When it comes to agribusiness, Brazil tops the list with a significant spread of exported commodities, including coffee, sugar, beef and sugar cane. However, a booming agricultural industry means the country’s success depends on one very important ingredient: fertilizer.
With no significant production of fertilizer minerals like potash and phosphate, Brazil relies heavily on imports to keep its soil in prime shape for the growing season. Luckily, the country is now trying to boost its fertilizer production, meaning that there may be some hope yet for reduced imports.
The main agricultural hubs of the South American country are Southern Brazil, which accounts for roughly two-thirds of the country’s agriculture. Brazil’s northern region — which includes some of the Amazon basin — is also becoming a significant region for agriculture; however, the region is characterized by far drier temperatures than its southern counterpart and often falls victim to droughts. Northern Brazil also falls short when it comes to infrastructure, capital and good soil; that said, it still hosts a substantial number of crops, such as cocoa and tropical fruits. Central Brazil has also started gaining some attention when it comes to agriculture — land that was once thought to be unsuitable for farming is now thriving with mechanized crop agriculture.
One of the companies currently developing a phosphate project in Central Brazil is DuSolo Fertilizer (TSXV:DSF), which announced today that it has secured an operational license for its proposed Santiago mine, part of the Bomfim phosphate project. That permit is the latest in a series of licenses the company has received and highlights the progress DuSolo has made at Bomfim in the last month.
Earlier this month, DuSolo secured a lease and completed the upgrade on its phosphate fertilizer processing facility. Securing the lease was a significant milestone for the company — combined with the completion of the processing facility, the company now has a process plant that’s able to produce 80,000 tonnes of direct application natural fertilizer (DANF) per year. With the latest news, “DuSolo is now one permit away from beginning production of DANF at its proposed Santiago mine,” Haywood Securities’ Mick Carew said in a note.
Once the final permit is in place, the company should produce 80,000 tonnes per year of DANF, while also pursuing an aggressive drill program to expand the resource. Carew states that his firm is looking forward to DuSolo acquiring its mine permit for Santiago as it will be key in transitioning the company from an explorer to a producer.
DuSolo is a 75-percent owner of Bomfim and has an option to increase its ownership to 100 percent should it meet certain obligations. The project’s claims are found mostly in the southern part of the state of Tocantins, near MBAC Fertilizer’s (TSX:MBC) Itafos Arraias SSP project. The project has an initial resource estimate of 462.6 Kt of measured and indicated P2O5 at an average grade of 11.88 percent, and an inferred resource of 18,270.3 Kt at an average grade of 6.32 P2O5. The estimate was determined using a cut-off grade of 3-percent P2O5.
DuSolo is planning staged production of its DANF as a mean to generate cash in the short term, while still being as cost efficient as possible. As the company notes on its website, due to the various selling prices for DANF, it plans to start production from the high-grade ore on the property without the need to invest in a flotation plant. From there, DuSolo will target thermal phosphate production in order to reach a wider market.
As it stands, the company is awaiting its final permit.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned in this article.
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