Shareholder Update - Potassio do Brasil

November 2015
Shareholder Update
Brazil Potash Corp, Suite 800, 65 Queen Street West, Toronto, On M5H 2M5 www.potassiodobrasil.com.br
Dear Shareholder,
As the year draws to a close we are pleased to report that 2015 has been a very productive year for Brazil
Potash given the many milestones achieved to substantially de-risk the Autazes project adding significant
value for shareholders. In this shareholder update we will provide an overview of our progress on the
Autazes Bankable Feasibility Study (BFS) including tailings management, thoughts on the recent weakness
of the Brazilian economy and how it affects Brazil Potash, construction financing and finally some
thoughts on our path forward in 2016 and beyond.
Autazes Bankable Feasibility Study (BFS)
The BFS is underway at Autazes and on schedule to be completed in late Q1 2016. Completion of this
study will be a major milestone for the company providing the confidence required by major banks, export
credit agencies and investment funds to commit the capital required to finance our project’s construction.
The feasibility study is being led by Worley Parsons with support from Golder, ERCOSPLAN and several
Brazilian specialized firms that are all recognized as being amongst the best in their field. For example,
Worley Parsons has tremendous construction management experience in Brazil including the US$14
billion S11D iron ore project for Vale which is nearing completion, on schedule and under budget. Golder
is one of the world’s top environmental consulting firms and ERCOSPLAN, who led the completion of our
PEA, has a specific focus on the processing of salts such as potash.
Tailings Management – Brazil Potash does NOT have the same risks as Samarco
Integral to the design and permitting of mining projects is the correct approach to deal with the tailings
generated. The Samarco (Vale/BHP iron ore project) tailings dam failures in Minas Gerais State has
focused the attention of the Brazilian public, government and mining companies on the consequences of
catastrophic failures, which in this case include tragic loss of life, environmental damage, financial costs
and reputational damage.
The final report on the reasons behind Samarco’s tailings dam failures is months away from being issued
however the public information available to date includes the following: two earthquakes occurred
shortly prior to the dams failing; a slurry dam collapsed first triggering a downstream second dam failure
that released ~60m3 of water/tailings; and the town of Bento Rodrigues was located below this second
dam in the direct path of the breach leading to its demise.
There are fundamental differences between the primarily dry stacked salt tailings stockpiles that the
Autazes project will have as compared to Samarco’s slurry and water filled tailings dams including:
 Samarco’s tailings dams held a slurry consisting mainly of water whereas the Autazes salt
tailings will be dry stacked having a projected moisture content of only 8% so the tailings are
unlikely to ever move. The likelihood of the tailings ever flowing is further reduced because
salt tailings tend to harden into a stable solid block over time
 Samarco’s tailings dam was ~70m high whereas the Autazes salt stockpiles will be 15m high
BPC Shareholder Update
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At Autazes, to minimize the size of the tailings stockpile, after about five years of operation, a
large portion of the tailings generated will be backfilled underground into rooms excavated
from mining operations to minimize our project’s environmental footprint
As part of the licensing process for the Autazes project, the Brazilian Federal and State mining,
environmental and safety agencies will carry out a review of our tailings dam design, construction and
operating procedures. While I anticipate the review may be further refined in the wake of the Samarco
tailings dams failures, because of the fundamental differences between the tailings at Samarco and the
tailings we will produce, there should not be any material adverse impacts on our project.
Brazilian Economy
It is hard to open the business section of the newspaper these days without reading a headline about the
weakness of the Brazilian economy. At face value this would seem a point of concern for Brazil Potash,
but it’s important to keep in mind a couple of key points that protect Brazil Potash from domestic
weakening. First of all, the current Brazil Real depreciation actually works in Brazil Potash’s favour as a
large portion of our capital costs, as well as operating costs, are in Real, however our product is sold and
priced in United States dollars. Second, Brazil Potash’s major customers include fertilizer blenders and
large farming cooperatives who also largely sell their products in United States dollars with costs in
domestic Real consequently, purchasers will continue to afford potash as their profit margins should also
increase with a depreciating Real. The agriculture sector in Brazil continues to be a global food producing
powerhouse because Brazil has one of the highest rates of available arable land and the greatest available
amount of fresh water globally coupled with a very temperate climate, skilled labour and direct water
access to international markets. Based on our significant logistics advantage, as set out in our PEA, Brazil
Potash will be able to sell potash into the domestic Brazil market at substantially lower all in costs than
international producers.
Construction Financing
Over the past few months, senior management has reached out to a number of existing major fertilizer
producers, equity funds, export credit agencies and banks to raise awareness of our project given our
aspiration to start construction late next year. The response has been tremendous as we have already
received several non-binding expressions of interest, particularly for debt financing, which I anticipate
will make up roughly 60% of our construction costs. Some of these groups have participated in site due
diligence visits and I anticipate this process will be ongoing until the middle of next year given the
extensive review process many of these groups have in place.
Looking Ahead
As we enter the New Year, our main focus will continue to be completion of the Autazes feasibility study,
securing project construction financing and obtaining the installation license to allow for project
construction towards the end of 2016. Substantial progress has already been made in many of these
areas as outlined in this update and I continue to add key people to our team as the project progresses.
One example of a recent key hire is our VP Sales and Marketing Marcos Pedrini who joins us after retiring
from Vale where he worked for 30 years, most recently as their General Manager of Sales for their
fertilizer department. Over the coming months Marcos will meet with all of the fertilizer blenders and
major farming cooperatives in Brazil to increase domestic awareness of our project and source letters of
intent for future potash sales. As you can see, 2016 is going to be a pivotal and exciting year for our
company!
BPC Shareholder Update
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Best regards,
Brazil Potash Corp.
Matt Simpson
Chief Executive Officer
Qualified Person
David Gower, an Officer of the Company and a qualified person under NI 43-101, has reviewed the scientific and technical
information herein.
Cautionary Note Regarding Forward-Looking Statements
All statements, other than statements of historical fact, contained in this shareholder update constitute “forward-looking
statements” and are based on the reasonable expectations, estimates and projections of the Company as of the date of this
letter. The words “plans,” “expects,” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,”
“intends,” “anticipates,” or “does not anticipate,” or “believes,” or variations of such words and phrases or statements that
certain actions, events or results “may,” “could,” “would,” “might,” or “will be taken,” “occur” or “be achieved” and similar
expressions identify forward-looking statements. Forward-looking statements include, without limitation, statements
regarding mineral resource estimates, PEA projections, strategic transactions and financing sources, the growth of the
phosphate market, expected industry demands, the Company’s business strategy, projected capital and operating
expenditures, currency fluctuations, government regulation and environmental regulation. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company as of the
date of such statements, are inherently subject to significant business, economic and competitive uncertainties and
contingencies. The estimates and assumptions contained in this letter, which may prove to be incorrect, include, but are not
limited to, the various assumptions of the company set forth herein. Known and unknown factors could cause actual results to
differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to
fluctuations in the supply and demand for potash, changes in competitive pressures, including pricing pressures, timing and
amount of capital expenditures, changes in capital markets and corresponding effects on the company’s investments, changes
in currency and exchange rates, unexpected geological or environmental conditions, changes in and the effects of, government
legislation, taxation, controls and regulations and political or economic developments in jurisdictions in which the Company
carries on its business or expects to do business, success in retaining or recruiting officers and directors for the future success
of the Company’s business, officers and directors allocating their time to other ventures; success in obtaining any required
additional financing to make target acquisition or develop an acquired business; employee relations, and risks associated with
obtaining any necessary licenses or permits. Many of these uncertainties and contingencies can affect the company’s actual
results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements
made by, or on behalf of, the Company. There can be no assurance that forward-looking statements will prove to be accurate,
as actual results and future events could differ materially from those anticipated in such statements. All of the forward-looking
statements made in this letter are qualified by these cautionary statements. These factors are not intended to represent a
complete list of the factors that could affect the Company. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, except to the extent required by applicable law. The reader is cautioned not to place
undue reliance on forward-looking statements.