Verde AgriTech Limited (NPK) Earnings Call Transcript & Summary

Ladies and gentlemen. Thank you very much for attending another call with the results for our third quarter. My name is Cristiano Veloso. I'm the Founder and CEO of Verde AgriTech Plc. As usual, in the first time -- first part of this presentation, Felipe will be giving an overview of our financial statements. And then later on, on the presentation, I will be addressing questions, questions we've received over the last few days as well as questions you may submit via the bottom of a screen under the Q&A option. Before we begin, I'd like to remind you that our conversation today may contain some forward-looking statements, which may or may not occur according to plan. If you risk-averse, please do not watch this presentation. Thank you very much. And if you're watching this on YouTube, thank you. Another time, please don't forget to hit the like button. If you like, what you hear that's how you tell Google YouTube to show the same content to other people like yourself, who might also be interested in what we have to say here today. So thank you very much. But before I begin, I know how excited all of you must be with the coming Black Friday. I know how excited all of you must be with Christmas coming over, trying to decide gifts for your loved ones, trying to decide what are you going to buy for your neighbor, what you're going to buy for your in-laws, what you're going to buy for your dear family and friends? So that is the best suggestion we can offer. If you're in the U.S. or if you're in Canada, just log on to Amazon, use your Amazon Prime and make sure to use the voucher we've given here offering some discount on Super Greensand. So not only you have the opportunity to follow a story, not only have the opportunities to benefit from that, both personally from seeing us improving the environment, but you can also help your own lawn, your own garden, and your friends and family with our Super Greensand delivered straight to your door. So thank you very much for supporting. Thank you very much for your interest in Verde AgriTech. Felipe, it's to you.

Thank you, Cristiano. Hello, everyone. I will start our presentation with key highlights where you can see in Chart #5. So in the left side of the screen, we can see cash profitability and operations. First, related to cash. We do still have an ability to generate significant free cash flow in the long term. The total loans for CapEx and working capital up to September 2021, is CAD 2.8 million. And for the 3 months ended in September, the cash utilized from investment activities was $811,000, an increase of close to $0.5 million from last year, mainly due to infrastructure investments in Plant 2. A bit on profitability, revenue from sales for Q3 was $10.6 million from the sales of 153,000 tonnes of the Product at $69 per tonne average price sold. Operating profit before non-cash events increased by 124% to $3.6 million compared to $1.6 million in Q3 2020. On net profit, an increase of 192% in Q3 2021 to $3.2 million compared to $1 million in Q3 2020. Trading of other receivables increased to 141% to $8.2 million compared to $3.4 million in Q3 2020. And sales by volume increased by 45% compared to last year. We're going to have a bit more details in coming same chart, and then we can get more into details later as well. Operations, the Group is currently fully permitted to mining 482,800 tonnes. And we do have submitted an environmental application for an additional 2.5 million tonnes per year. On the right side of the chart, you can see in summary that we are pleased to announce another increase in our 2021 guidance. The new target on revenue is BRL 110 million, which represents an increase of 120% of the company's original guidance, ahead of BRL 50 million. So if we achieve this target, it will represent a 212% growth year-on-year. In October 2021, as the company has secured CAD 3.75 million in loan agreements to fully cover the capital expense for construction for Plant 2. The first $1.1 million was already released by Santander Bank and the remaining $2.6 million was already approved by Santander and Bradesco and the company will use in the coming months, as soon as we need. So the total CapEx for Plant 2 is expected in CAD 5.2 million, which $1.4 million invested through internally generated cash flow. So after having invested over CAD 66 million to reach our current rate production, Verde is proud to finance the tripling of current capacity based on debt and cash flow alone. Going to Chart #6, Q3 2021 financial statements. I will highlight some key points here and then in the coming charts a bit more details on the main points. So first, I would like to highlight the revenue growth of 169% year-on-year. Here, you need to remember also that we had the devaluation of Brazilian real. So in Brazil real the growth was over 20%. The product cost also increased to what was expected. We did have some impacts in our cost per tonne. It could be, say, on oil, gas, electricity and local inflation in Brazil and freight and other kind of expenses that have an additional cost this year. On general expenses, also an increase as expected to support our sales growth and then also we will be paying a bit more. So to keep -- another key point, the operational profit loss before non-cash events we've shown here $3.6 million on operating profit compared to $1.6 million last year in the quarter. And the cumulative year-to-date, we are showing close to $4 million compared to $1.5 million last year. Going down to the operating profit and loss after non-cash events, we did show $3.6 million in the quarter of operating profit, and $2.44 million in 2021 year-to-date. So growth of 185% in the quarter and 120% in the year-to-date. In the end, bottom line net profit of $3.182 million compared to $1 million last year. So it's close to 100% growth. And in the year-to-date basis is $1.6 million compared to $700,000 last year. So it's another over net profit growth of 122%. On operational summary, this chart shows a bit on the expenses in revenue per tonne. We did sale a 154,000 tonnes in the quarter with revenue per tonne of $69 and production cost of $16, which increased, as I said before, against last year, that was $12, but showing a gross margin at significant growth from 67% to 77% in the quarter and from 63% year-to-date to 74% this year. And then the second table is a bit detailed as explained, FOB against CIF. The company has included in the $69 per tonne, the revenue with freight. So if we take this out of the numbers, the revenue per tonne would decrease from $69 to $48. And this is just to analyze the gross margin variance without CIF sales in it, since CIF sales, there is no margin for the company. But in the end of the day, we can see here that the gross margin is still highs to 67% in the quarter against 64% last year, which shows an increase. And also at the same trend, here we can see in 2021 year-to-date, 62% for gross margin this year against 59% of underlying gross margin adjusted removing freight from the revenue. Moving to Chart 8, you can see sales tonnes in the left side and revenue on the right side, you can see per quarter and per year. So it begins in 2018, in Q3, you can see how the company grew each quarter and in the end of the day, in Q4 -- just in Q3 just have referenced, we came from 9,000 tonnes in 2018 to 62 in '19, to 105 last year and this year 153,000 tonnes. And on the right side, you can see here the revenue also showing an even higher trend of growth and then a bit of the reasons explain later related to revenue impact that's driven us to a higher sales price per tonne this year. Now I can see the full year metrics from 2018 to 2021 on the left side showing a growth from 29,000 tonnes to 400,000 tonnes, which is our expectation first year. And then on the right side, the revenue, as I already said before, it's a BRL 110 million, which is $25.8 million for 2021. If we compare to 2018, '19 and '20, you're showing triple-digit growth year-on-year, which shows a very consistent growth. Chart #10, going to sales, general and administrative expenses. We do have an additional cost, yes, for sales and marketing expenses. We did have also a sales commissions paid to independent sales agents. We can see here a huge growth. However, it has an impact that we show below in the footnote that we had a provision that was reverted in Q3 last year. So it has an impact here, but we still show growth. It is a fee that we pay that as a percentage of the sales. So as one wants to grow, this expense also expects to be growing, so increasing. So at the end of the day, product delivery freight is also important. We have a chart here to show, but we did have a very relevant increase in this expense from $264,000 last year to over $3,200,000 this year. And then this is explained by CIF against FOB. We will have a chart to show in the next one. So going down to general expenses, general administrative expenses, $291,000 in the quarter, a 21% growth. Legal, professional, consultancy also here, we did have a decrease mainly due to renegotiation with auditors and other consultants. IT/software expenses is increasing. It was expected also due to the number of people that -- and new employees that we hired in the period. And then taxes and license fees, which is very relevant, the percentage is big but it's only 5,000 expenses this quarter in '19, either to date in the year. Now as I said, we have FOB and CIF sales. We did have an increase from 14% last year to 50% this year on CIF sales, which explains that impact I said before that on revenue per tonne. And also, we can see here the volume that we sold in CIF, which was 50%, 76,000 tonnes. And this is good for Verde, because especially in high season period, we can control a bit more the exact day that the product will be delivered. So it's easier to align production supply chain and the whole chain this situation to make sure that everything works as we need, and we do not need to depend on customers' freight and trucks to arrive in our plant. We do control our time. It's better for us once in CIF, although we have some risks like freight and other risks. But at the end of the day, it pays off for sure, and it's the trend to be like 50% or even higher in the coming periods. And in the right side, a bit on general expenses, we do show general administrative expenses here increase, mainly due to additional 36 administrative employees to support the company's growth that were hired in the period. And this is something that was already expected in our budget and the numbers. A bit on financial summary. Again, now on revenue from sales for Q3 was $10.6 million from the sales of 153,000 tonnes. And it's important to say at $69 per tonne sold, despite the 14% Brazil real devaluation against the Canadian dollars. So the revenue per tonne was higher than Q3 2020 to $37 per tonne. So this is mainly due to 3 factors. First, product volumes sold at CIF from 14% to 50%, as I said in the prior chart. Potassium chloride CIF price increased from $219, the lowest price in the period for last year, lowest price of $515. And then third, we did start sales of BAKS and less in Q4 2020. This is already accounting for over 10% of our sales, and this for sure impact us since we had some revenues in the product. It impacts us in our revenue per tonne year and also in the cost per tonne. On the profitability side, operating profit before non- events increased by 124% to $3.6 million compared to $1.64 million in Q3 last year. Gross margin increased to 77% compared to 67% and sales volume, 45% growth to 153,000 tonnes in the period. Net profit increased by 192% in Q3 2021 compared to $1.109 million last year. On cash side, on September the group had a cash of $2.4 million, an increase of $24,000, it was very similar. And trade and other receivables increased by 141% to $8.2 million compared to $3.4 million last year. From the total trade receivables overdue were below 0.5% as September 30. And this 8.2% was also expected to support the company growth and remaining with the same payment curve that we currently have. It shows this increase and it makes sense to have over 100% growth in the trade receivables. A bit on summary of interest and loans and borrowing. The company has currently in our books in September $2.8 million debt, loans -- of a total loan that was in BRL 3.2 million. We did have $3.2 million, sorry, and we did have here the old ones and then you can see the last 3 months are the most expensive ones and that was taking like 3 years ago. And we do expect here to the average, you do have 12.5% loan. So considering that the inflation in Brazil is close to 10% and the Brazilian government long-term bond rate is 12% per annum. We do consider that we do have here a good average of interest in our debt currently. A bit on economic scenario, Brazilian real versus U.S. dollar. You can see that the quarter that has ended is pretty close to last year, a bit lower saying like $5.28 against U.S. dollars and the trend for Canadian dollars a bit different to a bit higher. The expectation for the -- from the Brazilian Central Bank is to close this year with $5.50, which we are very close now and the interest rate that is expected to have in Brazil is 9.25% at the end of this year. On potassium chloride price, we can see here CIF, taking in consideration price in U.S. dollars. You can see here the growth we had of the increase of the product delivered cost to the farmers in the states. And in Minas Gerais, you can see that comes from 209 to over 500 a year to this year-on-year comparison. And then the 30-year history, we do not show here yet a trend, because it's a very long-term chart. But for sure, in a few months, I think it's going to start to show the trends that we are seeing in the price increasing here as well, average the price 12 months. So for chart 16, year-on-year sales growth tonnes, you can see here from 2019 to 2021, a year-on-year comparison, showing that we came from 29,000 tonnes to 400,000 tonnes, now it's 2021. And year-on-year growth here showing from 243 to 400, which is 64% expected. The guidance we had before, we have a guidance of 350,000 tonnes, now revealed to 400,000 tonnes. On the revenue side, we did have a target before of BRL 50 million revenue and now we are showing BRL 110 million target for this year end. On product pricing, our product price is based exclusively on its potassium content. So since K Forte have 10% of K2O, where KCL has 6%. The farmer pays 6x less for our products. So as an example, we took 2 key cities, 1 in Minas Gerais state and another 1 in Mato Grosso state that shows that including the CIF freight, the price that the farmer pays is 6x lower to our product -- to this product to compensate the 10% against 60%. And also in the table on the right side, you can see here the FOB price as well. Once the freight is more expensive, which is the case of Mato Grosso, the business is further than Minas Gerais. The FOB price has to be reduced, we make sure that the farmer will pay at the end of the day, the farmer pays price exactly the same price per tonne of K2O. And also here, you can see, of course, there is a footnote here that say that sometimes discounts might be applied, et cetera. So this is just how we make our sales price list. And then at the end, we do have a revenue trend from '17 now to 2020, the end of the next year 2030. We do expect this year BRL 110 million coming from 2017 from less than BRL 1 million of sales. Well, now I'll pass back to Cristiano, that will have the Q&A section, and I'll be also here to support as needed to answer the Q&A section. Thank you, Cristiano.

Thank you, Felipe. Excellent. Felipe, I think if you want to stop sharing your screen now, so we can go back to the full screen stage. Excellent. Okay. So anyone who wants to participate now, please, feel free to send your question via the Q&A option at the bottom of your screen. I will be answering some of the questions we received over the last few days. But before I start answering the questions, one important point to say is that some of the questions we've received in order to answer them, we would potentially disclose some commercial sensitive information, which we just are not sure whether the net benefit to investors would make it worth it or if perhaps other parties would benefit more than investors by having those answers. So those questions, we will not be answering for the time being. We will review the situation, it might change. Other questions we received, they were good. We just unfortunately not prepared yet to be answering them from how we structured. So for example, there were some very specific questions about certain types of cost structure, which our ERP system just can't handle it. Next year, we will be operating with S-A-P, SAP, and then we expect to be able to provide certain information with a bit higher a greater level of detail on. But even if your question isn't answered here today, please accept that it has helped us. It has helped us to think about it, think about answer, take it on Board, share it within the company, see how it can be addressed. So even if you don't get the answer, you should be assured that the fact you've sent this question to us has given us an opportunity to reflect about it, and we'd like to think it has helped the company, has helped our company growth, thanks to your contribution. So please don't stop sending questions, don't stop any comments. We really -- each and every one of them, and we very much appreciate how successful a lot of you have been in your previous careers and how much -- what you can give us over the last, over a decade. I have no doubt we wouldn't be in the position we are if it hasn't been because of the import of our several shareholders, who have supported us along the way in several different ways. So starting with the first question we have here on the list. It is a question about what type of energy we use in our production process? The type of energy we use is electricity. It is provided by 1 of the largest energy companies in Brazil, a company called CEMIG. It is from Minas Gerais state where we operate. Electricity accounts for about 5% of our costs. We were lucky to sign an agreement with the energy company a good few months ago when electric prices were quite low. So this has been benefiting us in a scenario nowadays where electricity prices are much greater. The main source or how CEMIG for those of you worried about ESG -- from an ESG angle. The main source of electricity -- the main source of power from CEMIG is hydroelectric electricity. I think over 80% of all the electricity generated by CEMIG comes from hydro. It is in our plans to, at some point, build a small solar energy plant to supply it -- supply us. It will probably happen alongside Plant 3. So whenever we start building Plant 3, which I hope, Plant 3 construction should begin at the end of next year. At that point, I would expect also to concomitantly be building a small solar plant, which given the funded in very, very good terms, and it would coincide with when we would be coming out of this good agreement we have for full electricity rates. If I didn't answer your question, if you feel like this more to be clarified then, please do not hesitate to send another question here. Next question. It is a question about pricing. So the question is, I don't understand why your revenue shows CAD 69 per tonne, when you're showing the price of potash as $515 per tonne? We've added to Felipe's presentation a slide that has a breakdown on the pricing. So Felipe, if you wouldn't mind sharing your screen again and going back to the slide with pricing. We can have a look on the pricing structure. This document or this information is also in our PFS. So if you go on sedar.com, look for Verde AgriTech or if you're on a website, look into other documents, there is the full copy of our pre-feasibility study. And essentially, how we come up with our price is to look at the delivered price of potassium chloride at the potential customer' farm. So nowadays, okay? If the farmer is in the town of Unaí in Minas Gerais state, you can see that the price he is currently paying for potassium chloride in Brazilian real is about BRL 4,681. If he is further away in the country, in the Mato Grosso state further away from our plant, he is currently paying about BRL 5,000 per tonne. What we do with that delivered price is to divide it by 6, because our product has 6x less potassium. That brings the -- how much we -- is our asking price in each 1 of those -- in each of those farms. So divided by 6 come up to BRL 780. In Tangará da Serra it comes up to BRL 800. If the farmer wants to buy the product, CIF delivered to the farm, we will bear the cost of transportation and we will be charging the farmer if he's in Unaí BRL 780, if he is in Tangará BRL 863. If the farmer wants to pay FOB, sometimes the farmer has his own truck, trucking company, some of them do, they will want to buy FOB in which case we deduct freight and would come up to our FOB price. So essentially, that's why when you look at the financials, you see that price. It will never -- the revenue per tonne will never be identical to the case in 2 KCL price as a -- because of all those aspects there, I've just mentioned. It's very important to say, as Felipe mentioned in his presentation, that this is the asking price. However, in different circumstances, this price could be lower for the customer. This will depend on a number of factors, which are related to our commercial strategy. There will also vary along the year, depending on a number of issues, such as seasonality or demand and other factors, which we will not be going into too much detail here for commercial reasons. If we go back then to Felipe, you can stop sharing the screen. If we go back then to the other question -- another question. What is the breakdown by tonnes sold to end users? What's the split between inside sales or the sales made by Verde itself, sales made by independent sales agents, and sales made by distributors? The split, which in the beginning of our sales activities, the bulk of our sales right at the beginning was made by independent commission sales. But over the years and especially this year, we've brought the majority of those sales be made directly by Verde, by our own team. So the split at the moment is 50% of those sales are made by ourself directly, 40% of the sales are made by our independent sales agents. We try to provide a very comprehensive support to assist them, growing their own markets as well and adding further clarity to our commercial strategy. And around 10% of those sales are made by distributors. Next question. Verde spent -- well, you talked about Verde having spent $1 million in the past 18 months acquiring land. And the question he asked here, can you share details of that land and the reason for the acquisition? It wasn't that much money spent on land. It just happens that under the account, infrastructure investment is also being accounted there. So what we will be doing for the next financials is to provide a better level or more detailed level of disclosure in terms of what is land and what is actually all the stuff. So we will be looking into doing that. But the amount spent on land acquisition has been tiny, tiny, tiny. The next question and before I answered this question, I'm very pleased to report the number of new names I see attending this conference. Thank you very much for your interest in Verde. If there's any point through the presentation you feel a bit like I didn't give enough detail or didn't have enough background, please do contact us directly and I will be delighted to go over into more detail about the business itself. The question is, do you have a dedicated team looking at ways to reduce considerable freight costs that are a result of increased tonnage for potassium needed by farmers compared to conventional use of potash? Can Verde remain competitive for the largest scaled farmers? So there are 2 questions here. The first question is, yes, we have a pretty good team, I have to say, handling logistics. So it's a team that this year alone will have managed, if everything goes according to plan, around 400,000 tonnes or it's not, maybe you think it was CIF. So it won't be 400,000 tonnes, but it's a gigantic number of transportation, and we try to use technology the best we can in order to keep this -- those rates competitive and keep the axe as competitive. Second question, can Verde remain competitive for the large-scale farmers? Yes, we can remain very competitive and we've been very much so. The other questions somewhat locked up and something else we trademarked. So they are asking SI Forte as a trademark, what is that? That is the trademark for Silício Forte, which is a product as -- which is a source of the nutrients we usually have, but especially marketed as a source of silicon. Silicon is a very important new trend, which helps crops increase its resistance against drought, against pests, against diseases. So for example, if there is a short spell where when conditions were drier than usual, the crop will be more resistant. This basically occurs for different reasons. One of the reasons is that something to do with the evapotranspiration mechanism plants have, which is how much water, plants lose to the environment as part of their growth. So by absorbing silicon, the structure of plants become more resistant. And as a consequence, it loses less air. There are several very interesting articles on the Internet about the benefits of silicon to crops. Next question. It's a technical question about reporting and to do with taxes. So of course, because we've made so much investment over the years and there was G&A associated with that, we carry losses in the balance sheet, especially in the Brazilian balance sheet. And if you look at our financials up to this point, we haven't compensated for any of those losses. The reason we haven't compensated, I believe, is explained in detail in the financial statements, but the easy way to explain it is that in Brazil, essentially when you become profitable, there are 2 different tax options you can follow. In one of those options, you can't use these previous losses. However, the tax you have to pay is much smaller. And the calculation is you do -- what you used to calculate follows some rules, which benefit and definitely benefit Verde at this point. The other alternative, you pay 34% income tax, and that 34% income tax, you can then use to compensate the previous losses. This is beneficial arrangement. This original one. It's only allowed for companies of a certain annual revenue. And as of next year, we will go beyond that. So this benefit won't last very much more to, this is what it is. The other one is an update on our trade receivables. So you can see we have about $80 million of receivables. We -- the answer to the question is that 70% -- about 70% of those receivables will be in our treasury throughout Q1 and the remaining 30% of that $80 million will be paid throughout the rest of the year. The other important point here in terms of the trade receivables is our so people who have failed to make the payment agreed is less than 0.5%. The people who have failed to make the payment on the agreed date is 0.5%, which is very low. That might even be a bit too low in my mind, because the problem it being too low of course, is that you fail to sell to some people, who do offer a slightly greater risk of not paying us back. So you have -- you don't sell to people like that and -- but the other side of the equation is there, you could increase a little bit your risk taking in terms of offering credit. And consequently, you would also be able to sell to more people. So it's an important part of our business, which as we've grown, will become more and more important because in the agriculture sector, farmers do expect to be financed by suppliers, input suppliers like ourselves. Essentially, if you don't do this, you really limit your market. But this is also a great business opportunity in terms of what you're essentially doing, which is lending money. I have even heard some people suggesting we should look into to turning this side of our business into some sort of FinTech given the access we currently have to farmers. I can't say it's a bad idea. It's just not something we can focus right now. Another question. The status on permits. The 2.5 million tonnes mining permits is making it slow crawling progress throughout different levels of bureaucracy facing different hiccups all the way from broken scanning machines due to other similar problems. But we're very confident it should be issued on time to allow us to carry on supply in Brazil of its very needed potash on a timely basis. In terms of environmental license, we have really here to congratulate the state of Minas Gerais where we are located. They've done an amazing job in terms of modernizing the environmental licensing procedure. And it has been a completely different experience to what had been in the past. Last week, I had the opportunity to have dinner here in London with the Governor of Minas Gerais state with the Secretary of Environment of Minas Gerais State, and I could thank them directly and tell them how pleased we are with all the hard work and fantastic work they've been doing for the state of Minas Gerais, for entrepreneurs and how transformational it has been for all the society of my beloved state of Minas Gerais where I was born and lived most of my life. Next question. When do you expect to have a production and revenue guidance for the coming year? We were going to disclose that on -- as usual on our last press release. But either someone looked at that and said there was already too much good news for just 1 press release. Not to put another good news on that press release in terms of guidance, that's either that or we are trying to use a little bit more of the time we have in the coming weeks to try to be a little bit more assertive with this guidance. I don't like what happened this year, where we came up with a guidance and then we kept having to increase that. I think for next year, we should try to be -- we should try or hope to be able to predict a little bit more or better our revenue. Of course, what no one can really determine is the -- is what happens with fertilizer prices, is what happens with agricultural commodities, what happens with global economies. I know there is a question further down, but I may as well share my view right now on this topic. There was a post I made on LinkedIn. I think yesterday, the day before, where I post -- well I think it was over the weekend, actually. Where I posted a chart showing the global food price impact over the years, and the fertilizer price index over the years. So you can see on the chart how much correlation there is between those 2 lines. The outlier, however, is now. So I think fertilizer prices have gone beyond where they should be. If you ask me, I think it's too expensive right now, it's true. The argument other people make, which even though it's expensive, farmers can still afford, and economics still work for farmers. However, from a supply structure perspective, I think they've gone too far. I wouldn't be surprised if current potash prices over the next 12 months come down by half. I think there wouldn't be a surprise. Of course, for anyone looking at fertilizers in agriculture, and assessing other projects, who do require a greater potash prices or do require an exorbitant potash price, which is the pricing now, that might come as a very bad news. For the case of Verde, which is the lowest delivered cost producer in the Brazilian Cerrado. Yes, there would be less margins. However, it's good for everyone, farmers, global food prices and all aspects of the business. So it's not something that bothers us. If you look at the pre-feasibility study we had last done, the potash price we used as a reference to come up with a net present value of around $2 billion. The price we used was $250 CFR Brazil and not the $800 CFR Brazil, we see nowadays. You can just imagine what would the NPV would be with a price close to what it is at the moment. I feel like I've spoken a lot on this topic, but I didn't answer the question when we will come up with the guidance. I think it will be -- well, most certainly will be before the end of the year. A couple of questions here. This one is on the -- when we expect the pre-feasibility technical report? The guidance we gave on when the new pre- study would be completed. The guidance we gave was by the end of this year. As of today, the guidance remains as such. However, I will make sure the report is as good and as neat as you all deserve before it gets published. So if it comes to the end of the year, and I feel like it isn't up to your standard, to our standard, I won't disclose it. I won't release it just for the sake of making good to our promise of putting it out this year. I will used an additional few weeks to resolve anything I feel like might be resolved. As you may expect, the mining aspect of the feasibility study is very straight forward. The process is very straightforward. Where it's taken a little bit more of my attention is when we look at BAKS. As you know, BAKS is our product, which, in addition to potash, has sulfur and other micronutrients. When you look at the -- again, engineering process part of it, this is also straightforward. Where I am having to spend a little bit more time with the consultants is trying to come up with the level of disclosure that will be in the technical report in a way that it doesn't give up or give away too much of commercial sensitive information on what we're doing. At a level, to understand the level of detail, which needs when you look at, for example, sulfur. You have, in this study, there were about 20 odd sources of sulfur, which have been taken into account in this spreadsheet. Things were getting a little bit complicated. And when you also look -- even if you just look at the main raw materials, you're looking at potassium sulfate. You're looking at super simple phosphate, you're looking at ammonium sulfate as comparable which come up with the price of sulfur. When you look at micronutrients and on micronutrients, you're most likely going to be focusing on 4 different micronutrients to be added to BAKS. You're looking at boron. You're looking at manganese. You're looking at zinc and you're looking at copper. Each 1 of those metals have different dynamics. Each 1 of those metals have different fertilizer sources. So these all needs should be very tight in the report. So that is essentially where -- and of course, this all impacts the financial models or impacts the economics or impacts the bunch of papers, which get written on the back of BAKS. So that is where most of my attention will be going towards as you all enjoy the end of the holidays. And of course, we can't do too much of that at this point, because we are still very focused on our sales, and we're very -- we have a campaign going on where we get in our customers who are ready to place orders for next year. We're doing all the strategic planning coming up with a better calculation of budget, marketing budgets, trying to validate the growth levers. We've been able to identify over the years and how we're going to use their niche, different types of the year. So this has been a very busy time of the year for us as well. At the current time, if you have to guess, when will the second phase be done? Is it a 5-year, a very reasonable target? So the question here is, again, about the pre-feasibility study. When we did the pre-feasibility study back several years ago now, we split that into 3 phases. The second phase was 5 million tonnes production. For the next pre-feasibility study, we're not going to be too bothered about being phases, because as you've seen, it's such a scalable business that we can grow as fast as slow as we can develop the market, and we don't need to follow an established fixed phased approach. If the question is, when I believe we'll be able to get to 5 million tonnes. My answer is I don't know. However, we will carry on working to support and potentially even expedite our current growth rate, assuming some tests we're going to be making especially next year on growth levers. You're going to hear that those words a lot in the coming calls, our growth levers. And if they start to work and we carry on being able to validate the base -- validate them based on data, we think we might be able to expedite things. Next question. With regards to recurring sales to farmers, do you see increase in purchasing per farmers as farmers decide to use more material to replace potash on a large part of the land move from pilot to adoption. Can you provide more info about this rate? Yes, we are seeing an increase in the usage. We've seen some big farmers coming in and placing orders for the full farm, which is good to see the level of confidence, people are starting to take with the project. But I don't want to be answering this question purely on a -- on a doctoral basis. There is something we came across reading the last addition of the Harvard Business Review magazine, something called MPS 3.0, where the inventor of MPS comes up with some ways to measure the earned growth versus acquired growth. So we're looking to create if it makes sense, we might even put a press release out and disclose those numbers and start following from there. Next question. Considering the correlation between food and potash prices, in a statement that potash prices may come down by half. You can see another most promotional hand-waving mining CEO. I'm just -- you might not like what you hear, but I will speak my mind and I don't think the prices will be -- will stay at decrease levels there now. Why does not Verde hedge by selling food for futures or by buying some hedges? I -- you're speaking Greek to me in terms of the possibility of doing that sort of hedge. So obviously, you're knowledgeable in that area. So please do reach out. And I would love to hear from you how we could potentially investigate doing something like that. And the last question, we have here where can we find the presentation by Felipe? As with all our materials, it will be available on our website very shortly. So all right, let me -- okay. I think that completes all the questions. I would like to thank you all for watching our results, sharing your questions. If you're watching this on YouTube, thanks again for spending your time with us. I hope you made to the end of it. I hope you still feel as excited as we are about our company, about our challenges, about our purpose, above anything else. And if I may say a few words before ending this call and perhaps in the meantime, you might want to hit that like button. Tell YouTube, you like it and other people like yourself might also be interested on what we're doing. If you really like what we're doing, please go and share this video with perhaps the people who are going to buy up Super Greensand too over Christmas and Thanksgiving, Canada Day. Thank you very much. But what I was going to say is I recently watched a presentation done by a very large Swiss bank, where they were telling their view for investment in the coming months. And it was so interesting to hear them say, because essentially 70% of what they said would entirely support what we're doing in Verde. I could mention several points, but 2 points I think are worth highlighting right now. One is what we're seeing in terms of the de-globalization. How each country will be looking to build moats to protect themselves, protect their supply chains to make themselves more resilient and to less dependent on global geopolitics and how many opportunities and how transformational this is going to be for several industries. And this completely, as you know, supports what we're doing from our business. It's crazy to think that 1 of the world's largest economies, Brazil, it's crazy to think that the world's largest food export of Brazil, it's crazy to think that the country where agriculture accounts for 1/3 of the GDP, which accounts for about 1/4 of all direct and indirect jobs, which even accounts for a significant component of fuel, which gets added to gasoline or to diesel or even like cars run only on ethanol in Brazil. All of that relies on 1 commodity, on 1 commodity being potash. But not only 1 commodity in potash, a commodity, which is imported in almost its entirety at the moment. More than 95% of all potash consumed by Brazil comes from imports. And imports from 2 countries, quite, very nice, kind, gentle, friendly 1, of course, Canada, but 1, a little bit more unpredictable called Russia and Belarus. So nowadays, not only the Brazilian economy, but also global food prices, they are entirely dependent upon what Vladimir Putin wants to do. If he wanted to double, triple, of course, use food as a weapon. If he wanted to do that tomorrow, he controls the way to do that. He controls potash supply. If he says, as of 1st of January, the great Russia, the great Belarus, Lukashenko, his pal, will no longer be exporting potash to the world. You better run and stock on food, because things are going to get very, very ugly. So you may despise Putin, you may not agree with Lukashenko, grounding planes, crossing over Belarus, but you should be very thankful to them. Every time you go to the supermarket and you see food prices where they are. You should thank them for being kind to humanity and keep food in their price. So we are lucky that it's down to people balanced like the 2 of them that we can keep humanity in a world as safe as it is. So there is the globalization. Of course, this big Swiss bank didn't talk about specifically this thesis, but the underlying aspect of the conversation was what we discussed here. The second point which was discussed, of course, very timely as a major investment trend is the race to net zero, is what -- how every industry is going to have to try to find different ways to cut its carbon footprint and how countries and business will have to pay for that. When you do that, when you're looking into it, it's again a little bit hard to understand how we are still looking at the possibility in the foreseeable future to be feeding plant with potash from conventional potassium salt. As you know, when you buy a conventional potash, be it potassium chloride, potassium sulfate, polyhalite, langbeinite, whatever the source, the salt source of potash is you or feeding crops with potash, but you're also bringing in what one of our customers like to say, it's poison. So it tells me and say, you know, Cris, your -- every time I used to use potassium chloride, I would have nightmares, because I knew what was both giving me the food but also giving the poison together with it, which was the chloride, which was that salinity. So I speak much, much better nowadays being able just to supply K Forte. So the problem, of course, will be salinity. The problem, of course, a bit chloride, soils in a net to -- in a race to net zero is because the impact soil micro organisms. Soil microorganism which were known for playing a crucial role on capturing carbon to the soil. The awareness on those mechanisms is something new. It's something new to a lot of people. But you start seeing some very important players on a global basis, talking more and more about that. One of those players is the United Nations Food Agency Organization that has chosen on Soil Day, the 5th of December, put this date in a calendar, the 5th of December Soil Day by the Food Agency Organization, it's going to be all about the impact salinity has to soils on a global basis and how we should be fighting that. So this is, again, something very close to our heart, something we've been working very hard in creating awareness, and we're very, very, very humbly proud how we've seen hundreds of customers joining us one more time this year in replacing conventional reported potash with our K Forte. Thank you very much. I'm pretty sure you're going to hear from us in press releases before Christmas and the New Year. There's a few things that we have on the go. So that will be on the press release. We're always happy to be answering questions in the meantime. If you feel like we can help you in any sort of way. But those of you who we don't get to speak again until next year, I wish you all and to your family a very happy Christmas and a fantastic, fantastic 2024 (sic) [ 2022 ]. For all of us, it is still day 1 at Verde. Stay safe. Thank you very much. Bye-bye.