The NI 43-101 Preliminary Economic Assessment for the production of conventional potash, KCl was completed in February 2012. The PEA was prepared by SRK Consulting (“SRK”) on Verde’s wholly-owned Cerrado Verde project (“Cerrado Verde” or the “Project”) located in Minas Gerais State, Brazil. The PEA evaluated the technical and financial aspects of two different scenarios. The first scenario (the "Base Case Scenario") has an initial production of 0.6 million tonnes per year (“mtpy”) increasing to 3 mtpy of KCl, with production growth financed largely from anticipated internal cash flow. The second scenario (the "Upside Case Scenario") has an initial production of 1 mtpy increasing to 4 mtpy. Each scenario was scheduled into three phases, assuming significant cash accumulation and anticipated construction times.
Key Economic Highlights
The PEA was based on the following assumptions:
- Production of 100% granular fertilizer grade KCl (60% K2O).
- Base Case Scenario - Total Production of 3.0 Mtpy of KCl in three phases: 0.6 Mtpy (start up: 2015),
1.6 Mtpy (start up: 2017), 3.0 Mtpy (start up: 2019).
- Upside Case Scenario - Total Production of 4.0 Mtpy of KCl in three phases: 1.0 Mtpy (start up: 2015),
2.5 Mtpy (start up: 2017), 4.0 Mtpy (start up: 2019).
- All Capex figures are incremental to the previous phase(s).
- A total planned production life of 30 years for the 3.0 Mtpy scenario, and 28 years for the 4.0 Mtpy scenario.
- 100% equity funding.
- Exchange rate of $1 USD=$1.8 BRL.
- A 25% contingency applied to the Capex.
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