |
(216 |
) |
(231 |
) |
|
Total |
(979 |
) |
(1,124 |
) |
(1,949 |
) |
(2,331 |
) |
Sales and marketing expenses cover salaries for
employees, car rentals, domestic travel in Brazil, hotel
accommodations, and Product promotion at marketing events.
As part of the Company’s marketing and sales
strategy, Verde compensates its independent sales agents via
commission-based remuneration. These expenses for this quarter
decreased in line with the reduction in sales.
Product delivery freight expenses
Expenses decreased by 32% compared to the same
period last year. The volume sold as CIF (Cost Insurance and
Freight) in Q2 2024 represented 81% of total sales, compared to 72%
in Q2 2023. However, the Company achieved a reduction in average
freight costs per ton for products sold on a CIF basis, to $37 in
Q2 2024 from $48 in the comparable period of the previous year. The
23% decrease in freight costs can primarily be attributed to a
reduction in the percentage of sales made to regions that are more
distant from Verde's production facilities.
Sales, General and Administrative
Expenses (Continued):
General and Administrative Expenses
|
CAD $’000 |
3 months endedJun 30, 2024 |
3 months endedJun 30, 2023 |
6 months endedJun 30, 2024 |
6 months endedJun 30, 2023 |
|
General administrative expenses |
(595 |
) |
(888 |
) |
(1,401 |
) |
(1,809 |
) |
|
Allowance for expected credit losses |
(87 |
) |
- |
|
(232 |
) |
- |
|
|
Legal, professional, consultancy and audit costs |
(303 |
) |
(290 |
) |
(643 |
) |
(607 |
) |
|
IT/Software expenses |
(147 |
) |
(231 |
) |
(329 |
) |
(343 |
) |
|
Taxes and licenses fees |
(13 |
) |
(33 |
) |
(41 |
) |
(56 |
) |
|
Total |
(1,145 |
) |
(1,442 |
) |
(2,646 |
) |
(2,814 |
) |
General administrative expenses include general
office expenses, rent, bank fees, insurance, foreign exchange
variances and remuneration of executives, directors of the Board
and administrative staff. General administrative decreased by 21%
compared to the same period last year, due to a reduction in
leasing expenses, such as water trucks and metallic structures to
support operations.
In the second quarter of 2023, we experienced a
significant reduction in the number of employees, which led to an
increase in severance payments. Consequently, expenses in Q2 2024
were lower than Q2 2023.
According to Verde's sales policy, any customer
payments that are overdue for more than 12 months must be
provisioned for. The increase in the allowance for expected credit
losses in Q2 2024 compared to Q2 2023 is attributed to the
financial constraints faced by farmers, which are a result of low
prices for agricultural commodities, among other factors, as
outlined in the Q2 2024 Review section.
Legal, professional and audit costs include fees
along with accountancy, audit and regulatory costs. Consultancy
fees encompass consultants employed in Brazil, such as accounting
services, patent processes, lawyer’s fees and regulatory
consultants.
IT/Software expenses include software licenses
such as Microsoft Office, Customer Relationship Management (“CRM”)
software and Enterprise Resource Planning (ERP). Expenses decreased
by 36% in Q2 2024 compared to the same period last year due to a
decrease in costs associated with the Company’s CRM software.
Share Based, Equity and Bonus Payments (Non-Cash
Event)
Share Based, Equity and Bonus Payments (Non-Cash
Events) encompass expenses associated with stock options granted to
employees and directors, as well as equity compensation and
non-cash bonuses awarded to key management personnel. In Q2 2024,
the costs associated with share-based payments were -$0.3 million
compared to $0.1 million for the same period last year. This
variance was primarily due to new options issuance.
Liquidity and Cash Flows
For additional details see the consolidated
statements of cash flows for the quarters ended June 30, 2024, and
June 30, 2023 in the quarterly financial statements.
|
Cash received from / (used for): CAD
$’000 |
|
3 months endedJun 30, 2024 |
3 months endedJun 30, 2023 |
6 months endedJun 30, 2024 |
6 months endedJun 30, 2023 |
|
Operating activities |
|
(312 |
) |
(3,597 |
) |
(3,171 |
) |
(6,874 |
) |
|
Investing activities |
|
1,596 |
|
(329 |
) |
1,327 |
|
(2,218 |
) |
|
Financing activities |
|
(1,963 |
) |
5,777 |
|
(2,735 |
) |
13,940 |
|
On June 30, 2024, the Company held cash of $2.7
million, a decrease of $3.5 million on the same period in 2023.
Operating activities
In agricultural sales, credit transactions are
common due to the cyclical nature of farming income, which sees
fluctuations with seasonal highs during harvests and lows during
planting. This cycle necessitates that farmers have access to
essential inputs like seeds, fertilizers, and pesticides ahead of
their selling season. To accommodate this, credit terms are
offered, allowing farmers to procure these inputs in advance and
align their payments with their revenue cycle.
The Company’s credit terms vary according to the
needs of its clients, tailored to the specific requirements of each
farmer. This includes considerations such as the crop cycle,
creditworthiness, and other relevant factors, with terms extending
up to 360 days upon shipment depending on the period of year. This
strategy ensures farmers have the necessary resources for each
planting season, while Verde secures its financial interests
through aligned payment schedules.
In Q2 2024, net cash utilized in operating
activities decreased to -$0.3 million, compared to -$3.6 million
utilized in Q2 2023.
Trade and other receivables decreased by 27% in
Q2 2024, to $12.8 million compared to $17.6 million in Q2 2023.
This is expected as the Company had lower revenues from sales in
the quarter.
Investing activities
Cash utilized from investing activities
increased to $1.6 million in Q2 2024, compared to to -$0.3 million
in Q2 2023. In the last quarter, our investment activity increased
due to the redemption of financial applications.
Financing activities
Cash utilized in financing activities decreased
to -$2.0 million in Q2 2024, compared to $5.8 million in Q2 2023.
This was due to additional loans being acquired during 2023.
Financial condition
The Company´s current assets decreased to $17.4
million in Q2 2024, compared to $27.6 million in Q2 2023. Current
liabilities increased to $25.9 million in Q2 2024, compared to
$17.0 million in Q2 2023; providing a working capital deficit of
$8.5 million in Q2 2024, compared to the working capital surplus of
$10.6 million in Q2 2023.
About Verde Agritech
Verde Agritech is dedicated to advancing
sustainable agriculture through the innovation of specialty
multi-nutrient potassium fertilizers. Our mission is to increase
agricultural productivity, enhance soil health, and significantly
contribute to environmental sustainability. Utilizing our unique
position in Brazil, we harness proprietary technologies to develop
solutions that not only meet the immediate needs of farmers but
also address global challenges such as food security and climate
change. Our commitment to carbon capture and the production of
eco-friendly fertilizers underscores our vision for a future where
agriculture contributes positively to the health of our planet.
For more information on how we are leading the
way towards sustainable agriculture and climate change mitigation
in Brazil, visit our website at https://verde.ag/en/home/.
Corporate Presentation
For further information on the Company, please
view shareholders’ deck:
https://investor.verde.ag/wp-content/uploads/2021/05/Corporate-presentation-Verde-AgriTech-July-2024-1.pdf
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Cautionary Language and Forward-Looking
Statements
All Mineral Reserve and Mineral Resources
estimates reported by the Company were estimated in accordance with
the Canadian National Instrument 43-101 and the Canadian Institute
of Mining, Metallurgy, and Petroleum Definition Standards (May 10,
2014). These standards differ significantly from the requirements
of the U.S. Securities and Exchange Commission. Mineral Resources
which are not Mineral Reserves do not have demonstrated economic
viability.
This document contains "forward-looking
information" within the meaning of Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. This
information and these statements, referred to herein as
"forward-looking statements" are made as of the date of this
document. Forward-looking statements relate to future events or
future performance and reflect current estimates, predictions,
expectations or beliefs regarding future events and include, but
are not limited to, statements with respect to:
(i) the estimated
amount and grade of Mineral Resources and Mineral Reserves;
(ii) the estimated
amount of CO2 removal per ton of rock;
(iii) the PFS
representing a viable development option for the Project;
(iv) estimates of the
capital costs of constructing mine facilities and bringing a mine
into production, of sustaining capital and the duration of
financing payback periods;
(v) the estimated
amount of future production, both produced and sold;
(vi) timing of
disclosure for the PFS and recommendations from the Special
Committee;
(vii) the Company’s
competitive position in Brazil and demand for potash; and,
(viii) estimates of
operating costs and total costs, net cash flow, net present value
and economic returns from an operating mine.
Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives or future events or performance
(often, but not always, using words or phrases such as "expects",
"anticipates", "plans", "projects", "estimates", "envisages",
"assumes", "intends", "strategy", "goals", "objectives" or
variations thereof or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative of any of these terms and similar
expressions) are not statements of historical fact and may be
forward-looking statements.
All forward-looking statements are based on
Verde's or its consultants' current beliefs as well as various
assumptions made by them and information currently available to
them. The most significant assumptions are set forth above, but
generally these assumptions include, but are not limited to:
(i) the presence of
and continuity of resources and reserves at the Project at
estimated grades;
(ii) the estimation
of CO2 removal based on the chemical and mineralogical composition
of assumed resources and reserves;
(iii) the
geotechnical and metallurgical characteristics of rock conforming
to sampled results; including the quantities of water and the
quality of the water that must be diverted or treated during mining
operations;
(iv) the capacities
and durability of various machinery and equipment;
(v) the availability
of personnel, machinery and equipment at estimated prices and
within the estimated delivery times;
(vi) currency
exchange rates;
(vii) Super
Greensand® and K Forte® sales prices, market size and exchange rate
assumed;
(viii) appropriate
discount rates applied to the cash flows in the economic
analysis;
(ix) tax rates and
royalty rates applicable to the proposed mining operation;
(x) the availability
of acceptable financing under assumed structure and costs;
(xi) anticipated
mining losses and dilution;
(xii) reasonable
contingency requirements;
(xiii) success in
realizing proposed operations;
(xiv) receipt of
permits and other regulatory approvals on acceptable terms; and
(xv) the fulfilment
of environmental assessment commitments and arrangements with local
communities.
Although management considers these assumptions
to be reasonable based on information currently available to it,
they may prove to be incorrect. Many forward-looking statements are
made assuming the correctness of other forward looking statements,
such as statements of net present value and internal rates of
return, which are based on most of the other forward-looking
statements and assumptions herein. The cost information is also
prepared using current values, but the time for incurring the costs
will be in the future and it is assumed costs will remain stable
over the relevant period.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. We caution readers
not to place undue reliance on these forward-looking statements as
a number of important factors could cause the actual outcomes to
differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates assumptions and intentions
expressed in such forward-looking statements. These risk factors
may be generally stated as the risk that the assumptions and
estimates expressed above do not occur as forecast, but
specifically include, without limitation: risks relating to
variations in the mineral content within the material identified as
Mineral Resources and Mineral Reserves from that predicted;
variations in rates of recovery and extraction; the geotechnical
characteristics of the rock mined or through which infrastructure
is built differing from that predicted, the quantity of water that
will need to be diverted or treated during mining operations being
different from what is expected to be encountered during mining
operations or post closure, or the rate of flow of the water being
different; developments in world metals markets; risks relating to
fluctuations in the Brazilian Real relative to the Canadian dollar;
increases in the estimated capital and operating costs or
unanticipated costs; difficulties attracting the necessary work
force; increases in financing costs or adverse changes to the terms
of available financing, if any; tax rates or royalties being
greater than assumed; changes in development or mining plans due to
changes in logistical, technical or other factors; changes in
project parameters as plans continue to be refined; risks relating
to receipt of regulatory approvals; delays in stakeholder
negotiations; changes in regulations applying to the development,
operation, and closure of mining operations from what currently
exists; the effects of competition in the markets in which Verde
operates; operational and infrastructure risks and the additional
risks described in Verde's Annual Information Form filed with SEDAR
in Canada (available at www.sedar.com) for the year ended December
31, 2021. Verde cautions that the foregoing list of factors that
may affect future results is not exhaustive.
When relying on our forward-looking statements
to make decisions with respect to Verde, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. Verde does not undertake to
update any forward-looking statement, whether written or oral, that
may be made from time to time by Verde or on our behalf, except as
required by law.
For additional information please contact:
Cristiano Veloso, Chief
Executive Officer and Founder
Tel: +55 (31) 3245 0205; Email:
investor@verde.ag
www.verde.ag | www.investor.verde.ag
1 Source: How El Nino Will Impact Latin America
in 2024
2 Source: Drought in the Brazil's Cerrado is the
worst for at least seven centuries, study shows
3 Source: Southern Brazil has seen an increase
of up to 30% in average annual rainfall over the last three
decades.
4 Source: Southern Brazil has seen an increase
of up to 30% in average annual rainfall over the last three
decades.
5 Source: Brazil sees unprecedented delay in
fertilizer sales.
6 Source: The commercialization of fertilizers
in Brazil is experiencing unprecedented delays decades.
7 Out of the total sales in Q2 2024, 46,340 tons
were sold in compliance with our Monitoring, Verification, and
Report (“MRV”) Protocol, qualifying them as potential carbon
credits. The carbon capture potential of Verde's products, through
Enhanced Rock Weathering (ERW), is 120 kg CO2e e per ton of K
Forte®. For further information, see “Verde’s Products Remove
Carbon Dioxide From the Air”.
8 Net Carbon Dioxide Removal (CDR): volume of 1
ton of Long-Term CO2 Removal, equivalent to 1 carbon credit.
9 K Forte® is a fertilizer produced in Brazil
using national raw materials. Its production process has low energy
consumption from renewable sources and, consequently, a low
environmental and GHG emissions footprint. Whereas the high carbon
footprint of KCl results from a complex production process,
involving extraction, concentration, and granulation of KCl in
addition to the long transportation distances to Brazil, given that
95% of the KCl consumed in the country is imported. 12Mt of K
Forte® is equivalent to 2Mt of KCl in K2O content. Emissions
avoided are calculated as the difference between the weighted
average emissions for KCl suppliers to produce, deliver, and apply
their product in each customer's city and the emissions determined
according to K Forte®'s Life Cycle Assessment for its production,
delivery, and application in each customer's city.
10 From 2018 to Q2 2024, the Company has sold
1.84 million tons of Product, which can potentially remove up to
221,337 tons of CO2. Additionally, this amount of Product could
potentially prevent up to 51,208 tons of CO2 emissions.
11 Verde’s Product is a salinity and
chloride-free replacement for KCl fertilizers. Potassium chloride
is composed of approximately 46% of chloride, which can have
biocidal effects when excessively applied to soils. According to
Heide Hermary (Effects of some synthetic fertilizers on the soil
ecosystem, 2007), applying 1 pound of potassium chloride to the
soil is equivalent to applying 1 gallon of Clorox bleach, with
regard to killing soil microorganisms. Soil microorganisms play a
crucial role in agriculture by capturing and storing carbon in the
soil, making a significant contribution to the global fight against
climate change.
12 1 ton of Product (10% K2O) has 0.1 tons of
K2O, which is equivalent to 0.17 tons of potassium chloride (60%
K2O), containing 0.08 tons of chloride.
13 Out of the total sales in Q1 2024, 40,127
tons were sold in compliance with our Monitoring, Verification, and
Report (“MRV”) Protocol, qualifying them as potential carbon
credits. The carbon capture potential of Verde's products, through
Enhanced Rock Weathering (ERW), is 120 kg CO2e per ton of K Forte®.
For further information, see “Verde’s Products Remove Carbon
Dioxide From the Air”.
14 Net Carbon Dioxide Removal (CDR): volume of 1
ton of Long-Term CO2 Removal, equivalent to 1 carbon credit.
15 K Forte® is a fertilizer produced in Brazil
using national raw materials. Its production process has low energy
consumption from renewable sources and, consequently, a low
environmental and GHG emissions footprint. Whereas the high carbon
footprint of KCl results from a complex production process,
involving extraction, concentration, and granulation of KCl, in
addition to the long transportation distances to Brazil, given that
95% of the KCl consumed in the country is imported. 12Mt of K
Forte® is equivalent to 2Mt of KCl in K2O content. Emissions
avoided are calculated as the difference between the weighted
average emissions for KCl suppliers to produce, deliver, and apply
their product in each customer's city and the emissions determined
according to K Forte®'s Life Cycle Assessment for its production,
delivery, and application in each customer's city.
16 From 2018 to Q1 2024, the Company has sold
1.8 million tons of Product, which can remove up to 215,751 tons of
CO2. Additionally, this amount of Product could potentially prevent
up to 49,459 tons of CO2 emissions.
17 Source: Acerto Limited Report.
18 Source: The impact of the Brazilian drought
on fertilizer.
19 As of Q2 2022 and Q2 2024. Source: EPEA –
ESALQ / USP.
20 As of Q2 2023 and Q2 2024. Source: EPEA –
ESALQ / USP.
21 As of July 31, 2024. Source: Brazilian
Central Bank
22 Source: Brazilian Central Bank.
23 As of July 31, 2024. Source: Brazilian
Central Bank.
24 Verde’s normal credit term is 30 to 120 days
upon shipment, depending on the period of the year, while
competitors can provide 180-360 days to collect its payments.
25 Source: Brazilian Central Bank.
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