Conference. My name is Daniel Harriman. I'm an Analyst here at Sidoti, and this afternoon we're going to hear from Itafos. They trade on the Toronto Exchange Venture Exchange under the ticker IFOS. This is the company's first time at our conference, and we're lucky enough to hear from their CFO, Matt O'Neill, as well as Jon Donnel, who leads investor relations and corporate strategy for the company. We're going to give them about 25 minutes to go through their slide deck, after which time I'm going to open it up for Q&A. If you do have any questions at any time during the presentation, please feel free to type those into the Q&A box, and time permitting, we will get to as many as we can. Please join me in welcoming Itafos. With that, Matt, Jon, I'll hand it over to you.
Thank you so much for being here.
Thanks, Daniel, and thanks to everyone. We appreciate your interest in the Itafos story. Jon, if you could go to the next slide, please. Standard disclaimer relating to forward statements, and as we're a resource company in relation to our reserves and resource estimates. Next slide. Our business is a pretty simple business. We operate in two jurisdictions and have four assets in total. Our major asset is our Conda integrated phosphate facility located in southeast Idaho. At that facility, we produce about 360,000 tons of phosphate each year, split between two major products: our MAP, our dry granulated product, and our SPA, our liquid higher concentrated asset product. We also have an asset that's operating in Brazil called Arraias, which we'll go into some more detail. It's an asset that was in care and maintenance that we're beginning to restart and seeing very positive results behind.
We have two undeveloped assets, Santana and Farim, which provide great optionality for future options for growth or potential valuation of acquisition divestiture, and provide optionality in that portfolio as well. Jon, if you could flip to the next slide. Right here really is the fundamental strategic elements of what we do. The first element of it is just operational excellence, high utilization. We have great contracts and long-term offtake partners that support the underlying and underpin our business. We've been very disciplined in our investment. We continue to invest into our assets, and that includes maintaining those assets to continue to utilize them, extending the life of our asset out at Conda, and really restarting our growth profile in Brazil with the restart of Arraias. In terms of our portfolio, we did divest an asset, and we continue to look at the overall portfolio structure.
We are looking for identifying and value-creating opportunities. We have a unique scenario here, given our shareholder base, where we are controlled by a large private equity shareholder who owns 65% of the shares. I'm also pleased to say that we provided our maiden special dividend earlier this year following the sale of one of our non-core assets, and we paid that dividend out at the end of the first quarter and the start of the second quarter at the payment was made. Next slide, please, Jon. You know, the story for us, and this really underpins sort of the foundation of what we do, it's really around our operational excellence, our utilization compared to our peers. For the purposes of this peer group, we are going to use Mosaic and Nutrien's phosphate businesses. There is one other producer in the industry domestically in the U.S.
They're a private company, so we don't have the same statistics for them. What you can see here is a clear differentiation in our performance and utilization compared to that of two of the larger competitors, Nutrien and Mosaic. We essentially have one facility that we're running at 100%, and we've been able to maintain that through diligently reinvesting capital into that asset, making sure we keep up our maintenance and continue to have a world-class team there that operate that asset. We're very experienced. The team out there at Conda, led by our general manager, know the asset very, very well and are very thoughtful about how we put capital into the business, and we can see it in the results. The other factor that underpins our performance compared to our peers is really just the overall quality of our resource.
Like most mining companies, typically you identify the highest-grade resource and produce that first. As a very mature industry, we're seeing pretty significant degradations in overall resource quality globally, and that's having an impact on utilization rates. We're not different to that. We are going to see a decline in our overall resource quality. We do intend to alleviate that through a capital project, which I'll talk a little further along in the presentation. If you look at the other side of this slide, the high utilization rate really drives our EBITDA margin, and you can see compared to our peers, it's significantly higher, upwards of 500 basis points higher.
That's all in the context of us being the smallest operation with the lowest economies of scale and our geographical isolation of our facility, which causes us to incur higher transportation costs for some of our raw materials compared to our peers. Overall, it's a terrific story. The team's done a fantastic job, and it's about delivering quarter on quarter, and it's significant for us given we are a one, essentially a one asset portfolio. We need to do that to ensure that the business continues to operate at the rate it does. If you go to the next slide, you can see here it's really been a turnaround story. In 2020, we had net debt in excess of $250 million. You can see here that even in 2021, the net debt was at $218 million.
On the back of the utilization of our facility and strong market tailwinds, we've been able to restructure the balance sheet to a fact that we're actually in a net cash position. That's all whilst executing a mine extension project at Conda called the H1/ NDR project, which has all been funded through internally generated cash flow, even though we've been paying down and delevering the balance sheet. That deleveraging has seen us increase liquidity significantly, and you can see the overall liquidity profile has increased. At the end of the first quarter, we had total liquidity of $180 million, which puts a fortress on the balance sheet given the CapEx in front of us. If you look to the third graph on this slide, it really shows our CapEx profile.
The range is up to just a little over $100 million of potential CapEx, combination of maintenance capital and growth capital. I'll talk about those growth projects, but I would expect that there would be slightly higher capital as we move into next year, as we finish off those projects and get Conda ready for the new mine extension that's currently almost complete. If we move to the next slide, one of the fundamental reasons we're here and want to talk to you is there's a pretty significant valuation gap between us and our peers. Our capital structure, our investor structure is quite unique in that we are owned 2/3 by Castlelake, a private equity investor based in Minneapolis. That really does provide an overhang and impacts overall liquidity.
Jon and myself and David, our CEO, have been spending vast amounts of time trying to get the story out there. It does present a challenge. At that valuation gap, it's difficult for our major investor to see value in trying to sell down its interests, but they understand that without that, there are liquidity constraints to the volume that we trade at, and all those things contribute to that valuation gap. As you can see, there's pretty significant upside compared to some of our peers in the market. If we change tack slightly and talk a little bit about the market dynamics, there's two elements of the market dynamics for us. One is the overall agricultural market, where that is at. Crop prices are not as high as they've been in the last 24 months.
There has been an impact on overall affordability for fertilizers, given where fertilizer prices are. What is alleviating that to some extent is the fact that there have been significant government payments in the U.S. to assist farmers. We've not seen our demand being impacted, but it is inevitable that given where fertilizer prices are, there's likely to be some demand destruction going forward. We're currently not seeing that in our markets, nor are we seeing it in the prices, with phosphate prices continuing to rise over the last 90 days to some of their most historically high levels. Jon, if you could go to the next slide. If you look at the overall stocks-to-use ratio, long-term crop fundamentals should be pretty robust.
There's no doubt the tariffs and the tariff story is creating volatility, including can we export to China in relation to corn and things like that. On a global basis, you can see that the stocks-to-use ratio remains near its lows, at close to 16%, which is overall a bullish indicator compared to historical norms. In terms of our specific phosphate market, we operate in a global market. MAP is a globally traded product, but there are overall two aspects to what we want to talk about today. One is the global market, and the second thing is the U.S.-specific market. Globally, stocks remain very, very light. Part of the impact of this has been drawn by the decrease in exports from China in relation to MAP and DAP.
The graph on the right highlights that historically, as little as four years ago, China was exporting about 10 million tons of product. That is expected to decline to somewhere between 3.5 million and 4.5 million for this year. That decrease has taken a significant chunk out of the market. Further exacerbating that is that China has said that those exports will not go to India. Part of this reduction in global supply is being impacted and taken over by Morocco, who has extra capacity. This Chinese dent is having a significant impact on the overall global market. The reason for the Chinese exports declining is threefold. One is it's to maintain pricing for product domestically in China for the farmers there. The second thing has been the increased demand of purified acid, which is phosphate-based EV vehicles and LFP battery development.
The third impact for Chinese reductions is their strategy around overall supply and their overall resource life, which is declining pretty significantly. Domestically in the U.S., what we're seeing is a pretty significant reduction in total production in the U.S. That was evidenced by the utilization rates. It's really driven by a couple of factors. One is the overall quality of the reserves that remain in the U.S. The second factor is the utilization or the ability of our producers to produce. As you can see from our peers, a number of them have seen significant reductions.
If you add that constraint of lower supply, and Jon, if you could move to the next slide, the variability—sorry, one more—the variability of tariffs and the impact of tariffs on our ability to import product into the U.S., what we're seeing is a dry-up of all imports coming into the U.S. because of the announced tariffs. Morocco, Russia, and China were already subject to countervailing duties and could not essentially import or export to the U.S. That has, in the last few years, been covered off by Saudi Arabia, Mexico, Australia, and others. All of those now being subject to tariffs of at least 10% has seen imports into the U.S. completely dry up in the last three months, already making a tight supply market even further tighten.
What we are seeing there is that prices have risen from the $600 mark—Jon, one more slide, please—in as little as 90 days ago to over $700 at the moment. I saw a published price this afternoon of potentially being at $750 at the end of this week. All of that bodes well from a fundamentals perspective, supply perspective from us. Domestically, we sell our product essentially into the western U.S. We have some limited amount of sales into Canada, but essentially we sell our product west of the Mississippi River into the western part of the U.S. We sell 60% of our product or our MAP product under long-term contract to a company called Simplot , and then we sell our SPA product to about 35 customers. As I said, predominantly west of the Mississippi.
We see continued demand for all our products. If you go forward, Jon, just in terms of our assets, I mentioned that Conda is our flagship business. It is operated in southeast Idaho. It has been operating for over 30 years. It is a significant asset for us. EBITDA generation over the last four years has been in excess of $600 million. We acquired the asset in 2018. It closed in 2019 following the merger of Agrium and PotashCorp. It was a divestiture that was required for FTC reasons. That asset has been significant for us. Part of the reason we were able to acquire the asset was that it required an extension of its life through a new mining permit. Jon, if you could go to the next slide.
What we're currently working on is a new mine development, which we call the Husky 1 North Dry Ridge development. We've actually commenced mining operations at the mine at the end of the year. What we are finishing off out there at the moment is the development of our rail infrastructure and our load-out facility or tipple, both of which are expected to be operating in the second half of this year and allow us to move ore to the plant later on in the fourth quarter. Jon, one more slide, please. Just in terms of the longer-term opportunities, we don't have significant growth opportunities to increase capacity, but what we have opportunity to do out at Conda is to extend the life of the asset. If you look at this graph here, we're currently mining in two places.
One, Rasmussen Valley, number one, that will end at the end of this year. We've just commenced operating in the North Dry Ridge at mine, which will continue through to 2028. We have environmental and permitting and infrastructure approvals and the development of that infrastructure for the Husky 1 mine, which will take us through to at least mid-2037 per our independent technical report. There are, however, significant upside opportunities to extend the life of this asset through further development and further exploration. We are currently undertaking a drilling program that will cost annually between $6 million-$8 million across our other undeveloped leases to extend that life. It's a challenging environment to get environmental approvals. It took us upwards of eight years to get the approval for our North Dry Ridge and Husky mine.
Those approval processes are the same for everyone, and so there's quite a high barrier to entry for anyone to be able to get a new mine development. We're prudently spending money today to really guarantee the life of this asset well past the middle of the century and hopefully towards the end of the century. We'll have further developments over time as we put more money into development and appraising activities. We think there's significant resources that are undeveloped in the area. Talking about our overseas assets quickly, I'm mindful that I want to give people time to ask questions. Arraias is our Brazilian asset. It was an asset that we acquired out of bankruptcy about a decade ago. It's an asset that's failed twice due to overall resource quality.
What we have done since placing the asset in care and maintenance is to restart the facility on a limited basis. We're continuing to make incremental investments, and we plan to run that plant in 2027 at about 1/3 of its capacity. That will produce about 170,000 tons of SSP production. That capital is limited in what we need to spend to be able to get that moving. Brazil is one of the biggest and most robust fertilizer markets in the world. There's great opportunity for that. In care and maintenance, this asset was costing us about $5 million annually just to hold. Last year, we were able to produce about $4 million of EBITDA through the production of our sulfuric acid and some dry fertilizer. We expect some growth in those numbers as we move forward to 2027 and restart our SSP production in Brazil.
Jon, if you could go to the next slide. Here's just really a promotion internally showing some of the quality of the fertilizer we've been producing in Brazil. It's had a very high uptake in the local market. We operate in the north part of Brazil. The quality of our fertilizer has been very robust. What we're seeing is really strong demand for our current fertilizer production this year and seeing strong interest in our SSP production for future years. In terms of our other undeveloped assets, we do have some other undeveloped assets. We had a rare earth project, which we sold at the end of last, start of this year. We closed, announced that sale last year. That was for a rare earth project located in Brazil. It was sold to an Australian listed company, a junior mining company called St George Mining.
Proceeds from that transaction were $21 million paid out over three installments. We've got the first installment paid. The second installment of $6 million will be paid in November. Additionally, we also acquired 10% of St George Mining as consideration for that. It essentially operates as a call option over the future development of that asset. We're pleased to announce that St George have been executing on moving that asset forward and getting approvals that will allow them to begin drilling in relation to that asset. We have two other undeveloped assets, our Santana asset in Brazil and our Guinea-Bissau asset called Farim. Both of them are high-quality resources. Given the state of the balance sheet three years ago, we weren't in a position to really think about how those would be developed. As the world gets tighter on phosphate supply, we continue to see interest in those projects.
We continue to think about how we'll monetize those projects through the development and value creation associated with those assets. For Farim, for example, we'll consider potentially putting in place and exploring opportunities to finance that project, given its location in Africa and the importance of it from a development perspective in Africa. We're looking to potentially put in place offtake contracts and commit for all the product that we'll produce from that asset as well. In relation to Santana, there's an opportunity for us to do some desktop studies on the best way to develop that. That's the least developed of our assets in the portfolio, but something we're starting to think about now that we are in a position, given the strength of the balance sheet. Just in terms of our financial results, as you can see, our safety performance, I will call it world-class.
We only show here, I believe, the quarters, but we've operated at under one TRIFR versus what would be considered an industry standard significantly over two. It's really a part of the culture of what we do and its importance. Overall, another very strong quarter in terms of our EBITDA generation, close to $40 million, which looks closely in line with what we did last year. Finally, this is the overall guidance that we've provided. Like most mining companies, we guide on production and costs and capital in relation to what we do, given we are price takers in the market. In summation, really want to reiterate the point of this business is operating very, very well. I'd call it industry-leading in the U.S.
We're very focused on executing both operationally and also in our development of our new mine, which will come on schedule in the second half of this year. We continue to look for opportunities to create value for all our shareholders, including the potential for capital returns once we get through the elevated capital that we have to spend over the next 24 months. Daniel, with that, I'll open it up.
Awesome. Matt, Jon, that was fantastic. We have a lot of questions that came in. I don't think we're going to get to all of them, so I'm going to try to combine some quickly if that's okay.
Sure.
Matt, you kind of touched on this in the beginning, but there's quite a few questions that have come in about Castlelake.
Can you just kind of explain your relationship with them and then how they interact with the company in terms of do they provide any kind of mandates or are they decentralized management? What is their capital allocation? What are their priorities there with you guys being debt-free and cash-generative as well?
Sure. Castlelake formed the company. Essentially, they bought the Brazilian asset out of bankruptcy in 2016, went through the listing process in Toronto to raise capital to fund sort of the restart of that facility. They continue to own 2/3 of the stock. They hold two board seats. They have a controlling interest. They're active participants on our board. I will say that I suspect we are not core to the overall strategy of Castlelake, which is much more focused on consumer credit, asset-backed lending. They're big aviation lenders.
They're big property lenders in terms of asset-backed lending. They used to have a natural resources arm that's been wound down. Where we sit in their portfolio, they're not fund-constrained, so there's not a time horizon in relation to them having to do a divestiture. They are very sensitive to valuation, and they can see the valuation gap like everyone else. We do have a chicken-and-egg scenario here where they understand that they're part of the problem from a liquidity perspective, but they also don't want to sell it at 2.5x EBITDA. We do have active dialogue with them around trying to find opportunities. There is the potential for us to uplist off the Ventures Exchange to the Toronto Exchange. We have had preliminary conversations about whether a U.S. listing would help that.
It's hard to understand the benefit of that without a catalyst. I'll say that they're very active participants in trying to find ways to unlock value and to increase the share price.
You said they were obviously aware of the value disconnect, and a question came in about that. I know you touched on it, but would you consider their overwhelming position in the company to be the significant driver of that disconnect?
Yes. The thing for Castlelake is they also can see on the horizon, Daniel, that in two years, this asset, the business is going to generate significant free cash flow once the capital is spent in relation to the new mine development. They're not going to give the company away when there's probably an opportunity for significant capital returns from 2028 to beyond. That's the distinction.
That is, I think, yes, they see it. Ultimately, I think they do not think they are the natural holders of it, but they are also not going to just give the company away.
Got it. You were talking a little bit earlier comparing you to your peers. Can you help us just understand a little bit where you see your competitive advantage versus the other two companies that you highlighted? A few questions came in about that, and just kind of wanted to get your thoughts.
Sure. I think all else being equal, we started at a disadvantage in that we are smaller than everyone else. We just do not have some of the economies of scale that they have. Our geographic location is pretty isolated. Just by way of example, Mosaic have four facilities, Nutrien have two, Simplot have two, and we have one. We are the smallest producer.
Some of our advantages, I think some of our advantages is the quality of our management team, and I do not know the other management teams. I know that we do not compete for capital in the same way that they do. If you think of a Nutrien that is thinking about capital allocation, not just to its phosphate business, but to its potash business, its retail business. We have made a commitment to reinvest into our plants. If you look at Mosaic's guidance, for example, they have talked about the fact that they undermaintain those assets over the last four years and outlined a pretty significant plan where they are going to reinvest capital. They continue to actually stumble along, and they just announced last week a downgrade in their overall production that is tied to some of that maintenance.
We do not have that gap where we are having to go back and sort of do work that we should have done four or five years ago. I am often asked about capital allocation priorities, and maintenance capital is our first. We hold that like sacrosanct. We will not cut capital into that plant. We have a team that knows where to spend it, and they have done a great job on that. In terms of the other inputs, raw materials, we purchase sulfuric acid from Rio Tinto in Utah. That is something where we do not have a big—we do produce some of our own sulfuric acid, but that contract has been beneficial. We have a reliable supply of ammonia from Canada that is priced off Canadian gas and is not referenced to the Tampa price. We have gone from being better than market to undermarket to better than market.
That one swings around a bit. Really, it's about utilization and overall ore quality and rock quality, which is driving that difference. We continue to have very good rock. Mosaic, for example, are importing rock from Peru, which increases their overall cost of ore, just logistically getting it to their facilities to be able to process.
Perfect. Unfortunately, we just kind of ran up on time, and there were many, many questions that came in. I'm sure the audience would love to follow up with you guys afterwards. Matt and Jon, that was really a fantastic presentation. We're so excited to have seen you for the first time and look forward to hosting you at future conferences. For those of you in the audience, thank you for your participation and all the questions. I'm sorry we didn't have time to get to everything.
Matt, Jon, on behalf of Sidoti, thank you so much for being here, and thank you again to the participants.
Thank you, Daniel. If there are any questions that are outstanding, just feel free to reach out to us on our IR website. We'll be happy to answer any of those remaining and happy to have a conversation going forward. Thank you very much for putting this on.
Of course. Yeah, we had about 14 questions in the queue, so hopefully the people will follow up with you.
Great. Thanks, everyone.
Thank you so much.
Thanks, everyone.
Goodbye.
Bye.