Mr. Cristiano Veloso reports

VERDE CULTIVATES FINANCIAL RESILIENCE WITH BANCO DO BRASIL AND BRADESCO BACKING

Verde Agritech Ltd. has secured $16.2-million (60 million Brazilian reais) in a debt financing facility from Banco do Brasil SA and Banco Bradesco SA, the two largest Brazilian banks. The funds raised will be used to replace existing debt that was at higher interest rates and provide the company with more favourable terms, including six months of grace period for Bradesco's loan and 12 months for Banco do Brasil's loan. This will enable Verde to offer financing solutions to potential customers whilst fostering growth and financial stability. The financing consists of $10.8-million in debt from Banco do Brasil, Brazil's largest bank (40 million Brazilian reais), of which the Brazilian federal government retains a 50-per-cent share, and $5.4-million from Bradesco (20 million Brazilian reais), the second-largest financial group in Brazil. Additionally, Verde currently has $20-million (74 million Brazilian reais) in preapproved credit with banks in Brazil.

The loan granted by Banco do Brasil received a sustainability certificate distinguishing it as a sustainable financial operation. The certificate is awarded to financing activities included in Banco do Brasil's evaluation against a diverse array of national and international standards and taxonomies. The purpose of Banco do Brasil's sustainable business portfolio is to encourage the expansion of enterprises and initiatives that directly contribute to Brazil's sustainable development by offering services and resources aimed at addressing social-environmental issues.

The certificate awarded to Verde falls under the environmental category, which encompasses projects like forest restoration, low-carbon agriculture and the rehabilitation of degraded areas, all of which are undertaken by the company, which integrates sustainable practices throughout its operational process as a core value.

For a transaction to receive Banco do Brasil's approval within the sustainable credit framework, it undergoes a rigorous evaluation encompassing environmental, governance and social dimensions. This assessment entails:

• Analyzing the sustainability of production processes;
• Ensuring the company's financial statements undergo third party auditing;
• Gauging the brand's reliability and reputation;
• Verifying compliance with national and international quality standards;
• Reviewing the competence of the management squad;
• Checking for any recorded discrepancies with government agencies;
• Assessing transparency in the company's communications.

"We are encouraged to count on the backing of two of the largest banks in Latin America to support our growth. The loans will increase our cash reserves and replace existing high-interest debt along with better terms and provide financing to potential customers, allowing us to extend essential financial support to farmers in the agricultural sector, who require postharvest input payments. These two loans reflect significant confidence in our business and in the partnership between Verde and these reputable institutions," stated Cristiano Veloso, Verde's founder and chief executive officer.

The financing transactions were structured as follows:

• Banco do Brasil: $10.8-million (40 million Brazilian reais) loan, with an interest rate of CDI plus 3.60 per cent; the loan term extended to 36 months, including a grace period of 12 months; payment was scheduled with three annual instalments of principal and interest, due in August, 2024, August, 2025, and August, 2026;
• Bradesco: $5.4-million (20 million Brazilian reais) loan, with an interest rate of CDI plus 3.61 per cent; the loan term was set at 24 months, featuring a grace period of six months; the payment schedule included the first six months with monthly interest, followed by four semester payments of principal in March and October for the next two years;
• Out of the total financing secured, 9.5 million (35 million Brazilian reais) has been allocated toward the settlement of six existing loans.

Brazilian interest rate outlook

The Central Bank of Brazil, on Aug. 5, 2023, announced a reduction in the Selic rate from 13.75 per cent to 13.25 per cent, marking a significant shift following a series of 12 consecutive rate hikes. Subsequently, on Oct. 11, 2023, the Selic rate was further adjusted, reaching 12.75 per cent. These adjustments reflect the Central Bank of Brazil's commitment to managing the nation's monetary policy in response to changing economic conditions.

Projections indicate a steady decline in the Selic rate over the coming years, with expectations of reaching 11.75 per cent by the close of 2023, followed by a reduction to 9.0 per cent in 2024 and a further decrease to 8.5 per cent in 2025 and 2026. These adjustments align with the broader economic indicators, with annual inflation easing to 4.86 per cent in 2023.

If the projected reduction in the Selic interest rate materializes in the coming years, it would result in significant interest expense savings for the company. These potential savings are estimated to reach $1.1-million (four million Brazilian reais) by the end of 2024 and a total accumulated savings of $2.7-million (9.9 million Brazilian reais) by the end of Q4 2026.

About Verde Agritech Ltd.

Verde is an agricultural technology company that produces potash fertilizers. The company's purpose is to improve the health of all people and the planet. Rooting its solutions in nature, the company makes agriculture healthier, more productive and profitable.

Verde is a fully integrated company: it mines and processes its main feedstock from its 100-per-cent-owned mineral properties and then sells and distributes the product.

Verde's focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper and Bio Revolution. Currently, the company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte and Baks, sold internationally as Super Greensand. In 2022, it became Brazil's largest potash producer by capacity. Verde has a combined measured and indicated mineral resource of 1.47 billion tonnes at 9.28 per cent K2O (potassium oxide) and an inferred mineral resource of 1.85 billion tonnes at 8.60 per cent K2O (using a cut-off grade of 7.5 per cent K2O). This amounts to 295.7 million tonnes of potash in K2O. For context, in 2021, Brazil's total consumption of potash in K2O was 6.57 million tonnes.

Brazil ranks second in global potash demand and is its single-largest importer, currently depending on external sources for over 97 per cent of its potash needs. In 2022, potash accounted for approximately 3 per cent of all Brazilian imports by dollar value.

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