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.