Verde says could potentially supply all of Brazil's potash demand

TORONTO (miningweekly.com) – TSX-listed Verde Potash is hoping to prove up enough resources at its Brazilian Cerrado Verde potash mine to supply all of the South American country’s future demand for the fertiliser, a spokesperson said on Monday.

That’s no mean feat, given that Brazil is forecast to become the biggest potash user globally by 2020.

“We’ve got 10.5-million tons of resources at 10.3%...we’re talking about a potential billion tons of potash there,” spokesperson Iwona Zakrzewski said.

The company aims to announce an updated resource estimate for the property, located in Minas Gerais, by the end of June or early July.

Currently, Verde envisages building an operation producing 1.1-million tons a year of what it calls thermopotash by the 2013, at a capital cost of around $200-million.

It will then double this to 2.2-million tons yearly by around 2016/17, for the additional capital of only $70-million, Zakrzewski said.

Thermopotash is made from a silicate-based potash resource, compared with the conventional potassium chloride or potassium sulphate deposits.

Zakrzewski said in an interview that Verde, which changed its name from Amazon Mining earlier this year, aimed to raise $100-million in equity in the first or second quarter of 2012, and the same amount in debt from the Brazilian government.

The company had $14-million in the kitty, which was enough to take it up to construction.

A feasibility study into Cerrado Verde was due for the first quarter of next year.

In an earlier presentation, Zakrzewski said that Verde had tasked Cambridge University professor to study the potential of converting thermopotash into the more widely used conventional potash at the mine.

“We hope to release a scoping study for that by the end of this year,” she noted.

This would form phase two of the Cerrado Verde project.

Currently, Brazil imports 90% of its potash, and Zakrzewski showed how it costs an estimated $80/t to $115/t just to transport the crop nutrient to blenders in Brazil from the mines in Saskatchewan, which account for about one-third of global production.

Potash was trading at around $425 at the Port of Vancouver at the end of April.

Verde climbed 2% on Monday to trade at C$6.37 by 14:34, valuing the company at C$204-million.