TSX: MBC
OTCQX: MBCFF
Shares Outstanding: 181,607,492 
Fully Diluted: 230,606,330

TORONTO, May 13, 2014 /CNW/ - MBAC Fertilizer Corp. ("MBAC" or the "Company") (TSX:MBC and OTCQX:MBCFF) announced today highlights of its first quarter results ended March 31, 2014  and provided a general corporate and operational update on its Itafós Arraias Single Super Phosphate ("SSP") Operations ("Itafós" or the "Itafós Operations").  The Company's Financial Statements and Management Discussion and Analysis ("MD&A") for the quarter ended March 31, 2014 are available on www.sedar.com.

RECENT HIGHLIGHTS:

  • Appointed Cristiano Melcher, a senior executive with more than 20 years in Brazil's resource, fertilizer and chemical sectors, as President and CEO effective February 1, 2014.
  • Strengthened the management team by appointing Nelson Canato Jr. as Vice President of Operations effective March 17, 2014. Mr. Canato brings more than 25 years of fertilizer operations experience to MBAC.
  • Received firm purchase commitments for approximately 115,000 tonnes of SSP.
  • Completed a bought deal public equity offering, which included significant management and insider participation, for net proceeds of approximately C$19.5 million.
  • Continued to make progress on strengthening the Company's working capital position and extension of the senior debt maturities.
  • Produced over 21,000 tonnes of SSP in April, which represents MBAC's highest monthly production to date.

ITAFÓS OPERATIONS UPDATE
MBAC has witnessed substantial improvement in its management team and operations year to date and particularly in April after the recent equity financing which strengthened the Company's working capital position.  

Effective March 17, 2014 the Company appointed Nelson Canato Jr. as Vice President of Operations to manage production facilities at the Itafόs Operations.  After spending approximately one month reviewing the operations, Mr. Canato implemented several operational modifications that are improving the consistency of the Itafós Operations.

In April 2014 total production reached over 21,000 tonnes of SSP, which represents the highest monthly production to date.  As a result, MBAC continues to target declaring commercial production during Q2 2014.  Operations in Q1 2014 reflected early stage ramp-up issues as well as working capital constraints, which have subsequently been improved.

The Company's sales efforts for 2014 are being advanced through negotiations with large fertilizer distributors, blenders, large farmers and grain traders within the region.  The Company has received firm purchase orders for approximately 115,000 tonnes of SSP year to date, a portion of which has been paid in advance. 

To satisfy market demand, the Company is providing its customers with the ability to purchase its SSP product in one tonne bags in addition to the standard bulk delivery.  The Company will also provide its customers with the ability to have micronutrients added to the SSP providing a broader product offering.  Each of these initiatives is expected to provide the Company with additional margin.

Over the longer term, the Company's production ramp-up and sales growth are supported by strong market fundamentals and trends in Brazil. Fertilizer consumption has continued to be strong, driven by increased intensity of fertilizer application and increased planting area. Soybean prices are at relatively high levels, encouraging Brazilian farmers to maximize crop yield through the use of fertilizers and other agricultural inputs.  Recent data from ANDA (the National Fertilizer Association in Brazil) shows that consumption of all fertilizers in Brazil for Q1 2014 was up by 10.6% compared to the same quarter last year and imports of fertilizer were up by 31.3% over the same quarter last year.  ANDA is currently forecasting fertilizer consumption in Brazil of 32.1 million tonnes in 2014 which would be yet another record year.

While overall fertilizer demand and consumption continue to grow, ANDA forecasts that Brazil's imports of SSP will decrease to approximately 400,000 tonnes in 2014 from approximately 870,000 tonnes in 2013.  The Company believes that this should lead to an improved competitive environment for MBAC's product in their target region. The decline in imports is consistent with Brazil's objective of reducing its dependence on imported fertilizer, given the strategic importance of fertilizer for Brazilian agriculture – one of the largest sectors in the Brazilian economy and one of the country's principal export engines.

UPDATE ON FINANCING INITIATIVES AND LIQUIDITY
The Company has received several proposals for working capital and the overall debt restructuring.  These proposals are in various stages of review and in some circumstances are subject to confirmatory due diligence.

Subsequent to the quarter, the Company has entered into negotiations and expects to complete the securitization of the outstanding balance of the CELTINS receivable for total net proceeds of approximately US$6.7 million.

In addition, the Company is continuing to advance discussions with its senior lenders regarding the extension of principal repayment terms on US$192 million of senior debt.  The bank group remains supportive. Such extension will be subject to certain conditions including final credit committee approvals and the execution of definitive documentation.  The Company expects to receive final credit committee approvals from its lenders by the end of the second quarter.

The re-profiling of the repayment terms of its long term debt will provide the Company with additional liquidity for the Itafós Operations, and enable the Company to pursue its operational and strategic plans in an optimized manner.

CONFERENCE CALL
The Company will hold a conference call to discuss its Q1 2014 financial results on Tuesday, May 13, 2014 at 8:30 am EDT.  All interested parties can join the conference call by dialing 1-888-231-8191 or 647-427-7450. Please dial in 15 minutes prior to the start of the call to secure a line.  The conference call will be archived for replay until midnight May 20, 2014.  To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the encore code: 41194606.

The corporate presentation and audio of the conference call will be available via webcast at: http://event.on24.com/r.htm?e=790136&s=1&k=324BB2B55F9CFA44B906BB340F62B75B

Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.  An archived replay of the webcast will be available on the Company's website.

About MBAC
MBAC is focused on becoming a significant integrated producer of phosphate fertilizers and related products in the Brazilian and Latin American markets. MBAC has an experienced team with significant experience in the business of fertilizer operations, management, marketing and finance within Brazil. MBAC owns and operates the Itafós Arraias SSP Operations which consists of an integrated fertilizer producing facility comprised of a phosphate mine, a mill, a beneficiation plant, a sulphuric acid plant, an SSP plant and a granulation plant and related infrastructure located in central Brazil. The Itafós Operations are estimated to have production capacity of approximately 500,000 tonnes of SSP per annum. MBAC's exploration portfolio includes a number of additional exciting projects, which are also located in Brazil. The Santana Phosphate Project is a high grade phosphate deposit located in close proximity to the largest fertilizer market of Mato Grosso State and animal feed market of Pará State. The Company continues to search for additional fertilizer opportunities in the Brazilian and other Latin-American markets, where strong agricultural fundamentals and unique opportunities are expected to provide attractive growth opportunities in the near future. Further information on MBAC can be found on the Company's website at www.mbacfert.com and on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements related to activities, events or developments that the Company expects or anticipates will or may occur in the future, including, without limitation, statements related to the Company's business strategy, objectives and goals; the price expectations for SSP in the Company's target market, that the sales efforts will generate expected results, the Company's expectation to declare commercial production, the Company's expectation regarding completion of its senior debt restructure, re-profiling of the repayment terms and working capital financing, and that its liquidity situation will improve, the expectation that the Company will generate cash flows from operations in the upcoming periods, the realization of the Itafós Operations estimated capacity of 500,000 tonnes per year of SSP, ;  the expectations in relation to SSP prices increases or reaching the levels expected for 2014; and the expectation to add micronutrients to the Company's product to provide a broader product offering, the Company's goal of becoming a significant integrated producer of fertilizers, the realization of the Itafós Operations estimated capacity of 500,000 tonnes per year of SSP, and that the Company will continue to be able to manage and to improve its working capital position and the expectation regarding the development and financing of the Santana Project.  Forward-looking statements are often identified by the use of words such as "plans", "planning", "planned", "expects" or "looking forward", "does not expect", "continues", "scheduled", "estimates", "forecasts", "intends", "potential", "anticipates", "does not anticipate", or "belief", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on a number of factors and assumptions made by management and considered reasonable at the time such statements are made, and forward-looking statements involve known and unknown risks, uncertainties and other factors may cause the actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such risk factors include, among others, the price expectations for SSP in the Company's target market not being fulfilled, the risk that the Company may not be able to provide a broader product offering, the risk that the sales efforts will not generate expected results, the Company not declaring commercial production, the risk of non-completion of the Company's senior debt restructure, re-profiling of the repayment terms and working capital financing, and that its liquidity situation will not improve, the risk that the Company will not generate cash flows from operations in the upcoming periods and the risk of the non-realization of the Itafós Operations estimated capacity of 500,000 tonnes per year of SSP,  the risk that the Company may not be able to manage or improve its working capital position,  risks associated with the expectation regarding the development and financing of the Santana Project, as well as those factors disclosed in the Company's current Annual Information Form and Management's Discussion and Analysis, as well as other public disclosure documents, available on SEDAR at www.sedar.com. Although MBAC has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. The forward-looking statements contained herein are presented for the purposes of assisting investors in understanding the Company's plan, objectives and goals and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking statements.

NON-IFRS MEASURES

The Company has included certain non-IFRS measures including "Adjusted Net Loss and Adjusted Net Loss per share" to supplement its financial statements, which are presented in accordance with International Financial Reporting Standards ("IFRS"). The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The presentation of adjusted non-IFRS measures are not meant to be a substitute for net loss or net loss per share presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Adjusted net loss and Adjusted net loss per share are calculated as net loss excluding (a) share-based payment expense, (b) gains and losses on the disposition of long-term assets, (c) amortization of deferred transaction costs, (d) unrealized gains and losses on derivative instruments, and (e) unrealized foreign exchange gains and losses. Management believes that the presentation of Adjusted net loss and Adjusted net loss per share provide useful information to investors because they exclude certain non-cash and other non-recurring items and are a better indication of the Company's results from operations.

SOURCE MBAC Fertilizer Corp.

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