Rio Verde Minerals Development Corp.

Rio Verde Minerals Development Corp.

August 04, 2011 08:50 ET

Rio Verde Minerals Announces Definitive Agreement for Acquisition of Fosfatar Mineracao Ltda.

TORONTO, ONTARIO--(Marketwire - Aug. 4, 2011) - Rio Verde Minerals Development Corp. (TSX:RVD) ("Rio Verde" or the "Company") is pleased to announce that, further to the March 24, 2011 Press Release (see: March 24, 2011, "Rio Verde Minerals Announces MOU with Fosfatar Mineracao Ltda. and Relocation of Sergipe Potash Drill Hole"), the Company has entered into a definitive share purchase agreement (the "Agreement") with Biscoe Trading Ltd., Colfax Management Inc. and Moriarty Services Inc. (collectively "the Sellers") to acquire their 100% operating interest in Fosfatar Mineração Ltda. ("Fosfatar"), a private company with phosphate assets in the north and northeastern regions of Brazil.

Terms of the Transaction:

Pursuant to the terms of the Agreement, Rio Verde will acquire 100% of the issued and outstanding shares of Terrero Overseas Ltd., which holds a 100% beneficial interest in Fosfatar. The purchase price will be satisfied by:

  • the cancellation of the May 2011 USD$1,000,000 demand loan to Fosfatar, which Rio Verde had advanced for the purposes of continuing day-to-day business at Fosfatar's phosphate projects;

  • the issuance by Rio Verde of 14,127,219 ordinary shares to the Sellers on the closing date of the transaction; and

  • a cash payment by Rio Verde of R$11,262,000 to the Sellers, with 25% of this sum being paid within 60 days of the commencement of commercial production and product sales from Fosfatar's phosphate projects, and the remaining 75% being paid through quarterly payments equal to 25% of Fosfatar's net income in the preceding quarterly period. Rio Verde may elect to pay all or a portion of this payment in Rio Verde shares at a discount to market price.

In addition, Rio Verde will pay a conditional bonus of up to R$17,000,000 (the "Conditional Bonus") upon the earlier to occur of either (i) the establishment at the phosphate projects of a Mineral Reserve of at least 2.5 million tonnes of P2O5 ore at a cut-off grade of 6%, or (ii) Fosfatar's achievement of an annual EBITDA of R$25.0 million, provided that such event occurs on or prior to the second anniversary of the closing date of the transaction. The Conditional Bonus will be paid in ordinary shares, with the number of ordinary shares to be determined based on a discount to the market price at the time that the Conditional Bonus is payable.

Completion of the transaction is conditional upon, among other things, the receipt of all required consents and approvals, including the approval of the Toronto Stock Exchange.

The Company expects that this transaction will add immediate value to Rio Verde, moving the company from pure explorer to producer status, and generating near-term cash flow to be used to self-fund its exploration and development plans. Fosfatar's flagship project, the Sapucaia Phosphate Project ("Sapucaia"), is shovel-ready, with equipment on site, and it possesses a potential 10-year mine life. The Company's preliminary timeline estimates that production at Sapucaia will commence in early 2012, with an initial production rate of 100,000 tpy of high-grade aluminum phosphate, later growing to 150,000 tpy.

Rio Verde's President and CEO, Stephen Keith, comments, "We are extremely pleased with the acquisition of Fosfatar Mineração Ltda., as it is a valuable addition to Rio Verde. The Project has the potential to create positive near-term cash flow, which will be used to fund our exploration program at the Sergipe Potash Project. With this acquisition, our aim of becoming a non-dilutive exploration company is well within reach".

About Fosfatar Mineração Ltda.

Fosfatar possesses multiple phosphate assets in the North and Northeastern regions of Brazil, close to both the port city of Belém, in Pará state, and to numerous fertilizer consumers. Initial pilot tests by Fosfatar at its flagship project, the Sapucaia Phosphate Project, indicate the potential to fast-track production of aluminum phosphate at low costs by utilizing a well-tested recovery process that has been used with other minerals. Rio Verde is currently conducting a technical due diligence at the Sapucaia Project to confirm, and potentially expand, current delineated occurrences (currently non NI 43-101 compliant) and to further test the applicable recovery process.

About Rio Verde Minerals Development Corp.

Rio Verde Minerals Development Corp. is a publicly traded company focused on the exploration and development of fertilizer projects in Brazil. The Company's goal is to become the leading Brazilian fertilizer mining and development company by selecting prime assets that are near infrastructure, with known mineralization, in regions without significant social or environmental issues. The Company plans to fast-track the best projects to development to create stakeholder value. Rio Verde's shares trade on the main board of the TSX, under the symbol RVD.

Rio Verde holds one potash project and a portfolio of phosphate projects in Brazil. Potash and phosphate fertilizers have favourable supply and demand dynamics, and Rio Verde has a significant cost advantage by being based in Brazil, a country that imports about 90% of its potash and 50% of its phosphate needs. Rio Verde's near-term primary objective is to focus its potash exploration on establishing a Canadian National Instrument 43-101 resource.

Forward-Looking Statements

This press release contains forward-looking statements. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the estimation of mineral resources, exploration results, potential mineralization, potential mineral resources and mineral reserves) are forward-looking statements. Forward-looking statements are often identifiable by the use of words such as "anticipate", "believe", "plan", may", "could", "would", "might" or "will", "estimates", "expect", "intend", "budget", "scheduled", "forecasts" and similar expressions or variations (including negative variations) of such words and phrases. Forward-looking statements are subject to a number of risks and uncertainties, many of which differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, failure to establish estimated mineral resources, the possibility that future exploration results will not be consistent with the Company's expectations, the price of potash and phosphate, changes to regulations affecting the Company's activities, including tax and trade laws and policies; delays in obtaining or failures to obtain required regulatory permits and approvals from government authorities; delays in commencing the Company's proposed drilling program, exploration costs varying significantly from estimates; uncertainties relating to the availability and costs of financing needed to complete exploration activities and demonstrate the feasibility of the Company's projects; the success of future exploration and development initiatives; and other risks involved in the mineral exploration and development industry. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement.

Contact Information

  • Investor Contact Details
    Rio Verde Minerals Development Corp.
    Stephen Keith
    President & CEO
    +1 (416) 368-8288

    Rio Verde Minerals Development Corp.
    Alex Penha
    VP Corporate Development
    +1 (416) 368-1573