Verde Potash makes "considerable progress" with engineering for flagship project

Toronto-quoted Verde Potash (TSE:NPK) has made "considerable progress" on the engineering side of its Cerrado Verde project in Brazil, it revealed.

More than 120 tonnes of feedstock have been processed between its own pilot plant in Belo Horizonte, Brazil and FLSmidth's facility in Pennsylvania, USA, and the key parameters of the process to convert it to potassium chloride (KCI) have been agreed between the firm and its engineers, it said.

FLSmidth has offered performance guarantees -  a key element required to arrange project finance debt -  for a rotary kiln for the potassium silicate to KCl process at a size less than the 12,000 tonnes per day outlined in the project's preliminary economic assessment of February last year.

Verde says that in order to receive similar guarantees on a 12,000tpd kiln, and mitigate both ramp up and scale up risks, it is considering running a semi-commercial scale demonstration plant and is in discussions with other kiln suppliers to assess alternatives.

In addition, Veolia HPD, a supplier of evaporation and crystallization technologies, has completed all necessary testing and is ready to supply equipment at any scale Verde wants for its commercial plant.

In a strategic update, the firm also said it had received significant interest in off-take agreements from a number of Brazilian counterparties. 

Verde chief operating officer Pedro Ladeira, told investors: "Securing a performance guarantee from Veolia HPD for any commercial scale of the hydro portion of our process is a significant achievement. 

"With regard to pyroprocessing, the KCl technology is proven, and studies to mitigate scale up risks are being carried out in order to secure additional performance guarantees from FLSmidth and arrange project finance.

"The company no longer expects to publish its Bankable Feasibility Study during Q2 2013. Management is considering running a demonstration plant and is also considering increasing the scale of the Phase II and Phase III expansions in order to ultimately move to a scale of 4.8 million tonnes. Phase I of the project will remain at 0.6 million tonnes per year in order to minimize upfront capex. Management expects to provide a revised timeline in the near future," it said.