EXCLUSIVE: Brazil Potash Seals Final Offtake Deal With Kimia Solutions For 704,000 Tons Annually

Brazil Potash Corp. (AMEX:GRO) on Tuesday disclosed the enactment of its third and final commercial offtake deal between Potássio do Brasil Ltda. And Kimia Solutions Ltda.

The ten-year term agreement entails Kimia to purchase up to 704,000 tons of potash annually from the Autazes Potash Project at market prices.

Notably, the Autazes Potash Project is a critical mineral potash agriculture project of Brazil Potash.

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In particular, Kimia expects to purchase around 23%-32% of Brazil Potash's annual potash production on a take-or-pay basis.

Kimia's offtake obligations will start after the commencement of production and scale proportionally during the ramp-up period to full production capacity.

Also, the deal allows Brazil Potash to assign future payment rights to financial institutions for project financing purposes.

Commercial Strategy

The deal is expected to offer the company a strong revenue visibility and demonstrate strong demand for domestically produced Brazilian potash.

Notably, the remaining output will be kept for spot sales, allowing the company to capitalize on market price premiums, manage maintenance downtime, and account for production fluctuations.

Management Commentary

Matt Simpson, CEO of Brazil Potash, stated, "This agreement with Kimia represents exceptional commercial momentum, with all three major take-or-pay offtake agreements completed as planned, securing pre-sales of over two million tons of annual production for up to 17 years."

"Achieving approximately 91% contracted capacity positions us to further advance project financing discussions, knowing we have industry leading Brazilian partners committed to directly purchase or distribute our potash."

Recent Deals

In July, the company signed a Memorandum of Understanding (MoU) with Fictor Energia for a $200 million power line project.

The MoU outlines the terms for Fictor Energia to fund approximately $200 million in power transmission construction costs for the Autazes Project.

Overall, both these deals are expected to largely de-risk both the commercial and infrastructure components of the Autazes Project.

GRO Price Action: Brazil Potash shares were up 2.73% at $2.63 during premarket trading on Tuesday, according to Benzinga Pro data.

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This article EXCLUSIVE: Brazil Potash Seals Final Offtake Deal With Kimia Solutions For 704,000 Tons Annually originally appeared on Benzinga.com

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