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Brazil Potash signs 28-year power agreement for Autazes Project

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Announcement Summary

Brazil Potash Corp. (NYSE-American: GRO) announced a definitive agreement with Gera Center for a modular power plant serving the Autazes Project.

  • The Build-Own-Operate agreement gives Gera Center responsibility to fund, build, own and operate the plant for 28 years: five years during construction and 23 years as backup power.
  • The plant is expected to supply electricity for two mine shafts, the processing plant and the port/terminal until the grid connection line (SIN) is completed.
  • The system comprises 45 modular containerized diesel generators, with initial capacity of 10 megawatts increasing to 20 megawatts over the first year.
  • The agreement removes approximately $33 million of power-related spending from the Project's upfront construction budget and is expected to deliver approximately $10 million in net savings.
  • During construction, the agreement establishes contractual availability levels of at least 98% each month and 98.5% each year.
  • Initial mobilization is to be completed within 120 days following issuance of the Order to Proceed.

The company expects the system to operate in reserve mode as backup power after mining begins and the planned transmission line connects the site to SIN. Its offtake agreements cover approximately 91% of planned production, and Brazil's Profert program has been enacted to support domestic fertilizer production.

Investor FAQs

Brazil Potash Corp. (NYSE-American: GRO; NYSE American: GRO) said its wholly-owned Brazilian subsidiary, Potássio do Brasil Ltda., has signed a definitive Build-Own-Operate agreement with Gera Center Amazônia Serviços e Locações De Máquinas e Equipamentos Ltda. for a modular power plant. The agreement has a 28-year term: five years supplying power during construction, followed by 23 years as backup power once the mine is operating.
The plant is expected to supply electricity for construction of the two mine shafts, processing plant and port/terminal until the Autazes Project is connected to Brazil’s national grid, referred to as SIN. The equipment is then expected to operate in reserve mode as backup power for the mine. The source states that the site does not yet have access to Brazil’s power grid and that the planned grid connection remains subject to completion.
Gera Center will fund, build, own and operate the plant for 28 years. The system will comprise 45 modular containerised diesel generators, with peak capacity of 20 megawatts. Initial capacity will be 10 megawatts, increasing to 20 megawatts over the first year, and initial mobilisation is expected to be completed within 120 days following issuance of the Order to Proceed.
During the continuous operation period for construction, described as approximately five years, the agreement establishes contractual availability levels of at least 98% each month and 98.5% each year. The source does not provide equivalent availability figures for the subsequent reserve-operation period.
The company states that the agreement removes approximately $33 million of power-related spending from the Project’s upfront construction budget, although a portion of Gera Center’s cost recovery will still occur during the five-year construction period. Brazil Potash also expects approximately $10 million in net savings over the life of the contract compared with earlier Project cost estimates. These are forward-looking expectations identified by the company and are not presented as guarantees.
The source refers to offtake agreements covering approximately 91% of planned production and the enactment of Brazil’s Profert program to support domestic fertilizer production. It also states that the company is pursuing other arrangements with outside infrastructure partners, while noting risks concerning financing, the ability to raise additional funds, obtaining further partnerships on acceptable terms or at all, required licences and permits, legal and regulatory proceedings, and further appeals or challenges relating to the Autazes Project.
The company cautions that statements about the plant’s implementation, timing, capacity, availability and performance; the planned connection to SIN; the transition to reserve operation; the expected cost reduction and savings; and the advancement, financing, construction and eventual operation of the Autazes Project are forward-looking statements. It states that these involve risks and uncertainties, including changes in legislation and regulations, political or economic developments, capital-market risks, unexpected geological or environmental conditions, operational risks, and the success of obtaining required licences and permits. Actual results, performance or achievements may differ materially from those stated or suggested.

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