MBAC Rally Fades After Surge on Agnelli Stake

MBAC Fertilizer Corp. (MBC) ended flat after rising 12 percent in the last five days as a venture co- founded by Vale SA’s former Chief Executive Officer became the Canadian crop-nutrient producer’s largest shareholder.

B&A Mineracao SA, a venture of a company controlled by Roger Agnelli and Banco BTG Pactual SA (BBTG11), bought 13.6 million MBAC shares at C$2.73 each, valuing its stake at about 11.5 percent, according to a Sept. 13 statement. The investment will allow MBAC to fund the completion of its Itafos Arraias phosphate project, said Spencer Churchill, an analyst at Paradigm Capital Inc.

“The financing for the project was there but the worry was that if there would be a delay or more capital needed, that buffer wasn’t there,” Spencer, who recommends buying MBAC’s shares, said by telephone from Toronto today. “Now it is.”

MBAC was unchanged at C$3.50 at market close after rising 12 percent since the day before the announcement. The stock is up 24 percent this year.

Sao Paulo-based B&A was created in July to invest as much as $520 million in mines in Brazil, Africa and Latin America. B&A is looking at investment projects including copper, iron ore, phosphate and titanium, Chief Executive Officer Eduardo Ledsham, a former Vale director, said July 12. BTG, the Brazilian investment bank that went public this year, and AGN Agroindustrial, Projetos & Participacoes Ltda, a company controlled by Agnelli, each hold a 50 percent stake in B&A.

Rare Earth

Toronto-based MBAC, which produces about 60,000 tons of phosphate rock a year in Brazil, plans to start operations at the Itafos Arraias project in November, from where it expects to produce 500,000 tons of single super phosphate by 2014, Chief Executive Officer Antenor Silva said in an Aug. 13. interview. The company is also seeking a partner to become Brazil’s first rare-earth producer by 2016, he said at the time. All of MBAC’s projects are in Brazil. The company has a market value of about C$409 million ($419 million).

MBAC shares are rising on the investment news, diminished concern about project financing and an improvement in the outlook for fertilizer industry, Spencer said.

“The gains I think are coming off the combination of the financing and less concern there, they’ve got this big Brazilian bank that’s backing them, and just general market sentiment has improved towards the fertilizer space,” the analyst said. MBAC is “by far and away the best-performing North American junior fertilizer company.”

To contact the reporters on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net; Katia Dmitrieva in New York at edmitrieva1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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