Verde AgriTech Limited (NPK) Earnings Call Transcript & Summary

My name is Cristiano Veloso. I'm the Founder and CEO of the Verde AgriTech. It is with great pleasure that I start another one of our results call, and I look forward to addressing as many questions as possible. I look forward to interacting with all of you participating here live on this call. If you're watching our video on YouTube, thanks very much for your interest. If you're a shareholder already or if you like what you see, one way for you to help us is by clicking the Like button and also sharing this video. When you do that, you will help Google to show -- to present our video to other people who might have a similar interest, increasing awareness about Verde AgriTech and what we're doing. If you're watching it live, please also go back to our YouTube channel and click Like, share the video so we can together increase awareness of Verde AgriTech because as you know, we unfortunately don't have any independent research coverage because we are not raising any money. So it's thanks to you, thanks for your help that we can help other like-minded people to become aware about what we are doing at Verde AgriTech. Felipe, who will be joining us, our Chief Financial Officer, our partner, shareholder in the company, a large shareholder of the company. Felipe, if you could please share your screen with the presentation, I will go over the initial slides. Then I will hand over the presentation to Felipe, who will be -- if you can go over to the first slide, you can share -- go for full-screen mode, Felipe. And then after Felipe goes over the numbers, I will be addressing more questions as we received several questions for Q&A. I'm sure some other questions will also come up as we progress the presentation. And I've also prepared a few interesting updates towards the end of the presentation, which I hope you will like as well. So next slide, Felipe. As we begin, I'd like to remind you that presentation contains some forward-looking statements. Actual results might differ. The disclaimer is very obvious. If you risk averse on bio stock, don't rely on anything of this presentation. And then we have our usual disclaimers in terms of what we like to call like-minded people who have been so important for the growth of Verde. Next slide, please, Felipe. If you haven't done so and you're based in the U.S., Canada, but also other countries, you can go on Amazon and you can try our product yourself. So it's Super Greensand. You can use one of the coupons, discount codes on this slide. Buy it as a gift, you can try it yourself. So by all means, go and try Super Greensand and then let us know what one experience was like. Next slide, please, Felipe.

Sorry, Cristiano, you're on mute.

Next slide.

Sorry. Okay.

So Felipe, so the floor is yours and then later on, I'll come back to the presentation and answer those questions. Thanks very much.

Thank you, Cristiano. Hello, everyone. Good evening or good morning. I'm Felipe, CFO of the company, as Cristiano has introduced. So I will start the presentation now for our Q1 results and expectations for this year. Beginning of the summary, Verde increased its 2022 guidance that was previously published on January 10, and the revised guidance shows now 1 million tonnes of products sold with a net revenue per share of $0.87. The 2023 guidance provides of sales of 2 million tonnes. The company also launched Bio Revolution, its newest technology that enables the incorporation of microorganisms to mineral fertilizers. K Forte will be the first fertilizer in the world to use Bio Revolution technology. Verde's Plant 1 is already equipped with a facility for deploying Bio Revolution. At Plant 2, large Bio Revolution facility will be built with operations expected by the end of 2022. Third point, Verde concluded the updated pre-feasibility study, which supplants the PFS completed in 2017, calculating the financial economic potential for the Brazilian agricultural market for potash, sulfur and micronutrients such as zinc, boron, copper and manganese. I will have more details in the next slides. So a bit on PFS study that was positioned May 16. We have 3 types of products. The first one -- first scenario is product potash, K20. The second one is potash and sulfur, K2+S. And then the product as a source of potash, sulfur, zinc, boron, cooper and magneses. These are the 3 key scenarios. And each scenario has 1 -- has 3 alternatives on volume from 10 million metric tons per year to 5 million metric tons per year. So the market share represents for 13.51% to 54.97% of the Brazilian potash market demand projected for 2030. In the next chart, we can see a bit on summary financial economic analysis at each production scenario. So beginning from the 10 million tonnes per year, you can see that we have a CapEx of $52.77 million with a net present value of $2.9 billion and the internal return rate of 427%. The second scenario, the CapEx increased from $129 million with a net present value of $5.8 billion and an internal return rate of 387%. In the third scenario, the CapEx increased to $553 million, the NPV for $13.54 billion and then the return for 227%. So more details we have on the press release issued last week and in the coming days, also a bit more details will be posted as well. Going to Q1 2022 highlights. First, about cash. The company remains its ability to generate significant free cash flow in the long term. The cash utilized from investing activities increased by 913% in Q1 2022 to $3.38 million compared to $334,000 last year. Trade and other receivables increased by 517% in Q1 2022 to $17.6 million compared to $2.9 million in Q1 2021. And total loans for CapEx and working capital in March 31 was $9.02 million. On profitability, revenue increased by 1,206% in Q1 2022 to $11.3 million compared to $831,000 in Q1 2021. In Brazil real also shows a significant increase of 1,196% in Q1 2022 to BRL 46 million compared to BRL 3.6 last year. On sales volume, also had a increase of 572% (sic) [ 574% ] in Q1 2022 to 111,000 tonnes compared to 16,600 tonnes last year. On gross margin side, an increase from 41% last year to 77% this year. On EBITDA before noncash events, an increase to $3.68 million compared to a loss that we had last year of close to $1 million. Net profit base increased to $3 million this year compared to a net loss of $1.8 million in Q1 2021. On operations, Verde operates Plant 1 with a capacity of 600,000 tonnes per year, and Plant 2 is on track for commissioning in Q3 2022 with an additional capacity of 2.4 million tonnes per year. Plant 3 is expected to add another 10 million tonnes with construction planned for 2023, raising the company's overall production capacity to 13 million tonnes per year. Plant 3 is expected to be financed entirely from cash flow and not impacting the returns of gains to shareholders via dividend, buyback or a combination of both. On financial statements, you can see a chart that shows from revenue to net profit and loss on the left side, Q1 2022 and the right side, Q1 2021, and then the compares between both years. Revenue, as I said, for increased to $11.3 million. The gross margin delivered 77%. EBITDA, $3.7 million this year against net loss last year. It also is important to highlight at the end of the chart, the net profit for the period was $3 million against a net loss of $1.8 million last year. So it's the first time that Q1 demonstrates a positive net profit for the company.

Felipe?

Sorry, yes?

Just one second. Just to let you guys know that I will be playing a video showing the progress on Plant 2 construction. So at the end, there will be a short video and everyone is going to expect, the plant is very focused now on getting things moving along. So we didn't want to disturb them for this quarter presentation, but we have prepared a short video to show the progress. So stay tuned. At the end, we're going to be playing it.

Yes, let's go over there so that would be nice. On operational summary, tonnes sold, 112,000 tonnes. Revenue per tonne of 101 compared to $50 per tonne last year. In the production side comes another reduction from $30 per tonne to $24 in Q1 2022. And gross margin increased from 41% to 77% in Q1 2022. In the second table, it's a point that we have a lot of questions from investors and shareholders. You can see here, P&L to gross margins demonstrating how it will be without freight impact. So the revenue per tonne would decrease from 112 to 75 in Q1 2022. And then the gross profit for -- from 77 to 51. In the end of the day, the gross margin, excluding freight impact, is 68% in Q1 2022, and it would be 19% in 2021. Just to remind that the freight cost is also charged on revenue, but it is also compensated as expense on SG&A. On the key metrics quarterly, you can see here year-on-year growth from 2018 up to 2022 quarter-by-quarter. So on the left side, you can see sales in each quarter, how the company has been growing constantly quarter-by-quarter. So from '19 -- from 2019, actually, we're not operating yet. We started in Q3 2018. But comparing '19 against 2022, we came up from almost just 1,000 tonnes to 111,000 tonnes. So it's 100x growth. On the right side, you can see the revenue that demonstrates an increase compared to the prior years. So that's the expectation we have -- we still have to -- for the coming quarters. So yearly metrics on sales tonnes now at full year. Sales, you can see from 2018, 29,000 tonnes and for 2022, expectation of 1 million tonnes growing over 100% than compared to prior year, that was 400,000 tonnes in 2021. On the revenue, the right side of the chart also showing a total revenue of $109 million compared to $27 million last year. So it's more than 3x growth projected for the year. On next page, sales, general and administrative expenses. You can see, as expected, the total sales expenses increased from $531 to $3.9 million. Most of this increase is explained by the product delivery freight expenses. We have an increase in volume that I can show in the -- I will show in the next chart. But also the oil cost that is well-known had a significant increase year-on-year based in Brazil and all over the world. On general expenses, we also had an increase from $697,000 to $1 million, plus 50% growth. This is mainly explained here by IT software expenses, which is a variable cost depending on the number of the employees in number of licenses that we have for our ERP and also the other [indiscernible]. In the other highlights, just interesting update on the left side on FOB against CIF. FOB remained its -- when the customer pick up the product in our factory in CIF, we deliver the product to the front gate to the customer. So you can see that FOB against CIF, a huge increase in volume and also in mix. So just staying on mix, it increased from 34% of the total sales in Q1 last year to 60% in Q1 2022. So more than half of the sales currently have been made by CIF method, which we would prefer, although it increased quite the risk. However, it makes easier for us and make it better in order to organize the daily booking in the factory and the [ expenditure ] of products and other impacts that you might have on FOB. And on the right side of general expenses, we can see here that the key explanation for this point is that sales and market expenses increased due to the team that increased headcount from 43 people last year to 62 this year 2022 to support the company growth and our client needs. This chart shows in detail our summary of loans. So we had a few new loans this year in the Santander Bank and also Bank of Brazil. Most of it for 100% of long-term loans. And I use it to -- most of it used to investment in Plant 2 and also to support working capital needs. Since sometimes we have sales on over 3 to 4 months and an average day was made on 45 days. So yes, we grow. We need more cash to support the company's needs cash flow. In the end, we have $9 million balance of total loans in Q1 2022. Just a quick highlight in the group current loan rate is around 12%, which we assume is quite good, considering that currently, the government bond in Brazil pays close to 12%, 12.5%. That's a good number. And for sure, if we need additional loans right now, the costs will be higher since the inflationary scenario that's taking all over the world. On 2022 guidance, you can see here by quarter, and this was already disclosed in the last press release related to the guidance. You can see that the total full year volume increased from 700,000 tonnes to 1 million tonnes and then EPS from $0.50 per share to $0.87 per share. So that's the latest scenario we have. And below then, we have [ EPS status ] taking to get into this number. We are pretty confident that we're going to achieve this guidance sent. And for 2023 guidance, we can see here that we came from 1.4 million tonnes expected in January for this year to 2 million tonnes revised beginning of May. A bit on the economic scenario, you can see Brazil real against U.S. dollar is the same trend that you can see for Canadian dollar. Currently, we are CAD 3.82 per real. So we do -- we expect that the projection for the government and the financial institutions that this might be close to CAD 4 this in real at the end of the year. So that's the situation, but it's a bit hard to know exactly, of course, due to the macroeconomic factors. On the potassium chloride price, this is -- we show just for Minas Gerais site where our factory and mine is located in Brazil, we can see from the lowest in the left side to the highest price that we had last year against this year. So you can see an increase from the lowest price that we had in Q1 2021 from $215 per tonne to $800 per tonne of KCl delivered at [ some stores ]. So Cristian, this is it. I would like to hand back to you and -- get back to you and then hear also for Q&A session. Thank you.

Thank you, Felipe. If you could please stop sharing your screen, we will now start the second part of our presentation. Before we begin, and we've already received several questions here, and I understand Isabella is equally going to be sharing here some of the questions we received over the last few weeks. But before we start answering questions, there is a video we have in our deck. It's a trailer to a documentary. I'm sure several of you have already watched the documentary. But those of you who haven't watched it yet, I will play a 2 minutes trailer, which is something I've been doing every time I make this presentation to institutional investors and analysts. And I think it really helps to illustrate what we're doing, why we're doing, why we're growing so fast and why we so strongly believe this is the way forward to agriculture. Felipe, can you hear the audio as well?

Yes. I was hearing it, yes.

Okay. [Presentation]

So yes, I hope many of you will have watched it. If you haven't seen it yet, please, please do, please recommend. And if you enjoyed what you're hearing so far, do not hesitate to click Like or share the video, that really helps us increasing the number of people who will ultimately be watching our presentation. Before starting some of the questions, there's something I would like to share with you, which we're very excited about. We have a date for the opening, for the official opening for the ceremony that will open our Plant 3 facility. We're working very hard to make it happen, but we're confident it will happen, which is the third week of August. And we would like to fly one of you down to Brazil to visit our facilities and to join us for this opening ceremony. So of course, the company is going to be covering the costs, and we will be sharing on the description of the video how you can participate by entering your name, and we're going to pick someone by chance to come and participate on a very special day of our growth.

Let's answer a few questions, and then I'll also answer a few questions. I've also prepared this video with the Plant 2, the progress, a bit of a transformation. I think our guys or people or girls at marketing team, who did it overnight, something we came up with the idea at the end of the day today, and they worked hard overnight, putting together this simple basic video showing the progress. So I hope you all like it. So moving to answer the first question of the day. Are you -- so the first question, please discuss accounts receivable. Well, we give credit. So we give credit to farmers. We give credit up to 12 months for repayment. We charge market interest rates for whenever we're financing our customers. Our percentage of payments we didn't manage to collect is less than 0.1%. So our credit team is very strict in terms of to whom credit is given. The average time that we get paid by our customers, Felipe, please correct me if I'm wrong, but I reckon it's about 60 days nowadays?

Yes. It depends on the [indiscernible] that they're analyzing, but you can say that's from 48 to 60 days, yes.

48 and 60 days. Second question, any problems with farmers paying current high price of fertilizers? No, there aren't any problems. There are some cases of farmers postponing to buy fertilizers, waiting, hoping market will come down or prices will come down. But most of the professional farmers, they look at fertilizer prices, but they also look at the sales price of the commodities they grow, and they analyze the exchange ratio. And if the economics work, they won't hold back. So there isn't -- we're not seeing any problems. A bit later on, I'm also going to be talking a little bit about this market, what's happening with fertilizer market, which is very different to what I personally thought was happening until a few days ago. Next question. When does Verde expect to have an excess of 7,000 clients, what's the average consumption per client? I don't know when we're going to have more than 7,000 and the average consumption, it will vary. Felipe wants to...

Yes. We can see from -- we have a chart that shows a bit on it, but we can say that last year, we had, just a second, around 1,350 clients. If we sold 400,000 tonnes last year, the average was close to [ 300 ] tonnes.

Okay. Thank you. Next question. You have mentioned a U.S. listing in your presentations. Where are you in the process? When can we expect to see Verde trade on the New York Stock Exchange? That was one of the updates I had written down here to give. So let's give it now. We're working already on this listing and the target date is Q3. So Q3 is the target date. I won't disclose which one of the top 2 stock exchanges the listing will take place because we're talking to both exchange. They did make their own presentation, trying to justify why they would be the best fit for Verde. We're also talking to investors and trying to come up with the decision whether NASDAQ or New York Stock Exchange would be the best place for Verde. If anyone has any view on that topic, feel very strong about it, please do not hesitate to reach out to us, and we're always very interested to hear what our co-owners have to share with us. Another question. There are a few here. With regard to the increase of guidance this year to 1 million tonnes, can you explain in which quarters the incremental tonnage is to be sold? Q3 and Q4, essentially. Second question. Will you be manufacturing throughout the year? Yes, including Q4. Any color on recurring sales through farmers? Any pattern you've seen that change now from, say, 1 year ago, amounts coming without needing a [ quote]? Yes, there is a strong demand. We see now farmers coming in and buying the product for the full farm on the back of their neighbor's success with the project, on the back of consultant's recommendation. So this has definitely changed from when we first began selling the product back in 2017. Return of capital, how much dividend buyback? We don't know yet. All we know at this point is that we are aiming to return $10 million to shareholders this year and keep $30 million in the bank, including receivables as well. If it's going to be a dividend, buyback or a combination of both, we are still trying to figure it out. And lots of you have reached out with several different types of feedback, we really appreciate it. How is the plant development progressing? So on the back of that question, let's play the 2 minutes video our team very kindly prepared for this call. So share my screen again and play the 2 minutes video on the client. [Presentation]

So we've already received most of the equipment. It should be assembled. What the video also doesn't show is all the work going on in infrastructure, the road, the bridge, there's a lot of working going on. I'm very proud of all the effort our teams is putting in and all the results and how they've been able to very fast move on and progress with plant construction and how confident we are with this commissioning and the opening of the factory in August. Listing. I think one point I should have mentioned in terms of our listing is that it will be a dual listing. So whenever -- we're not looking to abandon TSX. It's -- we would be looking at a dual listing to make it easier for North American and some international investors as well to participate in our growth story. So there are 2 more things I prepared, but let's send some more questions before I get to those on the 2 updates. The question is, are you selling now also for Q1 2023? The answer is, yes. We are already selling product for 2024. We already have a good amount sold for next year. With regards to Q2, can we assume the majority of the quantity delivered was sold in -- on Q1? If not, how much was sold Q1, Q4? That's difficult to answer. I would say it was -- Felipe, do you want to come in? My gut feeling would be to say that our product, which is being delivered during Q2, I would say, about 70% of it was presold last year in Q1. What would be your view?

Yes. Yes, it's a good number. But remind you that's not just Q1, but after Q3 last year, it's same amount that was sold to deliver in Q3 this year.

Yes. Just -- so we already sold product during this year and previous year for Q3 delivery. I guess the big difference is that on Q3 now, we're expecting a significant increased production from Plant 2. So there would be more capacity -- far more capacity in terms of the ratio between what will get sold in Q2 for delivery in Q3 versus what has been presold. Next question. What is the impact on cost reduction with regards to the redomiciliation to Singapore? It's hard to answer that question. Overall -- costs overall in Singapore are less than in U.K. from an advisory point of view, reminding that the reason we're looking at redomiciliation is for commercial reasons in terms of expanding markets in Asia and Singapore being a very important hub for that new phase for the company. Can you give an estimate of the average selling price per tonne for the rest of the year? It's very difficult to do that because we don't know exactly to which regions of Brazil we're going to be selling. And as you know, there is a big change in terms of our net sales price, in terms of our realized price depending on whether we sell all the way up to the north of Brazil or down to where the mine is located. The guidance we gave has a blended number, which considers some of the product has already been delivered, some of the product has already been sold. But one thing you can't do with that number from the guidance is just to multiply it by 6 to try to get to what the reference price is for KCl. The reason you can't multiply that by 6 is because, as you know, we sell FOB and we sell -- FOB and CIF. So depending on the incoterm, depending on whether we pay ourselves for transportation costs, there will be an impact on that realized price. There will also be an impact there depending on whether we're selling direct or we're selling via distributors. So what I can tell you is that we have indeed been tracking potash prices. So if someone approaches us right now and asks to buy the project, it -- the price given is potash price divided by 6 on a delivered basis. The next question. You're planning to start construction of 10 million tonnes per year next year, license and grants coming by then from the government. That's a very important question. And for us, in order to build the new facility next year, we should really be having all of those license granted by the second quarter of next year, the latest. Unless we decide to scale things a bit different, but an ideal scenario would be Q2. Next question. Are you close to having any coverage of Verde by any research analysts? I don't know. What I can share with you is that I won't say all of them, but absolutely most of the research analysts I speak to, they are very keen to initiate research on the company. They've been following our progress for a long time. They understand all the drivers or the risks and they are very motivated to initiate research. As you also know, banks need to justify the research of a company. And usually, the way banks justify research is by having a company raise money and the conversations would usually go -- analysts very excited. I wanted to cover. Yes, it's good. We're doing -- oh, great potential. They see the possibility of making their reputation as well by writing and backing us and everything else. Their next call with the banker, hey, would you guys need to raise money? No. Okay. Thank you. We're going to talk again when your circumstance change. Unfortunately, that is -- for those of you who don't know yet how it works, unfortunately, that is the way of this trade. Next question. Does this market penetration vary by major crop categories? Yes. Our main crop is soybeans and corn, which are also the main crops grown in Brazil that require the most potash collectively on the crop, which we sell lots of coffee, which also needs a lot of potash. And then our sales distribution will kind of follow the country's -- the overall crop demand. There's no -- I wouldn't say there's no strong deviation from what it is in terms of a general consumption. Next question. Do farmers generally have the proper equipment for applying K Forte, i.e., is it similar to applying lime? That's a very good question. The answer is, yes. Most farmers in Brazil have the equipment you need to apply K Forte because Brazilian soils have very low pH and farmers have to apply annually in Brazil about 35 million tonnes of lime, 35 million tonnes of lime. They do that in order to raise the pH to make more phosphate available, allow more uptake of calcium by crops. And to apply lime, they apply powdered lime, which is the same form they buy and apply our product. Excellent question here. What do you think on long-term average prices you can achieve per tonne? The short answer, I don't know. The market study looked at $350 Brazil CFI. And they came up with that number, looking at incentive for new production. They looked at it from a exchange ratio. So we can probably be using $350 as a long-term average price of potash, which is what the independent analysts looked at. But I've heard prices from long term far greater than that. Next question. Is there any updates on the resales for existing customers, farmers, synergies and some presentation? We make this update once per year, but it's been very encouraging, no doubt. There are quite a few questions here next from the same person. How is the mining license being acquired in Brazil and in the specific states you operate in? We're not acquiring any mining license. We applied for it as an exploration title all the way back in 2008. We did need to buy it from someone, and the state we operate is Minas Gerais. This have an expiration date. It comes with some expiration date, but essentially, it's more like a renewal date. In Brazil, there hasn't been a single case and the legislation doesn't create this uncertainty, whether you would run the risk of losing a mining concession. Once you get a mining concession, as long as you're mining, as long as you're developing it, you will be doing it forever the way several international companies have been doing in Brazil with no perspective of changing. We don't renew it. From time to time, yes. So he's a relevant government official that provides it. This is with the Minister of Mines and Energy, under which circumstance, it can be revoked or discontinued. It's very complicated. For that to happen, you would need to completely abandon mining for several years without any reason. And even when that happens, I know several cases that companies still hang on to it and have -- hanging on to it forever. How safe do you consider your mining license is? Very, very, very, very safe. I wouldn't worry about that one. If anyone was worried about that one, there's very large international companies operating in Brazil, which would be huge candidates for having their stock shortage. Do you price your products with correlations to potassium chloride? Yes. How the math works, we divide it by 6. So we work out how much potash costs delivered to a farm. And we divide that price by 6, and that is the price of our product delivered to the farm. We will divide the price by 6 because our product has 6x less potash. It's encouraging. It's good. I feel happy to see questions of clearly new people to the story, new investors, new people interested. So it's very encouraging. Thank you for that. Are Verde's product cheaper, more expensive than or equally priced compared to traditional potash products? It's equally priced would be the answer. [ If we're going to arrange ] potash environment to advantage compared to potassium chloride, how aware of the customers of this advantage? What impact does this awareness have on the customer's decision to choose? Customers are aware of the benefits from an environmental point of view. However, farmers don't make decisions thinking about the environment. They make decisions thinking about the preservation of their business, which is a risky activity. Agriculture is a risky activity and they're always protecting and trying to minimize risks. So we won't see a farmer choosing a product because it's better for the environment. Where there will be an alignment of views is when something is good for the environment but at the same time, it's good for the soils, it's good for the yield, it's good for the resilience of crops, it's good to mitigate past diseases. So it's good to make all the nutrients available. So when there is another advantage rather than purely an environmental advantage, they will be open to it.

Let me stop the questions for a little bit by sharing something else with you. So share my screen again. [ It's on the one video ]. I'm sorry. So the document or the file I wanted to share with you, it's this one, okay? So this is a report which was published 7 days ago by a leading Brazilian investment bank, and its report on the importation of fertilizers. Before I read this report, I was under the impression that farmers, distributors in Brazil were struggling to get fertilizers. Initially, we were thinking and many people are still thinking on that basis that there would be a problem bringing potash from Russia. There have been a few announcements, including a declaration by the Secretary of Commerce, Mr. Antony Blinken, where he said that some have tried to blame the sanctions imposed on Russia and many other countries for worsening the crisis. He's talking about the fertilize -- this is false. When the United States imposed sanctions on Russia in order to end the war as quickly as possible, we deliberately and carefully created exceptions for agricultural goods and fertilizers. We're working every day to get countries any information or assistance they need to ensure that sanctions are not preventing food or fertilizer from leaving Russia. So there is no shortage of potash coming from Russia. It's abundant. There's plenty there. And the importers were even a bit more wary about that, the -- or making the transactions via Citibank, big U.S. American bank, just to make sure there's no risk of them breaching any sort of rules. So our growth up to this point and beyond, the increase in fertilizer prices is not as connected to the allegedly lack of Russian product coming into the market as was advertised, as was spoken. This isn't happening. There's plenty there. To support what I'm saying, there's this presentation here, I'm also sharing with you where it covers all fertilizers. It's in Portuguese. But when we look at potash specifically, we can see the huge amount of potash which is being imported and distributed in Brazil. So in blue, this is 2020. Gray, this is 2021. In orange, it's 2022. This is the volume in tonnage. So in January, you can see it was just a little bit less and you can see the growth in term -- from 2020. In February, it was literally the same. In March, it was even more than in 2020. And in April, you can see how -- it was double what had been the historical level of potash. What is also interesting to look at is the source of potash. So there has also been some -- there have been sanctions against Belarus, which used to export via Lithuania. And some people had mentioned that Russia wasn't -- Belarus wasn't able to move any product at the moment. And for that reason, prices have gone up a lot. We can see from this chart that this isn't quite the case. So in April -- up to April 2021, up to April 2022, Belarus has actually grown a little bit. Russia went down about 5% in comparison to last year. Canada increased a little bit. Other countries increased. Germany decreased. So you can see the situation didn't change dramatically. In April, the change wasn't also that significant. Yes, you can argue, Belarus cut down by 50%, but it's still not crazy in comparison to people saying it would be like 0% coming from Belarus. You can see Canada only increased 6%. Russia, you can see Russia has stayed pretty much stable as well. So just to stress that if anyone thinks potash prices are up because -- exclusively of the problems in Lithuania because exclusively of the potential sanctions against Russia, I think those numbers here show that this isn't necessarily the case. If one thinks that people were buying more of our product and our salespeople are having like an easier time this year because there's a shortage of potash and that's why they are changed, again, this isn't the case. You can see how much stock there is in Brazil at the moment of provision of potash and somehow -- I might be a bit biased why people are still growing and preferring to buy our product, you can see there is plenty of demand. So there's no doubt this is very bullish to our growth scenario, to our potential growth scenario and to the independence we have in terms of growth through the geopolitical events going on. So I guess the question, which probably someone is typing in right now, is if it isn't because of Russia and Belarus, how come potash prices went up as much as they did? And potash prices are correlated with food prices. The stablished -- let's call it the -- I can't say oligopoly that controls the price, but established suppliers, historically, they've always looked at food prices, they've always looked at the exchange ratio, i.e., how many bags of soybeans or corn someone needs to swap for a ton of fertilizer. And then priced fertilizers, so farmers could still turn a profit, so farmers could still be encouraged to farm but that way that they could capture a greater margin with food prices going to -- anyone looking at what we're doing in terms of drivers should be looking very carefully on what his or her view is on food prices. Do we see food prices going up? And then when we talk about food prices, there's a lot of conversation about wheat. Wheat is important. But when it comes to Brazil, it's irrelevant. Brazil doesn't worry literally of any wheat, this exchange ratio of fertilizers per unit of growing crops. What's relevant in Brazil is soybeans, corn, coffee, sugarcane, cotton, those are the key commodities one would need to look at and not wheat. And all of those commodities at the moment, they're presenting a very strong ratio. And if you believe there is a case that food prices will remain elevated or can go higher or if they come down, won't come down too much, be it because of inflation and any other reasons, this is -- when we look at this chart, this seems to be much more relevant than the conflict itself. So I was very light in treatment. I saw that and spent some time talking to some people about that and it was a change I wanted to share with you as part of this presentation. So going back now to the questions. And I still have an interesting update. Do you have significant price volume visibility out into Q4 or into 2023? Well, yes, we have the visibility of agreed sales, of where the market seems to heading towards. Can forward sales and pricing be disclosed to shareholders in advance? Maybe. We have never done that as an element of additional disclosure. So we will look into it. Given the fact, though, they have sold out some number of months in advance, are you taking that as a signal that prior pricing was conservative? I.e., is it allowing you to focus on higher-margin sales channels? It's always comforting when you look at your deliveries, your schedule sales. It's always comforting to see a certain number of tonnage already taken, already committed for the future. And yes, whenever you're seeing that, it allows you to be far more conservative in terms of how you come up with your commercial strategy. Can you please help us understand the difference between the current market price and the realized price for Q1? Yes. So the price we realized for Q1 was pretty much contracted last -- throughout last year. Farmers will be placing in orders and for delivery in Q1. Because we were sold out and Q1 is a more challenging -- usually, a more challenging month in terms of production given the weather, the bulk of the deliveries that took place in Q1 have already been presold throughout the previous year. When you say you will be celebrating the opening of Plant 2 in the third week of August, is that Phase 1 or both phases? If it is just Phase 1, when will Phase 2 be in full production? It will be Phase 1 which will be adding 1.2 million tonnes. However, Phase 2 would take much longer, should be all set up as well. So stay tuned. The previous guidance we gave was for Q4. For Phase 2, which is the additional 1.2 million tonnes, given a total of 2.4 million tonnes, so it might be a bit earlier than the Q4 we had given a guidance for. Fingers crossed. Next question. Educating the customer. I guess that farmers are required to change some of their practices and habits in order to apply Verde's product. How hard is the change for them? Does it involved new equipment in each purchase? How do you help them in this transition? All very good questions. How -- so the first -- how hard is for the farmer to change? He will have equipment so that already answers the second question. So he won't need to buy a new equipment. The how hard question, I think the worst element for the farmer is that he will to have apply 6 times more than he was previously applying. The advantage, though, is that he'll be able to do it all at once instead of doing it up to 4 times like what you have to do with a coffee plantation like the one you see in the background when farmers have to go and reapply throughout the calendar year 4 times potash. With our product, they can do it only once. I think I prepared something along those lines a bit later on in the presentation. So I think we'll add a little bit more light to where you're trying to get to. Technical question here. Can Super Greensand be using ferti gation -- I mean fertilization -- do a recent irrigation such as ferti-irrigation. We have a version of the product, which is the micronized product, which is smaller than 200 mesh, which can be used for ferti-irrigation. Next question -- for people who don't -- in the contest to attend the opening of Plant 2, can we pay our one -- our own way and attend? Please get in touch. We're going to -- we can look into it. But given everything which is going on, I don't know how many people we're going to be able to bring in to the plant. I hope the plant will be operational throughout the commissioning of it, throughout the ceremony. I hope we won't need to stop delivering product, everything else, so our farmers don't get late product. So we're going to need to look into potential disruption of our deliveries versus bringing more people to look into it. Next question. I was wondering if you're selling potash to market price? Or do you have long-term fixed price delivery contracts? We offer product at market price, but we also have customers who place orders on pre-agreed prices. Why us? Because I can see the revenue in Q1 and the number of sold tonnes and then every tonne is which is under market price. Well, the first thing which needs to be looked at when we look at the $101 is that this is a blended product between FOB and CIF sales. So you can't just literally multiply that by 6 because of this transportation cost element. But regardless of what I just said, yes, most of it was presold in 2021 when potash prices were far lower than what we saw during Q1. Based on our current guidance, Verde will have reversed its accumulated loss position by year-end 2022. This will remove the restructures imposed by the fact that the United Kingdom bans companies from making any type of payment to shareholders while there are no distributor reserves available in the parent company. So this is no longer a reason to support the move to Singapore. I -- yes, if that happens to be the case that all of that money is indeed transferred from the Brazilian subsidiary up to the parent company, that would be one way to look into it. That's why the main driver for the change of domicile would be a commercial reason in terms of exploring the Asian market. Some people have brought to our attention that in addition to that commercial reason, there is a very beneficial tax treaty between Brazil and Singapore which isn't the case between Brazil and the United Kingdom, which doesn't have a tax treaty. Some people have brought to us saying that this tax treaty with Singapore seems to be the best among the other jurisdictions one company could be incorporated. However, this isn't the reason we are looking into doing it. The reason we're really looking to change domiciliation is from a commercial point of view. Singapore is a phenomenal jurisdiction. It's the agricultural commodities hub, very safe. And I think it's going to be a very important next step for the company to be redomiciling it from the U.K. into Singapore in terms of new markets, new possibilities. Should have been -- this next question, have been this ratio percentage of growth from existing customers? Or is it only counted year-on-year basis? How has it been in Q1? We don't disclose that by quarter, but next year, we hope to be presenting that again. The current spot price of potash, significant. You should have made a staggering some of the lines, sell it abroad, and it will pay itself for the shipping, I'm sure. I just hope the farmers will slide to increase the price of their products in order to buy your goods at higher price, especially if they're sending it abroad. Okay. Next question. What are your thoughts about suggestions that the company should create and pay a royalty to shareholders on production? It's certainly one of the possibilities. Next question. Why is there such a big difference between Verde pricing intended for Brazil market against price of potash in Brazil? There isn't a difference. If you approach us today to buy our product, I will be pointing you potash price divided by 6. Next question. Did the special committee said the possibility of distributing the existing net -- 3% net smelter return repurchased by the company in 2018 to current shareholders on a pro rata basis and noncash capital distribution? It's certainly a very interesting idea. We can't say it's an existing 3% net smelter royalty because that's something that was dealt with a long time ago and is -- no longer exists. But the idea of creating some sort of net smelter -- some sort of royalty and given that as a dividend to shareholders is something that this independent special committee is looking into as well. Can you please talk about the [ exercise ] selling this morning? Some of our directors have exercised all of their stock options and increased the shares they own in the company. In order to fund this acquisition of shares, they have sold a small number of shares to pay for the exercise price. In terms of the size of selling, I think you should all remember our directors or most of our directors have been with us for over a decade. During the time they instead of getting conventional fees in cash, they were issued with shares when the company had no available real capital to be making payments in cash and they've been very loyal supporters of the company for a very long time. Let's not forget, we have been doing this for 17 years. So it's not your new IPO or your company coming up from nowhere. And we've been on this for a very long time. What Verde -- and with a lot of sacrifices along the way. What would April and May potash prices in a Brazilian port? Around $1,100 per tonne. Next question. Assuming how Verde production for the next 10 years is required to supply the local Brazilian market, is the company seriously considering building a Far East export program that would require for the opening of a sales office in Singapore? It's an exciting market. We are -- have been constant demand from several countries in Asia. We have ongoing negotiation with some very large relevant countries. And it's something which -- considering the bulk of the population growth comes from Asia and especially, with the increase of food prices, there is a very strong increase and awareness in terms of understanding a little bit better the whole food supply, and fertilizer is a very important element of that. If there's no shortage of commodity, what drives price increase or quantity increase? Food prices. So it's food prices. There's no shortage of commodity in potash, right? So what drives potash price increase or quantity increase, it's food prices. How are you planning to address more institutional investors in the future? We -- as I mentioned, several banks approached us when you think about your traditional Canada banks. I'd say all of them, but most of them. Most of them run away when we said we want -- I need to raise money. There was no need. But there has been 3 banks that turned to me and said, don't worry, we're doing this because we believe our institutional investors need to hear the story. We believe our institutional investors -- even if there isn't a capital raise and even if we're not going to make money out of raising money for Verde AgriTech, we believe our institutional investors should hear about the story. So 3 -- I heard that from 3 banks, and I will name them because I think it's very honorable to do what they did, and this is aligned with what we at Verde try to do as well, which is support the interest of our customers always is a more important thing on what we're doing. And those banks were Raymond James, Eight Capital and Canaccord. So congratulations to Eight Capital, Raymond James and Canaccord. If you have any relationship with them, give them a thumbs up, and they having been bringing this story to the institutional investors. And I hope that will also incentivize other banks to be doing the same. We're very open to presentations or to talk to more institutional investors. We learn a lot as a company. And we also understand the responsibility a fund manager has managing third-party money and how important it is. It's part with the due diligence and it's part of the investment decisions to talk to the company, understand and be able to answer questions. So we're very open to that. Is there any focus expanding volumes of potash? Are you looking towards more on expanding down related products, for example, micronutrients, nitrogen? Yes. We've spoken a lot about potash here. But let's not forget, we have BAKS. Let's not forget, BAKS has been pretty much sold down since we launched it. Let's not forget BAKS is this blended product, which comes in with several other nutrients. We speak a lot about potash. You guys think a lot about potash, but let's not forget this is a technology company. We have a lot going on, including Bio Revolution, BAKS, [ 3S ] so Macro S Technology, 3D Alliance and others. So let me move on here to the chat option. But before I move on to the chat option, there's something else I've prepared for today's presentation. Will share my screen again. Okay. We've been doing what we're doing now since 2008. And over the years, several of our investors and analysts also went to talk to established place, established companies, the big companies in this space. And often, what would happen is that they would ask an executive, a senior executive from one of those companies what they thought about Verde, what they thought about what we're doing. Then they would hear it and then they would come back to me and say, hey, Chris, I spoke to so and so, CEO of this company and -- or VP of something, and he told me this -- or some big institution investor would say, oh, I spoke to this -- seen a guy from this other big company, and he told me that what you guys are doing isn't going to work because of that. So it's interesting that since we've begun in 2008, a few things have happened. Starting with the fact that the senior management of all of those companies has completely changed over those years. But also, the reasons given to why we wouldn't completely succeed in disrupting the market, the reasons given would change over the years. In all honestly, from the very beginning, people wouldn't even know who we were, what we're doing. But as the years progressed, people started having and sharing their own view. The first reason given by the industry, why we wouldn't succeed was that in the fertilizer business, a company needs a lot of money to make it work. And if you're a small player, you're never going to be able to make it. I personally heard that in 2009 because I spoke to the CEO of one of the largest companies in an investor conference hosted by Credit Suisse. And I was there just as an attendee. I put my name down and sat down with all the institutional investors, spoke with this guy, and that was the feedback. I remember this gentleman giving me, no, no, you're going to need a lot of money, a lot of money. And not just this feedback, but every single feedback we heard from the industry over the years has been extremely important for us to adjust our strategy, to tweak our products, to envisage technologies. So we never looked at it from a confrontational point of view or from a fixed mindset approach. We always looked at it respecting a lot their experienced, respecting a lot their career, respecting a lot where they were coming from and learning from that. So the first one was, well, one, you're going to need a lot of money. And how we addressed that was by really looking to do something scalable, was really by looking at doing something which we could come up with technologies that could minimize the upfront capital requirement. So -- and that's something -- even though we're a different type of size now, it's something still -- we still consider very important, always trying to do what Professor [ Barry Frey ] from University of Cambridge hae taught us, which is to always look for simple solutions for complex problems. The second reason, which we then started hearing from the industry was that our product was powdered. And because it was a powder, we were going to struggle convincing farmers to use a power because farmers don't like it. They preferred granulated product. So we heard that all the way back in 2014, '15. And one element of it, which we already addressed, is this is absolutely correct for pretty much every country in the world, but Brazil. Because in Brazil, farmers apply more limestone every year than they apply granulated fertilizer for that reason. They're not just only used to applying powdered product, but they also have all the equipment and all the know-how in terms of applying it. It doesn't mean they like it. It just means they can do it, they cope with it, they're used to doing it for over 30 years. And it isn't a major problem. However, there's no doubt there will be some farmers in some circumstances where people or farmers will prefer a granulated product. And that's why we have invested several years on looking at different granulation technologies all over the world. We've done hundreds of tests. And I'm very, very glad to share that we've come up with something in partnership with another company, which is phenomenal, which allows us to granulate our product with a minimum, irrelevant amount of water needed in the process with close to relevant amount of energy needed to dry off the material later on and more importantly, without the need to add any sort of binding to this process. So it allows us to start delivering a compacted product, a granulated product at a very similar cost for us as a powdered product. So it's something that as soon as we understand our market development is starting to slow down -- we haven't seen this yet. We don't know when this will happen. But when and if that does happen, we have a solution. It's something we've worked. Several years, it's something we'll be ready to deploy as soon as needed. They are important question. And I think it's important to share those questions and answers to -- with all of you. So it isn't just restricted with some institutional investors or some analysts who actually had the opportunity to talk, address directly the C level, those very large companies. So that was the powder element. The other aspect we've heard from the industry is that because our product is less concentrated to the potash, the conventional potash, transportation cost is a huge cost. And they're right. This will always be the case. However, the way we price the product by reducing our FOB price and always having the product competitive against KCl on a delivered basis has allowed us to sell nationally and internationally, in some cases. But mainly nationally, we sell all the way from the very northern position, the very south of Brazil and that has allowed us to increase market penetration to gain scale, reduce -- and each day be able to reduce more and more cost. So that feedback helped us in terms of shaping our strategy. What that feedback also helped us, and that's a bit also to do with the blended answer I have later on, is that by adding all the nutrients to the product, especially micronutrients, which are very expensive on a per nutrient basis, that allows us to make the transportation cost less important. That allows us to make the application costs less important. So we also were able to adapt our business plan and not allowing that one should be a problem. The other one is an interesting one, a very interesting one, which is a feedback I received in 2010 by the distribution director of one of the largest players in Brazil. And what he told me was that we would only -- those were his words, we would only be able to succeed if we found a way to sell the product directly to blenders. So blenders could mix our product with their own fertilizers and then blenders could sell it to farmers. This gentleman turned to me and said, it's going to be impossible for you in order to achieve big volumes to develop a market and sell to -- and remember his words, to sell to as many as a thousand customers. It's going to be literally impossible to sell it to as many as 1,000 customers. And he's absolutely right. If we had pursued a traditional commercial strategy in Brazil, which is by having hundreds of salespeople in trucks -- in rented trucks visiting 2, 3 customers every day, yes, it would be very capital intensive, very efficient. And most likely, we wouldn't have got to where we are now. So with his very valuable feedback, we knew we couldn't do what every other player was doing in Brazil in terms of developing the market. And that's how or why our commercial strategy was so important and has been so crucial for us to achieve scalability and to carry on growing and growing without the problem. And the numbers speak for themselves, how many customers we have and how it's been growing. Again, I'm very thankful to every single feedback and it's thanks to them, we were able to grow. The other feedback was the blended, like the requirement to sell via blenders and not to buy direct. So the fact about 50% of our sales nowadays or direct sales and the independent agents, which is also a kind of a cost side, direct sales as well, the number is even greater. So our dependency on distributors is minimum, absolutely minimum in Brazil. The other element here, the other feedback was that some farmers, they don't want to apply just one nutrient. They want to be applying more nutrients at the same time. That's why for that one, the 3D Alliance technology was so important, which allows us to be adding all the nutrients to the product. It allows us to be adding micronutrients to the product. So instead of us just selling potash, we can be resolving all of the problems and providing more nutrients to customers. And the final one, which is the feedback we had from the concentration of the product being low, that also allowed us to create a new technology in the new product. What we did on the back of that feedback was to look among the other nutrients applied by farmers in Brazil which one was the other nutrient, which was also -- which also relied on a lower concentration type of fertilizer, and that the economics weren't necessarily in favor of farmers. The other nutrient we looked, which fits this requirement is sulfur. So farmers, they apply lots of sulfur. Crops need a lot of sulfur. Brazilian soils are very low in sulfur. And one of the main sources of sulfur to agriculture in Brazil is a phosphate fertilizer called super simple phosphate. In some cases, they also use a [ mining ] sulfate. But when you look at super simple phosphate, the concentration of phosphorus, which comes in super simple phosphate is also low. It's about 14% versus other phosphate fertilizers, which can have as much as 54% [indiscernible]. But lots of farmers, they have to apply super phosphate, big super simple phosphate because it carries sulfur, which the other sources of phosphate don't carry. So we started researching sulfur. When we started researching sulfur, we also saw that whenever a farmer used sulfur from super simple phosphate, there will be a massive amount more per unit of phosphate instead of applying a conventional more concentrated fertilizer. So there was also an economic opportunity there. And that's when we started developing Micro S technology. We went to look at what would be the cheapest and most concentrated source of sulfur we could develop a technology. We found residue elemental sulfur. We were able to come up with the technology to micronize that and combine that into our product. And by doing that, we can demonstrate to farmers how they can stop using super simple phosphate and start using a far more concentrated source of phosphate like MAP or super triple phosphate, which also economically reduces significantly their costs. So that was the final feedback we had from the industry, which allowed us to keep evolving. And I really hope we're going to hear more. I love when an institution investor turn to me and say, by the way, I spoke to this and he said that, that's when I really pay attention and see how we can improve and carry on growing. But I think the biggest change, the biggest change is something we -- this time, Verde, something we are bringing to the market. We strongly believe that until Bio Revolution was launched a few weeks ago, we had, when it comes to fertilizer, the equivalent of an old Nokia phone, what I'm calling a fertilizer 1.0. All that fertilized did was to provide nutrients. All that telephone did was to make phone calls. With Bio Revolution, it changed completely. With Bio Revolution, a fertilizer is no longer there just to make phone calls or to provide the nutrients. It's there to provide a whole array of benefits to your crops, to your soil with the addition of microbes. This is the fourth revolution in agricultural, microbes, billions of dollars being spent by several companies all over the world. And the main challenge -- similar perhaps to the challenge of software developers faced in the past, the main challenge was how to deploy those microbes in an efficient, cost-effective, scalable way to use soils. And that is what Bio Revolution address. That is what Bio Revolution creates. And that is why we believe this is something transformational for the company, for the future of the company, for the future of agriculture, for the future of our farmers. So thank you very much. It was a great pleasure having this call with you. I please ask you to share this video, to click the Like button, if you liked it. Please look at the description of the video. If you're watching it on YouTube and see how you can participate. Please see how you can hopefully be the one who is going to be joining us for the opening of our Plant 2. We're very thankful to our -- to your support. We are very lucky to have you guys as co-owners of the company. We really praise all your feedback, really appreciate all your patience and support over the several years it has taken us to get to where we are. And we definitely look forward to continue this relationship with you for the foreseeable future. So thank you very much. It was excellent talking to you again. Bye-bye.