Thursday, 22 August 2013

Verde Potash's new strategy offers "more aggressive" scale-up, says Ocean

Verde Potash's (TSE:NPK) new plan for Cerrado Verde is a more aggressive scale-up in the potash project's devlopment, reckons analyst at Ocean Equities Adam Lucas.
It allows the fertiliser firm to tackle two factors simultaneously - completing a performance guarantee of a 12,000 tpd kiln and generating cash through local sales of a new product, which is not based on chloride potassium.
ThermoPotash, on which it has conducted extensive research and development, is a multi-nutrient fertilizer that is ideally suited for Brazilian soils.
The latest strategy comes after the project has suffered delays to the BFS (bankable feasibility study) due to issues surrounding the new kiln technology.
As reported on Wednesday, the new strategy will comprise two phases, and the first phase will see the company build a rotary kiln flex plant with a capacity of around 1,000 tonnes per day (tpd) for the production of ThermoPotash.
The flex plant will also be operated to process potassium chloride (KCl) in order to further develop scale-up and commercialisation of the process and with the intent of securing performance guarantees on a 12,000 tpd kiln for KCl production.
Phase 2, developed in parallel with Phase 1, would focus on large scale KCl production. This two-phased strategy expects to reduce up front capital expenditure by initially establishing the less capital intensive ThermoPotash product.
Verde said it expects to publish a prefeasibility study (PFS) in the first quarter of next year for Phase 1 and Phase 2. 
Verde has been engaged in discussions with Brazilian institutions regarding debt finance for Phase 1 and continues to believe that Brazilian federal and state development banks will play an important role in funding Cerrado Verde.
Verde is undertaking to meet the demands of the regulator in order to receive all necessary environmental approvals in a timely manner so that permitting will not act to delay the project.

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