Verde to receive 250-million-real financing from Inova

2014-02-19 09:54 ET - News Release
Shares issued 37,532,430
NPK Close 2014-02-18 C$ 0.87


Mr. Cristiano Veloso reports

VERDE POTASH PROVIDES ADDITIONAL INFORMATION ON INOVA AGRO

Verde Potash PLC has provided a summary of the company's business plan that was selected by Inova Agro. Verde's business plan for the development of the Cerrado Verde potash project consists of building a greenfield 1,000-tonne-per-day ("tpd") plant capable of producing ThermoPotash and also of seeking performance guarantees for a large-scale KCl kiln. Inova Agro approved Verde's business plan that requested funding for approximately 90% of the business plan, which includes investments in market development, pre-construction costs and working capital post commissioning for six months.

Verde submitted its application and support documentation to the Inova Agro program in August 2013. In September 2013, the Company was notified of its selection to advance to the program's next round of evaluation. For the final selection round, Verde submitted its business plan for the development of Cerrado Verde, at an estimated total of R$ 280 million (approximately US$ 115 million), of which R$ 250 million (approximately US$ 105 million) was asked from Inova Agro. This capital is to be provided via loans with subsidized interest rates, equity investment and non-reimbursable project investment grants from the Brazilian Development Bank ("BNDES") and/or the Financing Agency for Studies and Projects ("FINEP"), both of which are branches of the Brazilian government that operate Inova Agro. Of the total capital, up to R$ 10 million (approximately US$ 4.2 million) can be provided as a non-reimbursable project investment grant.

Commenting, President & CEO, Cristiano Veloso stated: "The selection for the Inova Agro funding is a strong endorsement from the federal government, acknowledging both Verde's competence to bring the project into production and the importance of the project for Brazil's long term agricultural development."

Commencing March 19th, 2014, BNDES and FINEP will meet with the selected companies to define a "Plano de Suporte Conjunto" (a joint support plan) where the funding structure will be defined, including the pre-conditions and a timeline for fund disbursements.

Any applicant to the program can file an appeal regarding the selection results. The appeal must be filed within ten calendar days and final results will be confirmed on March 18th, 2014.

Inova Agro

Inova Agro is an initiative of the Brazilian government aimed at coordinating the resources of BNDES and FINEP to provide financial support to innovative projects in the agriculture sector. The Inova Agro support program involves a specific set of criteria and a schedule for the distribution of funds. Companies and projects that are successful in securing financial support from Inova Agro will have funding plans set starting in March 2014.

The Inova Agro program targets three business sectors for funding: agribusiness inputs, food industry processing and agribusiness equipment. The Company's Cerrado Verde project expects to significantly contribute to Brazil's production of potash fertilizers and therefore fits into the inputs for agribusiness (fertilizers) portion of the program.

Inova Agro is part of the larger Inova Empresa program, which spans a number of sectors. The total budget for Inova Empresa is R$32.9 billion (approximately C$15.0 billion). While the budget for Inova Agro provides for R$1 billion in funding, this figure could increase at the discretion of the funding institutions (BNDES and FINEP).

About BNDES

The Brazilian Development Bank (BNDES), a state-owned company, is the main financing institution for development in Brazil. Since its foundation in 1952, the BNDES has played a fundamental role in stimulating the expansion of industry and infrastructure in the country. Over the course of the Bank's history, its operations have evolved in accordance with the Brazilian socio-economic challenges; today they include support for exports, technological innovation, sustainable socio-environmental development and the modernization of public administration.

The Bank offers several financial support mechanisms to Brazilian companies of all sizes as well as public administration entities, enabling investments in all economic sectors. In any supported undertaking, from the analysis phase up to the monitoring, the BNDES emphasizes three factors it considers strategic: innovation, local development and socio-environmental development.

About FINEP

The Financing Agency for Studies and Projects (FINEP) is a state-owned company under the Brazilian Ministry of Science and Technology that promotes economic and social development by fostering innovation in public and private companies, universities, technological institutes and other public and private institutions in the country.

Founded in 1967, the organization has funded thousands of successful initiatives, including the development of Embrapa, Brazilian agribusiness projects, oil exploration and development of the aircraft Embraer Tucano.

We seek Safe Harbor.