NI 43-101 Preliminary Economic Assessment - Verde Potash

Verde Potash Plc 18-3
Cerrado Verde Project
NI 43-101 Preliminary Economic Assessment
compensation agreement, if this amount may not be sufficient for the land owner. Surface rights
in Brazil are distinct from mining rights and must be acquired separately. The land owner has no
title to the subsoil or minerals contained therein. The Brazilian mining code provides for some
form of expropriation of privately held surface rights subject to fair compensation. The holder of
a mineral right is entitled to use the surface to conduct mining operations, including the
construction of facilities required for such operations. The access to the land and reclamation of
disturbed areas must be negotiated with each individual surface right holder. However, the
landowners are obliged by law to provide access to the mineral license holder to conduct
exploration. If an agreement cannot be reached by negotiation there are legal mechanisms in
place to allow courts to lead an arrangement.
18.2 Sensitivity
The Cerrado Verde Project is most sensitive to the received ThermoPotash product price.
Table 18.2.1: Sensitivity Analysis
Simulation Rate Opex Capex Sales Price IRR range
NPV range
(US$M)
Sim_1 12% -10% +10% -10% +30% -10% +10% 27.8% to 35.3% 281.2 to 380.4
Sim_3 12% -10% +10% -10% +30% -30% +10% 23.1% to 34.5% 181.9 to 370.3
Sim_4 12% -1% +50% -10% +30% -10% +10% 25.9% to 34.0% 239.9 to 359.5
18.3 Mine Life
Given the extensive resource base available; albeit all of which is in the inferred category, a mine
life of 40 years has been assumed for both the 1.1Mtpa and 2.2Mtpa production rates.
SRK Consulting (U.S.), Inc. September 16, 2011
Cerrado Verde_NI 43-101 PEA_343500.020_007_KG