Itafos Inc · TSXV:IFOS
Itafos — Investor Presentation (September 2018)
47 slides from Itafos's investor presentation, September 2018
Slide 1: Corporate Presentation: Pure-Play Phosphate Fertilizer Company
Corporate Presentation “Pure-Play” Phosphate Fertilizer Company September 2018
Slide 2: Cautionary statements and forward-looking information
Cautionary statements and forward-looking information FORWARD-LOOKING INFORMATION This presentation contains forward-looking information (“FLI”) regarding future events or the future performance of the company (“Itafos”). Generally, FLI can be identified by expressions of belief, expectation or inte
Slide 3: Table of contents
Table of contents 1 Executive summary 2 Investment highlights A Appendix A: Phosphate highlights B Appendix B: Portfolio highlights C Appendix C: Financial highlights 3
Slide 4: Executive summary
Executive summary ITAF@S
Slide 5: Company overview
Company overview Key highlights ▪ Itafos is a publicly traded (TSX-V: IFOS) vertically integrated phosphate fertilizers and specialty products company with an attractive portfolio of long-term strategic businesses and projects located in key fertilizer markets worldwide ✓ Itafos Conda, a vertically
Slide 6: Capital markets overview
Capital markets overview1 Capitalization Shareholders Exchange ▪ TSX-V Ticker ▪ IFOS 29.3% Shares outstanding ▪ 142,070,301 Share price (C$/share) ▪ C$2.05 Average daily volume (YTD) ▪ 7,449 57.7% Market capitalization (C$ 000s) ▪ C$291,244 4.5% Cash (US$ 000s as of June 30, 2018) ▪ US$62,896 8.6% D
Slide 7: Strategy overview
Strategy overview Itafos’ mission is to be a leading “pure-play”, geographically diverse and vertically Mission integrated phosphate fertilizer and specialty products company, creating value for all its stakeholders in a responsible and economically sustainable manner Itafos will achieve its mission
Slide 8: Investment highlights overview
Investment highlights overview Industry leading board of directors and experienced management team ▪ Industry leading board of directors with balanced mix of executive and board of directors level 1. Outstanding skillsets leadership ▪ Experienced management team with extensive operations and commerc
Slide 9: Investment highlights overview (cont'd)
Investment highlights overview (cont’d) Brazilian vertically integrated phosphate fertilizer business with 500kt per year of fertilizer production and sales capacity ▪ Vertically integrated producing asset base benefiting from consolidated operations and infrastructure and security of key raw materi
Slide 10: Investment highlights
[2] Investment highlights ITAF@S
Slide 11: Industry leading board of directors
1 Industry leading board of directors Name Role Experience ▪ Partner at Castlelake, responsible for the firm’s investments in emerging markets ▪ Over 20 years of investment and asset management experience Brent de Jong Director and Chairman ▪ Previous experience includes CEO of Zaff Capital LP and s
Slide 12: Experienced management team
1 Experienced management team Name Role Experience ▪ Senior executive with 20+ years of hands-on and diverse corporate and business development, M&A, capital raising and investment management experience Brian Zatarain CEO ▪ Previous experience includes senior roles at Zaff Capital LP (co-founder and
Slide 13: Owner and operator of attractive long-term and strategic phosphate businesses and projects
2 Owner and operator of attractive long-term and strategic phosphate businesses and projects located in key fertilizer markets worldwide Key highlights ▪ Current fertilizer production and sales capacity of approx. 1.1Mt per year and total phosphate rock resources of approx. 870.1Mt with contained P2
Slide 14: Itafos Conda: A North American vertically integrated phosphate fertilizer business
3 Itafos Conda … A North American vertically integrated phosphate fertilizer business Key highlights ▪ Located in Conda, Idaho, near Soda Springs, Idaho, approx. 50 miles southeast of Pocatello, Idaho ▪ Production and sales capacity of approx. 550kt per year of MAP, SPA, MGA and APP serving the Nort
Slide 15: Strategic position in attractive, consolidated North American fertilizer market
3 Strategic position in attractive, consolidated North American fertilizer market Key highlights <500kt JR Simplot Itafos Pocatello Conda 500-1,000kt JR Simplot Rock Springs 1,000-1,500kt >1,500kt Nutrien Aurora Nutrien White Springs Mosaic Itafos Conda Bartow JR Simplot Nutrien Geismar Mosaic Uncle
Slide 16: Operational flexibility offers multiple options to deliver P2O5 value to market
3 Operational flexibility offers multiple options to deliver P2O5 value to market Key highlights Sales by customer size (US$mm)1 ▪ Itafos Conda’s products sold into the North American 26 fertilizer markets ▪ Itafos Conda partners with leading crop services companies that have the trust of the grower
Slide 17: Itafos Arraias: A Brazilian vertically integrated phosphate fertilizer business
4 Itafos Arraias … A Brazilian vertically integrated phosphate fertilizer business Key highlights ▪ Located in Arraias, Brazil, in close proximity to the border of Goias and Tocantins states ▪ Production and sales capacity of approx. 500kt per year of SSP serving the Brazilian fertilizer markets ▪ R
Slide 18: Strategic position in one of the fastest growing fertilizer markets in the world
4 Strategic position in one of the fastest growing fertilizer markets in the world SSP SSP domestic target region capacity andisdomestic in coastalcapacity /southern Phosphate fertilizer imports have less impact on SSP LEGEND Itafos Arraias 34% Yara 50% Timac Cibrafertill 89% 100% PA MA Galvani / Ya
Slide 19: Adds competitive domestic supply to SSP market with disciplined sales and marketing strategy
4 Adds competitive domestic supply to SSP market with disciplined sales and marketing strategy Target region Composition of customers LEGEND Itafos Arraias Blenders FOB Arraias 1 FOB Uberaba 2 50% 50% 1, 000 Km 1 750 Km 2 Blenders Farmers 500 Km Key highlights ▪ Lean sales team design which is based
Slide 20: Itafos Farim: West African, construction ready phosphate rock mining project
5 Itafos Farim … A West African, construction ready, high-grade and low cost phosphate rock mining project Key highlights Reserve and resources highlights1 ▪ Located near Farim, 120km northeast of Bissau Item Tons (Mt) Grade (%) P2O5 (Mt) ▪ Extensive geological deposit with potential to increase Res
Slide 21: Itafos Farim (cont'd): Milestones and status
5 Itafos Farim … A West African, construction ready, high-grade and low cost phosphate rock mining project (cont’d) Milestones Status Highlights Feasibility Study ▪ Complete ▪ Reviewed by independent technical consultants Environmental and social impact ▪ Based on IFC guidelines and Equator principl
Slide 22: High quality phosphate rock is becoming more attractive
5 High quality phosphate rock is becoming more attractive Itafos Farim specification sheet Proposed changes to EU regulation on fertilizers Element Typical Range Maximum ▪ EU Parliament voted to reduce allowable Cadmium P2O5 34.0% +/- 0.5% - levels in fertilizers sold across the EU - Current level o
Slide 23: Compelling economic profile anchored by operating businesses and development projects
6 Compelling economic profile anchored by operating businesses and development projects Item 2018 2019 2020 Notes EBITDA Itafos Conda US$40-50mm US$20-30mm US$40-50mm Drop in 2019 due to sulfuric acid contract re-pricing Itafos Arraias US$(10)-(5)mm US$15-25mm US$20-30mm 2018 represents 2H 2018 EBIT
Slide 24: Appendix A: Phosphate highlights
A Appendix A: Phosphate highlights
Slide 25: Phosphate is a critical nutrient
Phosphate is a critical nutrient Why phosphorus? Effect of phosphorus on plant and crop growth ▪ All life forms need the element Phosphorus (P), which is involved in photosynthesis, energy transfer, cell division and enlargement ▪ Important in root formation and growth that improves the quality of f
Slide 26: Phosphate supply/demand expected to stabilize in mid-term
Phosphate supply/demand expected to stabilize in mid-term Projected 5-year phosphate demand growth Global supply to be outpaced by demand growth Global phosphate capacity additions and demand India 2.5 growth (mm tones P2O5) China Europe China & FSU 2.0 China 8% 1.5 0% Saudi Arabia 2% Saudi Arabia N
Slide 27: Traded phosphate rock market volumes have not grown significantly over last 20 years
“Traded” phosphate rock market volumes have not grown significantly over last 20 years Global annual phosphate rock production (Mt) Phosphate rock trade 1991 – 2021E 35 51 30 25 20Mt 82 traded in 20 the spot market 15 12 10 10Mt locked in 5 supply agreements 27 0 27 China Morocco U.S. Russia Other I
Slide 28: Appendix B: Portfolio highlights
B Appendix B: Portfolio highlights
Slide 29: Portfolio highlights
Portfolio highlights Item Itafos Conda Itafos Arraias Itafos Paris Hills Itafos Farim Itafos Santana Itafos Araxá Itafos Mantaro Itafos ▪ 100% ▪ 96.8%(*) ▪ 100% ▪ 100% ▪ 99.4%(*) ▪ 100% ▪ 100% Ownership ▪ Tocantins, ▪ Farim, Guinea ▪ Minas Gerais, Location ▪ Idaho, U.S. ▪ Idaho, U.S. ▪ Pará, Brazil
Slide 30: Itafos Conda
Itafos Conda Operating business Key highlights Location highlights ▪ 100% owned by Itafos ▪ Vertically-integrated phosphate fertilizer business with production and sales capacity of 550kt per year ▪ Produces MAP, SPA, MGA and APP to be sold to Conda, ID wholesale and retail customers ▪ Located in Co
Slide 31: Itafos Conda expected process overview
Itafos Conda expected process overview Operating business M B Phosphate Rock Grade: Ore Rock Ammonia 29.5% Volume: 1,300kt G C ▪ Mined Volume: ▪ Volume: 47kt MAP ▪ Volume: 335kt 2,000kt 3.75 t/t ▪ Sourced from Nutrien Volume: 335kt ▪ Sell to Nutrien ▪ Purchased Volume: 1.00 t/t 0.533 200-300kt P P t
Slide 32: Itafos Arraias
Itafos Arraias Operating business Key highlights Location highlights ▪ Owned 96.8% by Itafos ▪ Vertically-integrated phosphate fertilizer business with production and sales capacity of 500kt per year ▪ Produces SSP to be sold to blenders and farmers and PA MA excess sulfuric acid to be sold to indus
Slide 33: Itafos Arraias expected process overview
Itafos Arraias expected process overview Operating business M B Phosphate ▪ Volume: 6kt Rock Grade: Ore Rock Ammonia ▪ Sourced from 28% Volume: 320kt Petrobras, others ▪ Mined Volume: 3,100kt 1.7 t/t P2O5 Grade: 5.1% A 0.94 t/t G G C Strip Ratio: 2.5x Acidulation Granulation GSSP ▪ Volume: 500kt Vol
Slide 34: Itafos Paris Hills
Itafos Paris Hills Near-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be integrated Conda with Itafos Conda ▪ Located in Idaho, U.S. on a property consisting of approx. 1,010 ha of land and clo
Slide 35: Itafos Paris Hills expected process overview
Itafos Paris Hills expected process overview Near-term project M C Phosphate Rock Grade: Ore Rock 29.5% Volume: 0.95kt ▪ Mined Volume: 0.95kt ▪ Volume: 0.95kt P2O5 Grade: 29.5% T C ▪ Transport the Strip Ratio: TBD Trucking Phosphate Rock phosphate rock to Volume: .95kt Volume: .95kt Itafos Conda (ap
Slide 36: Itafos Farim
Itafos Farim Near-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be sold to producers of phosphate based fertilizers ▪ Located in Farim, Guinea Bissau on a property consisting of approx. 30,625
Slide 37: Itafos Farim expected process overview
Itafos Farim expected process overview Near-term project M B Phosphate Rock Grade: Ore Rock 34% Volume: 1,348kt ▪ Mined Volume: 1,750kt ▪ Volume: 1,348kt ▪ Sell to international P2O5 Grade: 30% T C producers and Strip Ratio: 9.6x Trucking Phosphate Rock distributors of Volume: 1,348kt Volume: 1,348t
Slide 38: Itafos Santana
Itafos Santana Mid-term project Key highlights Location highlights ▪ Owned 99.4% by Itafos ▪ Integrated phosphate rock mine and SSP production facility development project ▪ Expected to produce SSP to be sold to blenders and MA farmers PA PI ▪ Located in Pará, Brazil on a property consisting of TO a
Slide 39: Itafos Santana expected process overview
Itafos Santana expected process overview Mid-term project M B Phosphate ▪ Volume: 6kt Rock Grade: Ore Rock Ammonia 34% Volume: 300kt ▪ Mined Volume: 1,500kt 1.7 t/t P2O5 Grade: 12.5% A 1.00 t/t G G C Strip Ratio: 2.8x Acidulation Granulation GSSP ▪ Volume: 500kt Volume: 500kt Volume: 500kt Volume: 5
Slide 40: Itafos Araxá
Itafos Araxá Mid-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock and rare earth oxide mine development project ▪ Expected to produce phosphate rock and rare earth PA MA oxides to be sold to producers of phosphate based PI fertilizers and rare earth products TO
Slide 41: Itafos Araxá expected process overview
Itafos Araxá expected process overview Mid-term project M Ore ▪ Mined Volume: 1,500kt P2O5 Grade: 12.5% O N C Strip Ratio: 2.8x Niobium Plant ▪ Volume: 0.7kt Volume: 0.7kt ▪ International markets 0.92 t/t Sulfuric Acid ROM ▪ Volume: TBD 0.22 t/t R C REE Solvent NaOH (25%) ROM Ore Cracking Plant ▪ Vo
Slide 42: Itafos Mantaro
Itafos Mantaro Mid-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be sold to producers of phosphate based fertilizers ▪ Located in Junin, Peru on a property consisting of approx. 12,800 ha of la
Slide 43: Itafos Mantaro expected process overview
Itafos Mantaro expected process overview Mid-term project M B Phosphate Rock Grade: Ore Rock 28.8-32.5% Volume: TBD ▪ Mined Volume: TBD P2O5 Grade: 10.0% T T C Strip Ratio: TBD Trucking Phosphate Rock ▪ Volume: TBD Volume: TBD Volume: TBD ▪ Sell to national and international producers and distributo
Slide 44: Appendix C: Financial highlights
C Appendix C: Financial highlights
Slide 45: Income statement
Income statement Income statement Q2 2018 Q1 2018 ∆ US$ ∆% Income statement (US$ 000s) Revenues, net 67,187 58,116 9,071 16% Cost of goods sold 52,402 44,225 8,177 18% 14,785 13,891 894 6% Expenses Selling, general and administrative expenses 8,089 5,221 2,868 55% Operating income (loss) 6,696 8,670
Slide 46: Balance sheet
Balance sheet Balance sheet Q2 2018 Q4 2017 ∆ US$ ∆% Assets (US$ 000s) Cash 62,896 63,677 (781) -1% Accounts receivable 22,721 116 22,605 19487% Inventories 121,664 8,277 113,387 1370% Other current assets 28,563 9,005 19,558 217% Total current assets 235,844 81,075 154,769 191% Property, plant and
Slide 47: Cash flow statement
Cash flow statement Cash flow statement H1 2018 H1 2017 ∆ US$ ∆% Operating activities (US$ 000) Net income (loss) 63,453 (13,512) 76,965 -570% Adjustments for the following items: Depreciation and depletion 4,931 122 4,809 3942% Cash settlement of share-based payments (140) - (140) NA Share-based pa