Brazil Potash Corp. (NYSE: GRO)

Brazil Potash Corp. was incorporated on October 10 2006 under the laws of Ontario Canada. The company is an exploration and development firm focused on the Autazes potash project in the state of Amazonas Brazil. Its wholly owned Brazilian subsidiary Potássio do Brasil Ltda. holds the mineral rights for the project. The Autazes property covers approximately 98 square miles in the Amazon potash basin near the city of Autazes. The project is situated between the Amazon River and the Madeira River about 75 miles southeast of Manaus. The company has completed extensive drilling with 43 holes totaling about 121000 feet on the property. Technical studies indicate a mineral resource that supports a planned annual production of about 2.4 million tons of muriate of potash. The mine life is estimated at 23 years at that production rate. As of the filing date the company has not commenced commercial extraction or sales. The company has progressed the Autazes project to a near construction ready state having completed environmental and social impact assessments and technical studies. It has received all 21 construction licences expected for the build from the Amazonas state environmental agency. Additionally two water resource operating licences have been granted for groundwater supply. The company holds surface rights to 24 rural properties and has lease agreements for another 15 properties for tailings storage. It continues to work toward obtaining the final operating licence and mining concession needed to begin extraction.

Brazil Potash Corp. has not generated any revenue from operations to date. The company intends to earn revenue by selling muriate of potash to Brazilian farmers once the Autazes project reaches commercial production. It has secured several offtake agreements to lock in future demand. The Amaggi agreement calls for a minimum quantity of about 551000 tons per year after a three year ramp up period. The Keytrade agreement provides for the purchase of up to 900000 tons per year representing 30 to 37 percent of annual output. The Kimia agreement allows for the purchase of up to 704000 tons per year representing 23 to 32 percent of annual production. In addition the company has a shipping agreement with Hermasa Navegação da Amazônia Ltda. to transport product to inland ports. Franco Nevada holds an option to acquire a royalty on future gross revenue but that does not constitute current revenue. The firm has financed its development through private placements a regulation A offering an initial public offering and an equity line of credit. Total gross proceeds raised exceed 270 million dollars from various equity sources. The company does not expect to be profitable in the short term as it invests in building the mine and processing facilities. Once operational the revenue stream will depend on the volume of product sold and the prevailing market price for muriate of potash in Brazil.

Brazil Potash Corp. seeks to become a domestic supplier of potash in a market where Brazil imports about 98 percent of its needs. The Autazes project is the only significant potash development initiative in the country. Its location near the Madeira River allows low cost transportation by barge and truck reducing the distance to farms in central Brazil. The company plans to draw electricity from Brazil's national grid which draws about 80 percent of its power from renewable sources giving the project a lower carbon footprint than many overseas producers. The project has been designated of national importance by the Brazilian government and admitted to the Investment Partnership Program facilitating interactions with federal agencies. Experienced leadership includes former executives from major nutrient companies and mining firms. Main competitors in the potash space are The Mosaic Company Nutrien Ltd. Uralkali and Belaruskali. Brazilian demand for potash is projected to grow at a compound annual rate of about 6.8 percent through 2027 outpacing the global average. The country's large scale production of soybeans corn sugarcane and cotton creates steady demand for potassium fertilizers. By supplying product locally Brazil Potash Corp. can help reduce the nation's reliance on long distance imports which currently travel 8000 to 12000 miles from overseas sources. The shorter supply chain also translates to lower greenhouse gas emissions from transportation compared to imported alternatives.

The company's intended customers are Brazilian farmers particularly those in the high consumption states such as Mato Grosso. It has secured offtake agreements with Amaggi Exportação e Importação Ltda. Keytrade Fertilizantes Brasil Ltda. and Kimia Solutions Ltda. These agreements together cover a substantial share of anticipated production. The shipping agreement with Hermasa Navegação da Amazônia Ltda. ensures movement of product from the project site to river ports and onward to distribution centers. By focusing on domestic sales the company aims to reduce logistics costs and provide a competitive price to local growers. The Amaggi agreement includes a three year ramp up before the minimum quantity takes effect. The Keytrade and Kimia agreements are structured as take or pay contracts providing revenue visibility. The company also has discussions with other regional distributors to expand its market reach. All offtake partners are Brazilian companies with established logistics networks in the agricultural sector.