Brazil Potash plans IPO to finance US$2.5bn Amazonas project

Brazil Potash, controller of Potássio do Brasil, plans to hold an IPO on the New York Stock Exchange to finance its US$2.5bn Autazes potash project in Brazil’s Amazonas state.

The company, which filed a preliminary prospectus for the share offering with the US Securities and Exchange Commission, hired Cantor Fitzgerald & Co, Banco Bradesco BBI, Freedom Capital Markets, Roth Capital Partners and Clarksons Securities to coordinate the operation.

It did not unveil the number of shares to be offered, the amount to be raised nor the date for the operation.

"The company's choice to do an IPO on the US stock exchange is because this will give the company greater visibility to attract global investors to its operations, much more than if it opted to list its shares on the Brazilian stock market," mining consultant Pedro Galdi told BNamericas.

"Furthermore, the scenarios for equity markets in the US and Brazil are pointing in opposite directions. In the US, there is an expectation of a reduction in interest rates in the coming months, which favors investment in shares, while in Brazil, where interest rates remain high, there is an expectation of new increases in interest rates in the coming months, in light of future inflationary pressures," he said. 

Toronto-based Brazil Potash said the proceeds from the IPO will be used for expenses associated with its planned Autazes project.

Such expenses are "expected to include conducting additional engineering and essential test work for critical path items prior to starting the construction phase, such as shaft sinking and the power transmission line, and conducting engineering for the other applications and permits," it said.

“Other pre-operation administrative expenses are expected to include expenses relating to obtaining the operational license, the mining concession, and other remaining required authorizations, permits and licenses for the Autazes project, purchasing the remaining land for certain project sites, primarily consisting of the sites to be used for the dry stacked tailings piles, and maintaining our mineral rights," the company said in the preliminary prospectus.

THE PROJECT

Brazil Potash has received from the Amazonas environmental protection agency all the 21 construction licenses required for the Autazes project.

"Our current near-term goal is to start the primary construction of the other infrastructure areas of the Autazes project, which we intend to start once sufficient funding is secured. We estimate that construction will take at least approximately four years to complete," it said.

The project includes a mine, a processing plant, a port and other general facilities.

"We believe that our mining operations will be at full capacity after a 36-month ramp-up period following the completion of construction of our mining facilities. Once our operations are at full capacity, we plan to mine up to approximately 9.4Mt of run-of-mine potash ore per year using a conventional underground room and pillar mining methods," the company said.