Verde Agritech Skyrockets After $2 Billion PFS
Well, on November 27 the company released their concluded pre-feasibility study (PFS).
And it was better than the market ever expected. . .
Some highlights of the study are. . .
º Proven and Probable reserves of roughly 800 million tons of potash
º Impressive potash grades of 10%
º Capital Expenditures to launch phase 1 is only $3 million
º Estimated after-tax net present value (NPV8) for the project is almost $2 billion
º The estimated Internal Rate of Return (IRR) for investors is a whopping 290%
No wonder the stock was up over 90% in the first few hours since the news release went pubic. . .
Let’s look at phase 1 – slated to produce 600,000 tonnes per year, selling product for $38.15/t at a cost of $14.53/t. This is achieved with a minimal capex of $3.0 million.
This equates to cash flow of $14.2 million per year, or an NPV10 of C$60 million.
Verde Agritech’s market is currently C$24 million.
Phase 2 offers significantly more upside.
For $17.1 million, production will be ramped up to 5 million tonnes per year. Due to scales of economy, costs will decrease by almost half, to $6.77/t.
At full capacity, this will produce cash flow of $118.1 million per year, or an NPV10 of $503.2 million.
Obviously, there are risks in achieving these lofty numbers.
However, with substantial risk premiums, Verde Agritech is grossly undervalued.
We are still bullish.
And we’re excited for what comes next for Verde Agritech going forward.