Verde AgriTech Limited (TSX:NPK)

Earnings Call: Q4 2020

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Apr 7, 2021

Hi, everyone. My name is Christian Veloz. I'm the Founder of Verde Agritech. I would like to thank you for your interest in attending our Q4 2020 and full year conference call. Before we begin today's phone call, we need to talk about COVID. Yesterday has been the worst day in the pandemic in Brazil. We've lost 4,000 people. In total, Brazil has lost 350,000 lives. In the next month, it's estimated that Brazil will have lost nearly 500,000 people. I would like to pay our respects to one of our shareholders, Daniel Solomon, who is a Brazilian doctor and has been fighting the disease in the frontline since it begun over a year ago. I would like to pay our respects to our friend and plant manager, Ed Sosantos, who has lost his father for the disease. I'd like to pay my respects to my brother, also a shareholder, who lost his godfather, my uncle, to the disease. And finally, I would like to pay our respects to our shareholder, Magnus, who has recently made a very generous and sizable donation to a very poor community in Brazil. Before we begin then, as a gesture of respect to everyone's lives have been shattered by this pandemic, I will ask that we all hold 1 minute of silence before we begin our conference call today. Thank you. Thank you. There are approximately 30,000,000 people in Brazil living at the moment in extreme poverty, 8 in each, 10 people who live in favelas in Brazil all believed not to be able to feed their family. So if you want to help with any sum of money, the Brazil Foundation is a very respected organization in Brazil. I personally know one of its key directors. He's been doing a phenomenal job in the country, accepts donations from non Brazilian residents. So throughout the presentation today, you will have the QR code next to us. And if you're watching this presentation later on, on YouTube, at any point of time, also please make sure you access their website, have a look at the work they're doing. And if possible, be assured that your donation will be in very good hands to help people who very much need it. The presentation today will follow a similar structure to the last few times. In the first part, our Chief Financial Officer, Filippi Paolucci, he will be talking about the results. He's going to be carrying out a presentation. In the second part, we will host a Q and A. For the Q and A, you can be typing in questions throughout the whole presentation. Don't wait till the end to type in your questions. If you think about something, just type it in and send it to us, even if it's during Filipe's presentation. And then in the Q and A presentation, there will be myself answering. But if you also want to direct one of your questions to our Lead Independent Director, Michael St. Aldwin, he's also attending the call. And during the Q and A, he will be able to address also questions who were formulated with him in mind. Before Felipe begins his presentation, I just want to remind you of today's disclaimer. So on the right hand side of your screen with a very clear disclaimer where it says right at the top, if you're risk averse, don't buy our stock, don't rely on anything on this presentation. But on the left hand side of this slide, you can also see something we worked on a few months ago. And recently, I had a call from a very successful entrepreneur in the mining industry. Public markets has listed a few companies has led some very successful ones. And he was just telling me how someone had pointed out what we've been doing in our disclaimer by telling the market upfront directly the type of shareholders we believe are more aligned with us and type of shareholders who perhaps aren't. And he was just saying how he wished he had started doing it 30 years ago when he was running his first company. So I will make sure I read that after such an enthusiastic compliment by this gentleman. I will make sure I will not only have them on our presentation, but we go 1 by 1. And I hope all of you or most of you on this call are aligned with us. And for the ones who aren't, I think we'll find peace in knowing there are thousands of other companies in the capital markets, which might perhaps be a better place for you to invest than in the agri tech. So we're not good enough for you, I'm afraid, to invest if you're risk averse. If you just want to make a quick buck, if you expect us to delay our growth so you can earn dividends in the near term. If you're looking for a traditional potash company, frankly, if you don't deal well with change, if you don't understand how hard, how difficult it is in developing new technologies and especially new markets for innovative products like ours. On the other hand, please join our ride if you want to change the world into a better place, if you're looking for a real world technology developing company, if you want to help Brazilian farmers protect the Amazon, if you believe Verde can fulfill its purpose and can make yourself and the planet healthier, if you have watched or will watch the Kiss the Ground Netflix award winning documentary, they're probably recommended to several people afterwards. And finally, if you care about soil biodiversity and how important it is for our planet. So I will now pass it to Filipe Paolucci, our Chief Financial Officer, who will carry on with the presentation, and then we will come back on the call for the Q and A part of it. So thanks very much, Filipe. Please go ahead. Yes. Thank you, Christian, and everyone for joining this presentation. So I'm going to start now with the highlights and then the other subjects will come afterwards. And hopefully, we're going to clarify many doubts and points that we'd like to hear today. So in the first chart, number 4, we do have cash highlights here, ability to generate significant free cash flow in the long term like we had before. We do have currently over BRL 22,000,000 approved by financial institutions in Brazil to be used if needed. So far, we are not using any of this kind of cash. The total loans in 2020 for CapEx and working capital was around BRL 10,300,000. And at the end of the year, the cash held by the company increased over 2 36 percent with a total of C2.2 million dollars About profitability, our gross margin increased to 59% in Q4 2020 compared to 36% in the prior quarter and to 62% compared to 48% in the prior year. Sales increased by 76% in Q4 and by 103% in full year compared to the prior periods. And last one on profitability, the company achieved a net profit of $550,000 compared to a net loss of over $1,100,000,000 in 2019. So 2020 was the 1st year that the company recorded a net profit. And revenue increased by 48% in Q4 and by 52% full year. Considering Brazilian reals that excludes the exchange rate impact in our currency, we had close to 100% growth on revenue. On operation side, the company is fully permitted to mine over 482,000 tons in 2021. Plant 1 is already operating also with the new product called Bax. And the last one, in 2021, we are working a new pre feasibility study that will be elaborated during the year to replace and update the last one made in 2017. We do expect to have this update by the end of this year. In the right side of the chart, some comments just to highlight that 2020 was a very challenging year for everyone. We had the pandemic scenario. In addition to it, we had in the potash price a reduction of 27% price year on year in Brazil. Considering about COVID, we did not close even one day so far. We've made a lot of actions and new safe and health instructions to the company and employees to avoid risks. And so far, it's going very well. For Q2, we did not have big issues with our employees. We launched the new product, pallet bags. We are launching new technologies as well like 3 d Alliancy and MicroS technology. We achieved both targets we set in the middle of 2020 for the year like revenue and volume and recorded the 1st year net profit of the company. For this year, we do have a target of BRL 50,000,000 revenue and close to 350,000 tons of products sold. Well, just in the right side in the bottom, it's important to mention the exchange rate. We did close the year with BRL 3.84 per Canadian dollar against BRL 2.97 in the prior year. Moving on to Chart number 5, we can see the Q4 and full year financial statements. In the left side, we have Q4 2020, then Q4 2019 comparison and full year the same structure. I will highlight a few points here and then in the coming charts, we can have more details in the Q1s. So to mention here, it's important to say the revenue growth of close to 48% in the quarter and over 50% in the year. This is also always in Canadian dollars. Gross profit increased of over 144% in the quarter and 97% in the year. Sales expenses, general expenses as well increased as expected to support the company growth. I have a bit more of details on that to explain to you. And in the end, you can see total net profit and loss that increased full year of a loss of BRL 1,100,000 in 2019 to a net profit of $550,000 in full year 2020. Moving to chart number 6, just a summary of a bit on the values in per tonne, which make easier for you to identify the key buyers excluding volume effect. So revenue per ton sold has decreased 16% in the quarter and 25% in the year. This is basically due to the potash price decrease, as I mentioned before, and our price is based in the CFR potash price in Brazil. Product cost per tonne, on the other hand, mitigated this cost reduction of potash. We had a reduction of 46% in the quarter and close to 8% in the year mainly due to productivity efficiency and also the exchange rate Brazilian real devaluation. I have a bit more of detail in the other charts as well. So in the end, gross margin improved a lot from 36% to 59% in Q4 and 47% to 62% full year 2020. Moving to chart number 7. We have in the right left side the sales tons. You can see here our significant growth year on year since we start our operation in Q3 2018. We came up from 29,000 tons in 2018 to 119,000 tons in 2019. And now in 2020, we have 243,000 metric tons sold. The right side, the revenue shows also a big growth year on year coming from $1,300,000 in 2018 to close to $9,000,000 of revenue in 2020. Gross margin. We had this to highlight our gross margin improvement. And the key reason for that is we have 2 key reasons and the other one 3 key reasons, I'd say. 2, we can say that the Brazilian real devaluation and the other one, which is the cost efficiency improvement. We had a lot of investment made in the last 2 years in the factory, which allowed us to reduce our cost per ton for two reasons: efficiency and volume increase. And also another impact that we have in gross margin is the increase of CIF sales, which is the sales that we deliver the product to the farmer or to the customer, which increases our revenue and of course, our expenses, sales expenses. But this improvement year on year had a 2% increase in gross margin compared to prior year. Moving to chart number 9, sales and general administrative expenses. We do have in the first table the sales expenses, which is included here, the sales and marketing and product delivery freight. You can see that both lines had a big increase. 1, sales and marketing expenses, I do explain in the next chart, but it's mainly due to new employees hired by the company to support our growth. And on freight delivered, like I mentioned before, but also I want to tell you in the next chart a bit on that. Below the general expenses are our other expenses related to the bankruptcy, IT, taxes and license and other expenses that are related to the business. These ones, I do not expect to have significant growth in the coming periods since a good part of it are also fixed costs. So moving on to chart number 10. On the left side, we have the sales expenses year on year comparison. And the comment below saying that what explains the sales and marketing expenses growth is basically the additional people that we had close to 20 or 19 people additional in our team support the company growth. And in the right side of the chart, we can see FOB, 3 on board against cost insurance and freight sales. For instance, in 2019, we had only 2,300 tons at CIF and we had last year over 31,000 tons sales on this CIF term from 2% then of total sales to 13% in 2020. On financial summary, so revenue from sales on Q4 was $2,200,000 of 56,000 tons of products sold, $39 per ton as I mentioned before. And our revenue per ton was lower basically because of the due to the potash price reduction in the market, which was from $290 to $2.50 per ton of potash sold or delivered at Santos or Parana Agua products. And full year 2020, we had total revenue of $9,200,000 an increase of 50 2% compared to the prior year. On profitability, sales increased by 76% in Q4 and 103% in full year against 2019. Operating profit increased by EUR 1,900,000 in 2020, and the net profit after taxes increased by EUR 1,650,000 in 2020. The gross margin increased to 59% and to 62% full year compared to prior years. The cash flow by the group increased as well, as I said in the first chart, to 136% with a total of 2,200,000. And for 2020, the net cash generated under operational activities was EUR 1,000,000 compared to the net cash utilized of EUR 0.7 in 20 19, which also improved. On Slide 12, we have an open table here with our loans that the group currently has. You can see that most of it were taken in 2020 or 2019 and most of it for long term terms, which are being paid on time in full with no risk for the business for 2021 or 2022, out under control related to this matter. On Chart 13, you can see the Brazilian real against U. S. Dollars in the first chart and against Canadian dollars in the second one. You can see that the trend is pretty similar. What is important to highlight is that we did have a big devaluation after COVID-nineteen started until March 2020. But also in Q1 this year, we saw a big Brazilian real devaluation. You can see on Canadian dollars that it decreased from BRL 4.02 December to BRL 4.49 49 and now it's BRL 4.46 per Canadian dollars. Our numbers and projections and budget already considers this Brazilian real devaluation as is currently. And in the last chart, for T, you can see the potassium chloride price. As I mentioned as well, the decrease year on year in 2019 against 2020. And in the other hand, now in Q1 twenty 21, we saw a significant growth on price, increase on price and we do expect that this remains as is in the coming months. So and then in the last chart here, we can see the historic price of potash since 'nineteen 1 just as a reference for everyone. Well, now I have the last chart on 15 that shows the year on year sales growth. On volume, in the first chart, you can see constant growth of the company per quarter. Last year, we had in the end of the year 103%, but also growth in each quarter. And then the guidance that we had in 2020 completely achieved by the company, which was BRL 244,000 metric tons and BRL 35 point 2,000,000 on revenue. And in the end, the 2021 current guidance that we are chasing and we are confident that we're going to deliver, which is 350,000 tons of products sold and BRL 50,000,000 revenue. The other key objectives for 2021 is to achieve at least 10% of total sales of our new product, Box, launch the new technology into 2021, obtaining ISO 19.1 and 14,001 certifications, obtained a mining concession of 2,500,000 tonnes per year, which is a very important milestone in our path to achieve the target of 25,000,000 tonnes in our production. And also, initiated the construction of Plant 2 with the completion of necessary infrastructure for development such as plant power, grid connection, access roads improvement and preliminary civil constructions from August on this year. That's it this moment. So let's go back to Christian with Q and A sections and I'm also here to answer whatever is bested by you. Thank you very much. Please, Christian, move on. You are on mute, Christian. Thanks very much, Felipe. So we if anyone who wants to ask questions, there is at the bottom of the screen, there is an option called chat. So all we need to do is to click on chat, type in your question and your question will be answered. If you want, as I said in the beginning, if you'd like to direct one of the questions to our Lead Independent Director, Nicky St. Aldwin. He is also available. So we've received some questions here, which I will start answering. The first question, how do you justify paying yourself a salary plus bonus of 10% of the firm's revenue in 2020 and over 15% of revenue in 2021? I think the short answer to this question is that my compensation is dealt by the remuneration committee with 3 independent board members who then make a recommendation to the Board of Directors that decide how to compensate all senior level executives as well as to oversee the overall company remuneration via the budget. If there is any aspect in that regards, we have Mickey St. Oden here, who I'm pretty sure wouldn't mind answering questions connected to that if anyone feels that my question wasn't satisfactory. The second part of your question was, shouldn't this money be used instead to improve salaries of your employees and higher key talent? We have a very well structured compensation package for our employees, compensating not just for their standard wages, but also for achieving targets, for overcoming challenges. And I think a proof of the validity of that is the fact we were awarded a best place to work label or best place to work certification designation recently in Brazil, which we're all very, very proud of. The second question we have is, is it possible to farm in Brazil without inputs using methods described in Kiss the Ground? The answer is yes. We have hundreds, hundreds of farmers in Brazil who could very well be the main stars of the documentary Kiss the Ground. It's very as a matter of fact, Brazil has been a pioneer in a number of those technologies described in the documentary. So for example, direct planting, Brazil was a pioneer, Brazil is the leader, every single essentially pretty much every single large or even small farmer in the Cerrado or in most regions of Brazil, we will do direct planting. Composting, large scale industrial composting in Brazil is widely used and some of the other technologies. The other question is, is this a risk for Verde long term? No, this isn't a risk. As a matter of fact, those farmers are the ones who love our product the most because it's natural, because it helps with their soil microbiome, which you might remember from the documentary how important soil microbiome is. So it isn't a risk, it's a movement. We support, and it's a movement. I strongly believe will carry on growing stronger and stronger. Another question. Full year 2020 includes a significant tax payment, does Brazil allow profits to be offset against historic losses? The short answer is yes. Brazil allows profits to be offset against historical losses. We have lots of those historical losses in our balance sheet in Brazil, which at some point from a tax planning perspective will be able to be used to offset against profits. At the moment, we are in a tax regime, in a tax structure, in a tax scheme in Brazil, which is called Lucro de Ferreiro, which is more favorable in terms of reduced taxation than for you to start offsetting that. The other question, are you planning to take more debt this year? Possibly. So we're always looking for attractive debt package. We're also looking for ways to increase our working capital. We're looking at ways to be able to offer better payment terms, better loan terms to when we do trade finance to our distributors or to our customers, and a lot of that is funded out of that. Other question, how competitive is current product, which presumes K40 and Bax versus traditional fertilizer, I. E, price and effectiveness? Good question. If you look at our purpose then, our purpose is to improve everyone's life and the planet's health to improve everyone's health and the planet's health. The only way for us to fulfill this purpose is to be able to offer our product to as many farmers as possible so it maximize our reach. And the way hang on, there's some people joining here. Let me just mute them for start before it becomes a problem. Anyway, so the only way for us to fulfill this purpose is to be able to offer our product in a price competitive way in the markets we are focusing. So the essence of our business plan, both when you look at our first product, K40, and when you look at our second product, Bax, the essence of our business plan is that it should get to the farmer, delivered to his farm for the same cost or in some cases cheaper than he would have spent if he had chosen to buy a conventional chemical fertilizer. Hang on, there's someone sharing his screen here. The other question, Dan, you asked was in terms of effectiveness of the project. In some circumstances, our product will be as effective as conventional chemical fertilizers. But as you know, in some circumstances, it will not. So for example, if you have a soil, which is already very poor in potash, very poor in nutrients, and you're going to grow in that soil a crop, which is a short cycle crop, I. E, a crop that will be developed fully developed from planting to harvest in month, 2 months, you're probably better off with the water soluble potassium fertilizer than you are with a gradual release fertilizer like ourselves. So thank you for your question. The other question is, will you meet the April 12 deadline set by A and M for receiving environmental license for the 12 tenements comprising the 25,000,000 tonnes per year application. Just to give a little bit of context for everyone in this question, So the area where we hope to one day mine 25,000,000 tonnes is quite sizable. And when you apply for an environmental license, those environment the environmental license as well as the studies you need to make in order to be granted with an environmental license, they have a relatively short time frame. So as a result of that, it is impossible for us to be issued right now for with an environmental license for 25,000,000 tonnes if we are not going to be able to mine or we're not going to be able to mine that resource in some case over 10 years down the line. So what we have succeeded in doing is to fulfill our obligation that with our initial environmental license for 2,500,000 tonnes, which we hope to mine in the nearer term. And then for the other titles, which account for the total 25,000,000 tonnes, As time progress, we will then, in due course, be presenting the environmental license so they don't lapse. The next question, do you have a projected price on the Brazilian real in the next 12 months? I'm sorry, Albert, we don't. It's been so volatile, has proven so many brilliant economists wrong in Brazil looking at those estimates that I won't risk. Michel, just to follow-up, the projection in 2021 is to have in Brazil reais revenue for our products close to last year value. I know that the potash price is a bit higher. However, we are also selling a bit further than prior year. So at the end of the day, we do expect to have around BRL 1,440,000 per ton this year, what will come to BRL50 1,000,000 revenue for 350,000 metric tons of products sold. Thank you, Felipe. Felipe, the next question by Ben. He's asking if we can go back to this slide, which has the objectives for 2021. So he's asking to discuss those objectives in a little bit more detail. If you put up the slide again, I can go over them. Can you say question on the left side here, Slide 16? Yes. Yes. So the first objective there is that the 10% of our sales, BFX, it's a new project. It's a more technical sale. So it's not even though it has its even though I strongly believe that at some point 70% of our sales or thereabouts should be of bags, there's a learning curve every time we try to introduce something new. So I think for this year, something like 10% would be reasonable. Let me just answer a question here then. Just give me one second. The other objective for 2021 is to launch a new technology, something like backs we've been working on for several years. It's something we're terribly excited about, something very exciting. And I hope by the end of this Q2, we can finally talk about it. The third one, some ISO certifications, both the 9,001 for quality, the 14,001 for environmental standards. We're also starting the certification for the 50 something, which is for safety, employee safety, production safety. And we've also applied and are working on a very important certification, which is B Corp certification. B Corp, I hope as well in the near future, we can become a B Corp certified company. I suggest you guys go and have a look at what the certification is all about. The other one, obtaining the mining concession for 2,500,000 tonnes. For Mine Pit 2, which is something or it's a step towards our greater objective. And it's something I strongly believe we should be seeing at some point this year. And then finally, we hope to start building plant 2 or at least starting 2. There is some crazy inflation at the moment in Brazil In terms of civil construction, steel prices went up. Some price of civil construction materials went up as 50%, 70%. So we're kind of like examining that. But at least the essential work we hope to get accomplished this year, so we can have the plant fully commissioned and ready to be delivering product for the second half of next year. I am confident that the current plant should be able to fulfill be able to fulfill all orders, both for this year and for the first half of next year. But I'm not so sure as far as the next year is concerned. Okay. Going to sorry, I'm a bit distracted. There's so many people sending me message here. It just like keeps popping up. So going back to the next question here. Can the product be transported by slurry pipeline to a port for export? The answer is, I don't know. But it isn't something we are too concerned about right now, Sunu. The Brazilian market is worth so much money and relies on over 95% of imported product that this is really our main focus. So we didn't look at the possibility of a slurry pipeline for an export port. The next question, if the company had hit the targets it set for itself a few years ago, we would have done 600,000 tons last year, would we not? Ian, it's a good question. It's a good question. I think to answer this question, I need to split it in 2. The first part of the question is about the first part of the question is about the first part of I'm just distracted here. There are 40 questions here now already. The first part of your question is, if we look at the prefeasibility study, the prefeasibility study, it starts with a Phase 1 at 600,000 tonnes, But it doesn't mean and then it has a second phase at 5,000,000 tons, it is the 3rd phase for 25,000,000 tons. When the feasibility study was made in 2017 for a brand new product, no one could possibly predict or what or how this could develop or even if, which is an if, let's bear in mind here that it's not when we will reach 25,000,000 tons, to a certain extent, it might not be able to succeed ever. The product might not be taken up by the market to achieve that sort of market share. So I wouldn't think about the 600,000 tons as a number from the feasibility as the same way you would look at 5,000,000 tonnes as the next step because as you can see, the next plant we're building is for an additional 1,200,000 tonnes, and we're going to keep going in a scalable way. So the prefeasibility study, as with all pre feasibility studies I've filed on SEDAR, they're really like a road map, some initial study of what a mineral resource might look like in terms of economics. If you ask this question from a previous conversation we might have had, in which I would have remembered you very diligently with a notepad taking up notes with everything I said in the different places we met over the years, which I miss. It probably was self confidence or exaggerated self confidence thinking that we would be able to already be producing 600,000 tons at this point. The bottom line, and I've shared that in all the conversations, in all the calls before, is that it's very, very hard selling a new product to a farmer. It's not easy to turn to someone and tell him that, that fertilizer, which made him worth 100 of 1,000,000 of dollars in several situations, 1,000,000,000 of dollars. Now this little company has something better to offer and he was doing all wrong when he was making his 100 of 1,000,000 of dollars. So it's not an easy sale, very competitive market. We're literally competing against giants here with 1,000,000,000 of dollars 100 of 1,000,000 of dollars in marketing budgets, 100 of sales and established sales structure in place. And so it's a fierce competition. And that's why I really want to remind you all that it's a very risky investment. It's a very risky proposition what we're trying to do. And if it was free of risks, easy and simple, I'm pretty sure over all those years, there would already be another company, a major company perhaps in our place doing what we're doing if it was something easy. So that's my reflection about your question. Another question here. Has there been any delays in Obitene, your mining and or environmental license? Oh, several, several delays, several hiccups, several problems has been has not been a straight path at all. As this is the case with pretty much, I won't say all, but every mining project I've looked at. Has there been any pushback from regulatory bodies? I don't know what exactly we mean by pushback, but from what I understand, which is someone should turn to us and say, no, what you guys doing can't be done, absolutely not. It's to the contrary, because we don't have a tailing dam, because we have minimum impact on native vegetation, because of the environmental the sustainability nature the sustainable nature of our mining operations. We were actually given an award by the Environmental Secretary of Minas Gerais State 2 or 3 years ago. Another question. What percentage of your reduction in costs of production in Canadian dollars in 2020 can be ascribed to the devaluation of the real? Felipe? Yes, sir. I can handle. We had close to 45% cost decrease and we can say that 30% was related to exchange rate, Brazilian real devaluation and 15% due to cost effectiveness improvement. Filipe, another technical question for you. Can you confirm that Mr. Veloso's 2020 compensation was expensed as part of the G and A expenses category on Page 30. Yes. Our payments to the salary to everyone, which is not related to the sales and commercial or marketing, are located in general and in strategic business, yes. Thank you, Felipe. The next question. What is the total volume of Verde green sand that has been exported from Brazil to date, 2018 through 2020. I don't know from the top of my head, but it's very small. It's very small. Can you split this total amount, U. S, China and all other countries? By value, most of it was sent to the United States. By tonnage, I think a bigger portion was sent to China. As I said before, our focus is Brazil. When we sell the product in the United States, it's a niche product. So it's the garden market, it's some organic growers. And they're not buying the product because of its potassium content, because it's just too expensive if you look at the potassium content versus other locally available products such as KMAG, Trio, even potassium sulfate. The reason they buy it in the United States is because of what it does to the soil as a soil conditioning aspect to it. There's a history in the United States of farmers using green sand. We verified improved to their soils and green sand is same mineral as we mine in Brazil. So this is the niche market we fulfill in the United States. In terms of China, we made a sale to a distributor in the country. He's going through regulatory process to register the product, but it's not something we it's not something and will never be anything as important as the Brazilian market for logistic reasons. At the end of the day, potash is an industrial mineral and because the concentration of potash in our product is so slow, it's 10% versus the other commodities, which is about 60%, it will be forever impossible to compete. How are you approaching the development of export market? Is this something that can wait while you focus on the domestic market? How are we approaching it is paying a little bit more attention to our Amazon sales. Amazon has made a bunch of changes in terms of how they receive their product as a consequence of COVID that made a little bit trickier for us to operate with them, but we are fixing it. And we recently hired someone who is dedicating a big chunk of his time as well trying to do outbound sales in terms of exports. But it still remains something which isn't our focus. However, I do strongly encourage every one of you who is in this call to go on Amazon, if you're in the U. S, soon to go on Amazon if you're in Canada, to buy super greensand and try for yourself what a great product it is. Talk to your family, talk to your neighbors and let's spread the word out in North America so we can together create this market for the project. The next question, Dan, current year expectations for fertilizer prices, your crystal ball, Dan, I don't know. Everything we're reading is suggesting prices will go up. I've met and kept in touch with a fund manager, who's probably the most knowledgeable person in the world perhaps in terms of fertilizers, certainly runs more money than anyone else in that space. And he's very bullish. He had already been talking about the depressed commodity prices over several years. He likes to talk a lot about the transformation that will happen in China with the ethanol policy, how what a big game changer it will be. So there are some people in this space who are very bullish about a renewed increase in fertilizer prices. I'd like to say we had the golden age of potash, which were very interesting times, very interesting times, the Golden Age of potash. It begun before the financial crisis, so it begun around 2,007. Throughout the financial crisis in 2008, there was a blip, so it crashed, but came back strong really fast. And then we saw potash prices very high all the way until 20 13. It was interesting. It was interesting. I mean, it was a sexy commodity back then. And as with any company in a sexy commodity market, we were treated very well by Bay Street. We're preparing another presentation. I was looking over some of the factors to do that. It will be a little bit of our history. And in those golden days, okay, golden days of potash, that's when our share price went on top of the way up to $10 that's when we did funding finance at $6 But those banks, they would take me to dinners with Dennis Rodman by our side, quite a character. In those crazy days, we had as many as 11, 11 analysts covering the company. Pretty much all the big banks in Canada were covering us. Target prices all the way up to $16 I was looking at the photo with those 11 analysts visiting our site, coming down to visit the site and everything else. From all of them, only 2 still have a job. The other 9 are doing several other things. So those were the golden days of potash. To answer your question, then I don't think we're going to go back to the golden days of potash because the players there, the big players, the Nutrien, Roqali, Mosaic, I think they've learned the lesson. And I think they will make sure they keep prices some sort of lit on those prices, so you don't start attracting other companies like Verde and start incentivizing big companies like BHP to go ahead with Jensen project in Saskatchewan. So that is what my crystal ball says. But unfortunately, lots of those big companies, lots of the executives, they have a very short time frame on how they think. And that's the risk we all face that given the short time frame, they will look the opportunity, they will increase potash prices and create some huge boom in the short term, but then suffer the consequence as we've been suffering, okay, with Verde since 2013 for the last 8 years. So in 2013, we still have potash price around $400 $500 We're still like very, very high. And then the President of Urokali wasn't happy that Lukashenko was allowing the President of Belarus, was allowing Belarus Kali to sell potash out of their cartel. So he called up and told the CEO of Urokale to fly down to Minsk and meet for a discussion. I don't think the discussion went very well because the poor guy, as he was making his way back to the airport ready to board his private plane, was arrested and was thrown in a cold jail in Minsk throughout the winter, which I don't think was a very nice experience. But all of a suddenly, the other directors of Orocari put out a press release saying this is the beginning of a price war. We're no longer friends of Belarus Kale. Now we're going to favor volume over price. In one day, potash companies lost 1,000,000,000 of dollars in valuation. No one else cared about potash anymore from that point onwards until, I would say, this year when some people woke up again to potash with a little bit of an increased price. And of course, that fight for potash prices, which crushed the price, brought the prices down to $200 Of course, that was the trigger or that made it a perfect storm for Verdi Agritech, literally a perfect storm for our company. This perfect storm, It's not just because price crashed, but at the same time, those price crashed. We had the worst recession ever in Brazil. No one wanted to touch Brazil. We had some interesting economist covers about the what is or was the worst recession in the history of Brazil, horrendous time. And to make things even worse, we had the very famous massive, perhaps still ongoing bear market on TSXV when no one cared about resource stocks, no one cared about mining stocks. It was when some of you might remember the boom of cannabis and we had some difficult times. And then was in the midst of that perfect storm, a father of 2 young children that we were in 2017 in a situation where we had no proven product. No one believed on what we're doing. Even the ones who believed didn't believe either in Brazil or potash or the government or everything which was going on. So in the midst of that perfect storm, we ran out of money, we ran out of money in a challenging environment. I remember coming back in 2017 beginning of 2017 and having to turn to the company and saying, look guys, unfortunately, we have to cut costs. Unfortunately, we can't afford senior people anymore in the company. We are down to 4 or 5 people who are being paid the salary at that point. I myself at that point in time in 2017 with a share price of around 0 0.20 dollars 0 prospect on whether we would really be able to succeed or to sell a gram of the project. I turned to my wife and said, tight the belt, cut costs because I don't know when I'm going to be able to get a salary again in Verdi, Agritech. I'm going to be paid in stock. Our fellow directors supported me, supported the company, agreed to the same terms and I'm very thankful for them. But we had seen executives in the company who came who had come from successful careers prior to joining Verde, who decided to become an unemployed executive rather than make the sacrifice. And because it was a terrible market in Brazil, they went on to be unemployed and do all this stuff with that time rather than carry on fighting with the company in a completely uncertain point of time history. So I'm sorry, Dan, if it was a long answer to your question about our expectations for fertilizer prices. But I think it's very important for everyone to understand where we all come from and how hard it has been for everyone in the company to move the project along, how uncertain it was back then and how uncertain it still is and how proud I am of everyone who decided to stay on with the company and be crucial for its success, like the Board members who stayed on and like some of our employees, which deserve their names to be mentioned here in full as well. So that's the answer. Next question. Would an increase in sales for export markets, especially in the Northern Hemisphere, such as China, help even out orderly sales as a growing season in these markets would be different? Yes, it would absolutely help, would be phenomenal, would be excellent if we could do that. It's just not easy. It's just not it's something we try, but it's not something easy. We're not selling the product there the same way we sell the product here. They have alternatives there, which cost a fraction of our product, literally a fraction. So it's a difficult one, and it's one we end up being restricted to niche markets. And but it's something maybe we'll break into 1 or a few opportunities that will help address that. What we're also trying to do to address that is try to identify and develop and sell the product to some crops in Brazil that would have a higher demand during Q1. This is something we're looking at. But if you have any hope of being able to level things or make things as discrepancy as they currently are in terms of Q1, Q2, Q3 type of sales volumes, we won't be able to do that because that's in the nature of agriculture, that's in the nature of climate, that's in the nature of how the growing season takes place. The next question, does Verde operate its own fleet of delivery vehicles and drivers or do you contract our audio delivery service? We contract 100% of our delivery vehicles. We don't own a single truck. We have no intention of owning a single truck. Next question, what is likely what's the likely timing of a government decision on mine expansion? I won't give a likely timing because I've been proven wrong so many times I gave up giving likely timings in quarters a few years ago, Kit. I or I can say that I believe it's something we should have issued this year. It's something we're working hard to get issued this year. Is the devaluation of Brazilian currency good for the company? Yes. The devaluation of the Brazilian currency is excellent for the company. It makes potash prices in Brazil more expensive, allows us to sell our product for higher prices, but it also make it more profitable for farmers to farm. So soybeans, corn, coffee, they all trade in U. S. Dollars and they end up with more money in their pockets every time the Brazilian currency becomes weaker. The next question, If you currently use all contracted services, do you have any plans to acquire and operate on fleet? No intention. It's a new different business, something complicated. So it's not something we intend to be doing. Is the design of the new processing plant a multiple copy of the existing plant at Sogou Tard with multiple parallel lines? Or is it with a single line but with much higher hourly throughput? That's a good question. When we begun in 2018 with our own building our own facility, We went in the market and bought the biggest equipment, the biggest mill for the type of application we have that could be sourced cost effectively, that could be sourced in Brazil. So that was the biggest one. We build the facility and then because this is the biggest one that dictates the requirement for you to have parallel lines. So that already answers your question. But adding to the answer to your question, a few months ago or perhaps over a year ago now, the same company, so it's the leading Brazilian supplier of that sort of equipment, they launched a new equipment, a new mill with a greater production capacity to the one we had originally purchased. And then at that point, it made complete sense to buy the bigger one, but also to replace the one we have currently bought to make it easier in terms of operation, in terms of replacement parts, in terms of replacing parts inventory and added output. So it was an easy decision to replace both equipments. We're even lucky to be able to sell the old one. Even if we weren't able to sell the old one, if it was just going to be write off, it would still have been a good decision. And now talking about Plant 2, it will equally be parallel lines. So for Plant 2, instead of looking at 2 of those mills, we're going to have 4 of those large mills. There's a company in Germany that can manufacture bigger mills. Those were the mills we considered for our pre feasibility study for Phases 2 and 3. However, there were crazy expenses then when the exchange rate wasn't as bad. Nowadays, it's just even more expensive. So it doesn't make sense. It's better to work with those multiple mills than having just the one much bigger one. What percentage of domestic sales are made directly to individual end user farmers at full retail price versus sales to intermediaries, distributors and custom blenders under some kind of wholesale discount. I don't know the percentage from the top of my head, but I would say it's probably 80% going to distributors and 20% sold via Amazon, in which case would be sales directed directly to individual and farmers in the gardening markets. What's the magnitude of the discount to retail price that you offer to intermediaries? I don't know from the top of my head, but it would be like something standard. Do these intermediaries hold their own purchase, so does Verdi deliver the product to them? We do both. So we sell in DDP, delivery duty paid, so they don't need to worry about anything. They get the product there as if they were just buying from next door. And in some other cases, we sell FOB or CIF, so depends on the case. Is this split between direct retail sales and intermediary sales undertaken on a geographic basis? Are you serving directly your customers, located through the plant and shipping? Hang on, hang on. Let me go back to your question, because I was answering your question here thinking about the international markets. So the first answer I gave you was thinking about the international market. In the domestic market, Christian, it's around half or 60% direct sales and 40% distributors around. So that would be the answer to the thanks, Felipe, to the The discount is 15%. The discount the magnitude of discount, so it's 15% to the cuts to the distributor. Do these intermediaries hold their own purchase or does Verdeliver the product to them? We do both. So in some cases, we sell FOB, some cases, we deliver the product. Is it split between direct retail sales and intermediary sales undertaken on a geographic basis? Are you saying this is directly to all customers located within 200 kilometers of the plant and shipping to intermediaries and blends for cost located in the local market? So the split isn't taking into account the geography. It's taking into account the size of the opportunity. If my answer wasn't clear to some of those questions, please, by all means, go back and Gold, Cooper, just ask it again, I will be happy to address them. Next question. Can you list the names of companies you see as a domestic competition in the production of locally sourced fertilizers? Who is on your watch and monitor list? So the main competitors would be the traditional fertilizer companies like Nutrien, like Mosaic, like Yara, the Giant. Then you have some Brazilian local distributors like Heringe, like Firthpar. And then when you look at the domestic fertilizer production, you have other smaller companies, which don't have much scale, but also show up every now and then in certain price bids. What's the total CapEx budget for 2021? Felipe, if you can come back to that question. The total CapEx projected BRL30 1,000,000 is BRL 12,000,000 this year, so far at this point. Thank you. Felipe, the next question. What's the current capital budget estimate for 20222023? We don't have one yet. The December 2019 shows a total full time staff level of 69. What's your current forecast plan for full time employees at the end of 2021? Do you have this number, Filipe, easy? Just a second. While you have a look at it, I'll go on to another question. How did the 2020 audit review unfold with the new auditors appointed in November 2020? It was a very thorough audit, which you would expect from a firm that was taking up the file for the first time. So they went over literally everything and was very time consuming And I'm sure Felipe's team deserves congratulations for the hard work they all put into addressing everything the auditors had as well as the audit committee that was part of the process. How do you spell B Corp, please? Any suggested reading? If you just type in B Corp certification, you will see it's very interesting. Your spelling here is correct, B Corp. Were there any transition issues or challenges during the 2020 audit? There wasn't. Felipe, when you answer the other question, you can also comment if you felt that way. Will you be able to recommend the new audit firm who just finished the 2000 audit to be retained to conduct the 2021 audit? I believe so. At this point here, we need also to thank Filipe for having carried out a competitive price estimate in the last audit, which saved us some money. And but I don't see why we wouldn't be keeping the same one. Filipe, do you want to answer the other question? Yes. The expectation is to have additional 30 full time employee additional this year against the end of 20 December, yes. Why did the company believe it was necessary to have the Chairman appointed to the Board's subcommittees, but since 2013, did not believe it was necessary or appropriate to have a Chairman named for the Board. Why was this position changed in 2021? I don't know. I think we were just so busy carry on with the business, and we had so many challenges and so many so much to do that we never stopped before to elect a Chairman. And I had been acting, let's say, as Chairman during the Board meetings and things were flowing very naturally. And why has this position changed in 2021? I think as the company now gets ready for its next leg of growth after those initial years of major sacrifice, I think it's important to start having more formal structures in place. And I'm very pleased with the appointment and the decision the Board made to appoint Michael St. Alduin as the independent Lead Director. He is a phenomenal person, very brings up some excellent points, very critic, very detail oriented in a number of risk aspects. And I'm pretty sure he will be helping us, management and other stakeholders in keeping up with the most stringent corporate governance requirement for any company nowadays. Next question, what's the capacity of Plant 2? The capacity of Plant 2, the operating capacity is 1,200,000 tonnes per year. Can you provide information as to how Verde's research and development is organized and managed? We have small company goals. We don't have a formal R and D department. I mean, if you look at the patents we've filed, we filed about 6 patents. I for the first two patents we filed, I was part of the no, I was the one leading it. The name as the inventor shows up, the name of our engineer at the time. But then the other four patents we filed, they have myself as inventor, who truly was coming up with the ideas. So we're a tiny company in that aspect. As we grow, we might be looking into setting up a formal R and D team. But for now, it's still very, very informal. Do you arrange and run your own field trials using the various existing and new developed fertilizer formulations to test their effectiveness? We it's a good question. We don't do any trials ourselves. Every trial we make is using a third party, which is usually a consultant or a university or research institute. So we have a few of those trials ongoing. That's where we test some of our technologies and where we are testing some of our new technologies. Chris, how much we plan to be able to produce once constructed? 1,200,000 tons operating capacity. Next question. Who is responsible for conducting regular reviews of international academic publications that would be relevant to the company and its developing product line? That's an excellent question. It's an excellent question. So anyone interested, Google Scholar has an alert option, which you can create the words of interest. And every single time a new paper is published that refers to that word, be it in the abstract or in the full text of the in the full text of the word, it shows up and Google sends you and then you can decide how often you want to receive those updates. So I have about 10 words which are relevant to us. And I have a daily alert, which I receive around the time I go to bed, at which point I review and spend my time prior going to sleep reading some very interesting papers. And then I share with the team and we act upon some of the stuff which is there. More recently, we've been able, thanks to our Anywhere Office policy, very much more recently, we've been able to hire a lot of outstanding people. And a few of those with PhDs and Masters. And we've then created a group where we now collaborate and we have more people sharing all the research and more people doing similar things to what I'm doing. But for anyone in innovation, anyone in developing product, it's always a joy to be reading scientific papers and how much you learn, how much perspective it brings to what you're doing and to what you might be doing. The last one I read was very interesting, was about the difference between short term read DNA versus long read DNA. And the implications we're going to see for agriculture as long read DNA allows you to have a better understanding of soil metagenomic and its impact in a number of different areas of agriculture. I could talk for another half an hour about that, but let's go on. You have previously stated that regular dividends are something that Verde will consider in the future. Do you have a set of preconditions at which point you would be recommending dividends start being declared and paid? Is there a general cash flow production, which this starts to become a consideration? I don't have an answer to this question. It's not something the Board of Directors has ever discussed. But it's an important valid point. And I will suggest that Mickey St. Audrey brings this issue to the next Board meeting, and I think directors should be looking into this issue on a more structured and informal way. The next question, let me just see here how many more we have. We can go on guys. Okay. It's a lot. So next question. I get that it's hard selling a new product to a successful pharma, but KCL is up 20% in price ex Canada, and as well as your pharma has had its currency devalued to another 20%, now has got to be the best chance to gain market share. Yes, you're absolutely right. Our margins have increased significantly. This has allowed us to be some aggressive in certain situations, and we will continue being aggressive when we feel like it's the time to be to grow market share. One important point to take into account is that the reason farmers don't buy our product is not because of price. I can't remember a single time when we lost well, I can't remember, but that was a bit different. But what I'm saying is, it's not the price that is the barrier. It's really the aversion to trying something new, which has its merits, but also brings other difficulties to a farmer. It's no secret to all of you that our product is a powder, and it's not as easy applying a powdered product as it is applying a granulated product. So that's one point to take into account. Another point to take into account and we've lost sales to farmers who absolutely love our product, but they turn to us and said, look, Chris, I'm sorry, the distributor A came here and offered me a package, which included all agrochemicals, all pesticides, herbicides, including the seeds, including his fertilizers, all the package and he got paid in grains. He got paid in soybeans, soybeans which haven't even been planted yet. So you do end up having some aggressive people moving in the market as well and we fight against it the best as we can and but they take market share. So it's not an easy market. It's not an easy if anyone is looking to invest in a done deal here, we're going to get to 25,000,000 tonnes and hooray, forget about it. It's not Verde, if it's not what we have here. It's hard work. It's day to day fighting. It's a daily David versus Goliath fight we were here. And that's why I'm so proud of the team we have and how committed they are to what we're doing and very proud of how successful they've been in such a terrible market, in such a difficult circumstance to grow our sales in 100% from last year to this year. And only that, together with us, together with the Board, to together commit to another growth this year of another nearly 50%. The next question by Jeff, who also finds some very interesting videos and articles, and I'm thankful for him sharing them with me. An Inter Ministerial Work Group was established to address the topic of developing the National Fertilizer Plan on March 9. I understand that there is a 110, 20 day discussion period. My question is, is your company involved in any discussion with the government? Yes, I was consulted by some of the members of that inter ministerial group. They're very impressed by the work Verde has done. Every single member of that group has a big respect to our Director, Ares Sao Paulinelli, who was appointed by the government or by research institutes as a contender for the Nobel Prize, World Peace Nobel Prize for this year. And we're aware of what's going on. And we're also familiar with what's going on. We're also very familiar, Jeff, very familiar. It's not the first time this happens. We're living we're witnessing that for the 2nd time. When we begun in 2008, doing potash, we saw the price spike. We saw the farmers complaining with the government back then in 2009, 2010, 2011. And the government at that time also had some of those interministerial work groups. And what the President back then did was call up the CEO of Vale and tell Mr. Agnelli that he had to buy fertilizer assets, to which Mr. Agnelli complied, went on and bought fertilizer assets in the country, which were owned by Banggi and made some investment in that front. And then later on, in a different with a different president in place, those fertilizer assets were sold to Mosaic that now runs those phosphate mines, which were taken over by Vale and has also been running this potash mine in the Northeast of Brazil. So it's nothing new and but it's not if there's any expectation that this will change anything for Verde. If there's one thing those last 15 years has taught me to be very skeptical to really focus on what we can accomplish as a company and what we can work and what it only depends on us and that's what we're doing. Thanks, Fabio. He's just congratulating us. He's from a bank. Can you provide a direct email address to Mr. St. Aldwin so that I can forward a letter regarding the stock option plan that will be coming to the AGM in June. Yes, I can most certainly do that. What we will be doing is to put up an e mail in one perhaps the Broadnax newsletter. I don't know if Mickey wants to disclose a personal email, so perhaps the best thing would be to create a corporate email for him, and then we can allow any stakeholder who wants to speak directly to our independently direct, he can talk to him. Just one thing I wanted to talk about our stock option plan as well in advance of that because I know the content of this lifetime. If you look at all TSX companies, 100 and 100 of them, and if you look or 1,000, I think, over the period of time Verde has been public company, we might be the company that has issued over those years the least proportionately, the least amount of stock options. And the reason I think that is, is because I learned very early, together with our Board, a lesson in 2010. The lesson was when you are awarding stock options, you don't want to create a situation where, let's say, your CFO or your VP Sales or Chief Operating Officer, where he can become rich too quick and leave the company. Unfortunately, this happened with us. We had a standard stock option plan back in 2017, where it was, I think, a third and a third vesting period. So the vesting took place over a relatively short period of time. So I think it was like 2 years or something like that. So what happened with Verde was some of the people who were given stock options back when we had to reinvent the company the first time in 2008, 2009 from a gold company to a fertilizer company. Some of people had received those stock options at very cheap exercise price because that was the price back then. We saw the share price going up to $10 $6 $7 $8 they turned to me and say, Chris, we love you. We love your company. Thank you very much, but I'm going to do something else. And they could do that because it was a third, a third, a third over a small time frame. So we learned this lesson. And for that reason, the staff in the company, they have a vesting period, which takes them 5 years before they can fully vest with their stock options. So a 10th, a 10th, a 10th, and then only the end of the 5th year, they can get the full package. That way, what we have seen in spite of this price increase is that what we saw happening and learned back in 2007 doesn't happen, hasn't repeated again. The other lesson we learned was that when you do very short, when you have a time frame where people have to exercise the stock options straight away or risk losing them, You create an incentive, which we also saw happening, for people to then exercise at whatever price it is, sell the shares in the market and move on to doing all the things. So to address that and has been very successful, what we've done is to increase the time that anyone has to exercise the stock option. So give the stock option to our procurement manager and he can after divest, after 5 years, he can carry on with those vested stock options. I don't remember by exactly what the term is, but perhaps for another 10 years before he faces the situation of exercising and having to sell or not. So we saw a lot of that happening in the past, learned the lesson, and it's been much better. I think it's also relevant to share 2 other things with you guys. The first one is we have a program in Brazil called Seja Sochio, so become an owner, where twice per year, our employees, they can write us a letter. There's a number of criteria they need to fulfill in terms of having accomplished certain targets. They tell us a bit about the history, why they are with Verdi, why they want to be with Verdi and some fascinating letters. We received some fascinating people. And we choose and we award stock options and they become owners of the company. So it's a very successful program we have in place and very important, I believe, for what we are growing in Verde. The other aspect when it comes to hiring senior executives, it's essential for you to bring a I remember when I went to hire Felipe Pallucci, who had a bunch of alternatives. And I know that the package of options was a crucial reason why he joined Verde versus other companies. So being in a position where you can and like Verde will be for the coming years to issue stock options to bring more senior talent is essential, unless, unless, of course, we want to start paying much, much, much higher salaries. That's the trade off. That's a compromise. If you can't offer the stock options, you want to bring talent, senior talent, you need to do that. And when it comes to board positions as well, we have a Corporate Governance Committee, who is also always assessing the performance of the Board, looking at the necessity to bring on new Board members. It's always essential for you to have stock options as a way to make it interesting enough for someone to dedicate. And if you don't have those stock options, no problem. Like you're going to end up having to pay way more in terms of fees to be able to bring people to the company. Another question here. Can you comment on increased demand for your products in the cannabis space? Steve, I cannot, sorry. The last time I made a comment like that HSBC wants shut down our bank accounts, so I'm not going to be saying anything about that. Jeff, philosophically, what's your opinion on NPK utilizing hedging to neutralize your FX exposure at some point? Filipe, do you want to answer this question? I think Filipe might be having a break. No, I'm on mute talking by myself here. So well, we do have a natural heading, which is once the potash price or the Brazilian devaluates, normally, we can see that the exporters also decrease or increase their price in U. S. Dollars. It's like a natural head. So the final price in Brazilian real sometimes when the exchange rates change a lot, sometimes remains similar to the prior periods. So we can say that this could be close to a natural head. We only have cost in U. S. Dollars related to 1 raw material, which is not representative at all of our costs. So I do not see at this point, we've not had any debt in U. S. Dollars. The only expenses we do have in Canadian or in U. S. Dollars are the ones related to TSX and a few payments that we have in our headquarter. So since the revenue are pretty close to it doesn't change a lot because of exchange rate, we do not see any requirement hedge. But I'm sure that we are all the time looking at it. If necessary, you're going to implement a policy for that. The costs for hedge in Brazil are quite high. So it just makes sense. For example, if we have a big exposure in dollars, sometimes it costs over 10% or 12% or 15%. So at this point, I think we're safe enough to not do hedging. Thank you. Thank you, Felipe. As we approach 2 hours of our call, if you're watching it on YouTube, I thank you very much for your interest. I thank you for spending those 2 hours with us at your leisure time. And I also would like to thank the nearly 50 attendees we have live with us and have been live with us here for the last couple of hours. So thanks very much for being with us here. Next question, Bax, any data on actual tests carried out on the farms? That's a good question. Not as of yet. So we should start getting data from farms in the second part of this year. That's when we should have some results. But PAX is a combination, as you know, of K40 and other well established fertilizers. So there's nothing new or there's nothing different we would expect in terms of yields, in terms of results. It's there isn't a big expectation about that. Next question. Will plant 2 sit side by side with plant 1 or will you scrap sell plant 1? Asking because earlier you sold off the old plant. Okay, good question. Just to clarify, I didn't sell off the old plant. We sold off one piece of equipment, which was a mill, which became outdated to the size of mills we started and we became able to use. Answering the first part of your question, we won't sell Plant 1. Plant 1 will carry on operating for the foreseeable future. And Plant 2 will not be built side by side with Plant 1. It's in a different site, which we've already bought. It's ours. It's our land. It's and it's a site, which is next to the mine. So plant 1 is over 20 kilometers away from the mine. We at the moment have truck ore to be processed in plant 1. We had to do that because of infrastructure required to which we will now be making some investments, so we can have commercial trucks, our customers going and picking up the product from Plant 1. If I didn't understand this answer sooner, please let me know and I will go back to it. If there's any question I wasn't clear enough or one of us weren't clear enough, please feel free to go back and insist on the question or clarify any aspect I might have missed. Any other film to watch after Kiss the Ground? Any Brazilian film related to this subject? Good question. I can't think of any other film after this documentary, Kiss the Ground. It's, I think, straight to the point. It's a brilliant documentary. I think it will help changing people's views about the importance of soil biodiversity, will help people understanding why what is beneath our soil matters so much. And then finally, if there's a Brazilian film related to the subject, nothing commercial that I'm aware of. There are some documentaries, which were done, which are more like lectures with some images inserted, which were interesting. You can contact me via email, I can have a look and share with you if you're interested. During 2020, there was a single stock option exercise that being 7 50,000 shares per shares for a total of $300,000 Page 52 states 300 was in lieu of bonus to the Board to exercise shares. Can you confirm this was not bonus to the Board, but bonus from Mr. Velozin, Zuora's CEO, confirmed part of the bonus reported in Note 26, confirmed. What are Verde's thoughts on the Brazilian government looking at options to help reducing the country's reliance on imported fertilizer? And how do you think they will promote Brazilian production? Will Verde be able to benefit from this? And are you planning on making a submission to the commission? I think I've shared my view, Gold, when I answered the other question with the other question you asked, but this is a very important point. And I think you all like to hear that we created a committee in the Board of Directors, a temporary committee, which is in charge of looking at what's going on with this working group and making recommendations to management and the Board in terms of how to position in regards to it. I personally like very much your suggestion that Verde should be making a formal document and submitting it to the commission in which document we should narrate everything we've done, everything we've accomplished, everything we intend to continue doing for Brazil. And I like the idea to start with start it with a quote. Don't ask your country what your country can make for you, ask yourself what you can make for your country. So I think that will be our opening statement on this letter, and then we will go on narrating everything we've done over the years to help Brazil address this issue. Now that Cerato Verde project is in regular production, is in cash flow positive, Are there any plans to continue improving our reserves in the other areas of Verde has exploration development rights? Short answer is no. Reserves we have are significant. We're looking at decades of mine life at the very high levels. What we do have ongoing is infill drilling for more accurate mine plan design. So that's something we have ongoing and we'll carry on doing, but we won't look into to carry on exploring anything new. There is nothing we need we did a lot of that. We did a lot of that from 2,009 when I think our first drilling campaign begun all the way until 2012 when think our final resource calculation was established. Are there any testimonials of data regarding Verdi products' ability to increase drought tolerance? Good question. Our product has a nutrient called silicon, which is a phenomenal nutrient. It improves crop resistance against abiotic stress. Abiotic stress is drought tolerance, too much heat like water, increased crop resistance against pests, against diseases. So we do have several testimonials where farmers go on and say how the area they had treated with our product, even though there was a drought, what's called in Portuguese, a veranico, even though there was one of those, the crop stayed strong, wasn't as affected as a naval, as an adjacent plantation, which wasn't using our product. So there's a message here, Mickey, from a shareholder that you Yes, I'm seeing that. He seems very distressed here. So I don't know if you want to address that in here or via an e mail directly to him. So it's your call. Well, I think simply put the obviously in the past when there has not been a lot of cash around, the company has issued a number of options in order to compensate the executives and indeed the members of the Board. We are in the final stages of establishing a plan whereby we will limit the number of options that will be issued for that purpose. But we are not ready to make a public statement on that at this point. Essentially, it's Mr. St. Thornton. You have issued 12,400,000 stock options to date, of which 5,400,000 were given to Mr. Villoso. 6,400,000 options have expired or been forfeit 4th act. 3,800,000 have been exercised, of which 6% were exercised by Mr. Villoso. We need to change the rules to limit Mr. Villoso's personal benefit. Yes, I think the key aspect here is the fact we issued 12,400,000 options over 14 years 14 years of being a public company, having gone through big volatility of prices and crisis, the real number which needs to be looked at here is not the $12,400,000 because lots of those options were, let's say, were issued at when it was at $8 and was never exercised or people left before or had to be fined. So that's an irrelevant absolutely relevant number. The number which is very relevant here and people need to think about is that over a decade, we've only exercised 3,800,000 stock options. That's nothing, absolutely nothing when you look into those numbers over such a big period of time, over such a distressed or situations related, crisis and everything which was going on. So 3.28 is nothing. I challenge anyone finding all the companies that have been public for as long as we did or even on a per year basis where that number would be much smaller into that. The other question is 60% was exercised by Mr. Velez. It's not a surprise, Mr. Velez, myself, I'm the only one who's been with the company since I began it in my garage back in 2,005 all the way until now. So it's not surprising. The only one who was happy enough to or happy or call it something else to decide to stay with the company throughout 2 of the worst crisis you could think of, financial crisis in 2008. And then I'm thinking about the company, of course, the 2008 crisis and then the potash crisis in 2013. So it's also not no surprise. What ought to be said here is that even though those options were exercised by myself, not a single one of those shares was sold, not a single one. And in a number of a lot of times that exercise was needed to inject new money into the company in difficult circumstances. So not a single one was sold. So yes, that's what it is. The next question here is, have you considered increasing the price since really K40 is a much more valuable resource than KCL as a whole, particularly considered certified organic product? If also farmers are not so concerned about the price, maybe this would not lose business anyway. Our purpose, Harold, is to improve everyone's health and the planet's health. In order to improve everyone's health, we have to make the product accessible to as many farmers as we possibly can. In order to make it accessible to as many farmers as we can, we can't transform it in a niche product in Brazil. It remains to be sold as a replacement of potassium chloride, replacement of KCL on a K2O adjusted basis. Do you have any do you have next question, do you have to spend any money on exploration or infill drilling? What would be the cost of the new PFS? We don't need to invest any new money on exploration or infill drilling for the purpose of the pre feasibility study. There's plenty of reserves there that don't make it required. I the total cost of the PFS, I don't know exactly how much is in our budget this year, but we don't have all the quotes until now to come up with to answer this question. And this completes after 2 hours and 10 minutes of the questions, I'm going through here to see if there's any question here that I missed. So if anyone felt that his or her question wasn't properly answered here and wants to send it again. Please feel free to do so as a follow-up question or anything like that. I found a question here. Note 26, Felipe, maybe we might be able to help with this one. Note 26 disclosed compensation. Was any of this paid in 2020? Or some of all of it is still outstanding as compensation payable December 31, 2020, and including the EUR 1,400,000 of trade and other payables. I understand it's all payable. There's nothing. Philippe, go ahead. Yes. Everything was are paid or accurate in 2020. So for example, we paid a bonus to employees locally here last week, which was already booked last year. So there is nothing to be paid this year that's related to last year that was not booked in 2020. Okay. I'm having a look here. I can see someone sent a new message, but I haven't got there yet. But from what I can see here, I think everything has been answered. Yes, let me see the new message that came up. Okay, thank you. Elon Musk compensation deal, I don't know what an Elon Musk compensation deal is, but we can learn about it. Thanks, Sune. Next question, Frederic. How were the reserves valued? Well, I don't know the answer to that question. I mean, in the financial statements, they are I don't think they are valued. I think they're valued only on a basis of the investment made. So I don't think they carry a greater value than what the investment was. Of course, there is an NPV from the pre feasibility study, but as was said, as was mentioned several times, it's really a game plan. It's not a when we're going to be able to get to 25,000,000 tonnes or more. It's really a NIF if we're going to be able to grow the company at this sort of size. And here, there's one thing I think it's worth mentioning, which is that this is a growth company. It's growth stock. It's an entrepreneurial company. It's full of risks. It's full of uncertainties. It's full of dreamers like myself who are going around looking to ways to improve the health of the planet and everyone's health, trying to change the world, trying to change how very successful farmers cultivate, full of risks. And if by all means, you're risk averse, this isn't the right company to you, this is the right fit. If you feel like you need to micromanage management, if you feel like you need to micromanage the Board of Directors, if you feel like you need to micromanage all financial statements and tick everything, all the boxes and everything else, if you feel like if you have this anxiety, you should be spending your time doing that, that you don't have better things to do, I think you're starting from the wrong angle. You should look for a company that fits that kind of situation, like an established company, an operating company, a different circumstance, not what we are as a true growth company operating in an extraordinarily risky environment, which is so bold about it that puts up on its PowerPoint presentation that you might lose all your money if you invest in Verde. And in 2 situations, quite frankly, we were very close to doing that, perhaps not all the money, but very close to all the money people invested. Unfortunately, that's the reality. So we did the IPO in 2007, very good, 120, very promising early stage gold projects. Everyone was very excited about it. On it came the financial crisis. Share price went down to, I think, EUR0.15 or something as low as that. What if it was sold shares then? If it's not losing all your money, it's losing virtually all your money if you paid EUR1.20 for that share and then it's now down to €0.15 And then some of the people who bought those shares turned to me and said, Chris, we are the emperors of base rates. We know what's good for you and your company. We want to get your company and merge it with another shell company. Forget about what you're doing. The markets are never going to recover. They're never going to come back. Forget about this potash thing you want to do. The company still has some cash left from the IPO. It's now trading at €0.10, €0.20 It has €0.60 in its balance sheet from cash. Let's do it. And then I had fight, wasn't easy. It was my late 20s back then. Am I wrong here? Am I so what am I missing here? All those emperors of Day 3 turning to me and saying the fact I wanted to do potash is wrong. But for the good and for the worse, I succeeded. I succeeded in telling them to move on. And later on, they all became good friends. They all became very happy because they saw all those shares they bought at $0.12 gold, they're up to $10 in the golden age of potash. I know at least one who bought a whole bunch of shares and sold very close to the $10 when potash was very sexy. It was making the headlines in all over the world. BHP, the biggest mining company in the biggest super cycle, was trying to buy potash, was trying to buy potash Corporation So yes, those were the golden days of potash. But a lot of people in the field, very sorry, very sorry that a lot of people looked at what was going on and lost virtually all their money. That was the first time we had to reinvent the company. That was the first time. I could have wrong I could have been wrong. We could have just failed completely. I wouldn't be here. You guys wouldn't be here. But no, that isn't what happened. But hey, then we live in the gold age of potash. I'm having dinner next to Dennis Rodman. And potash is crazy, sexy. And people buying stock. People buy stock at $10 people buy stock at $8 $7 We have analysts telling everyone, the big names, analysts who get paid 1,000,000 of dollars, literally 1,000,000 of dollars per year, 1,000,000 in bonus and compensation, going around telling people Verdi is going to be a $16 I think the highest price was closer to $20 from now at least one big bank. And telling people going around and it's a great story, it's going to go and it's keep going up. And then we saw what happened later on. We saw the stock going all the way down from the high of $20 down to $0.20 And that $0.20 again, we had to reinvent the company because what triggered the price going up that much was something completely different to what we do nowadays, was something with potassium chloride, was the expectation we would be able to produce potassium chloride, the same fertilizer we now just between us despise, but that was what we're doing back then. Little they knew a tailing dam would burst in Brazil, a tailing dam killing hundreds of people and a second one would then also burst and tailing dams, which were even smaller than the ones we were planning to build for our potassium chloride operation. Needless to say about the potash price crash from $500 was always $600 Now the analysts are talking about $800 all along. So we had to reinvent ourselves for a second time. And when we reinvented ourselves for a second time, lots of people sold. I'm very sorry, lots of people sold and lots of people lost a lot of money when they made the decision to sell at €0.20 or €0.25 But the whole world, the whole dynamics of the market had changed. We had some very smart people, very smart institutional investor who bought in placements at 4.15, at 6.45 some big successful fund managers, but had it completely wrong what could have happened to potash prices. So we're doing good now. We have a new project. Sales are going well. We're very passionate about our purpose, very happy about what things are going on. But the same way I saw our share price being completely wiped out and we're having to reinvent ourselves. When you think about buying stock in Verde or if you're a shareholder in Verde, do not think this cannot happen again, Do not think we can control. I mean, it's something so new that it's even impossible for you to come up with all the risk factors associated with our business. No one has done it before, guys. It was easy. DHP, Nutrien, Nutrien spends per year on customer entertainment, probably more money than our market capitalization is. So if any of those companies had any expectation, there was even a remote chance we would succeed, they have plenty of cash to come and take us over. So this is a David versus Elias. This is an entrepreneurial company. This is a growth company. And if you want to see this with different eyes, you're really fooling yourselves and I think you should look for a different place to put your money in. Plenty of good companies out there, but probably it isn't very different. Thanks very much. It was a joy having spending this time with all of you. I really enjoy answering those questions. I'm very thankful for the support you have given me over the years. I know some of you have relatives who have who were huge believers and lovers of everything which we're doing and died throughout this journey. And I know some of you keep this dream alive, so I'm thankful for that as well in a family perspective, thankful for all the inputs we often receive by WhatsApp, by e mail. I'm sure Miki will learn to appreciate as well the importance of those inputs, this assistance and that's the word. I want to thank today's call as well. So thanks, everyone. Stay safe. Make sure you donate some money to the Brazil Foundation. We'll be put to very good use. Thanks a lot. Stay safe. Bye bye.

• Earnings release
• Slides