Itafos (OTCMKTS:MBCF) used its latest quarterly update call to recap what CEO David Delaney called a “great year” in 2025, highlighting record production at its Conda operations, improved profitability at its Arraias business in Brazil, and shareholder returns funded by the sale of its Airex Ag project. Management also addressed heightened volatility in phosphate and raw material markets, with Delaney pointing to supply disruptions tied to the Iran conflict and tight fundamentals that have pushed prices higher.
2025 results and operational highlights
Delaney said Itafos generated 2025 revenue of $558 million and Adjusted EBITDA of $159 million, with progress across operating segments.
In mining, Delaney said the company completed mining activities at the Rasmussen Valley mine and obtained “nearly two full years of additional ore compared to estimates in the original technical report.” He said Itafos reached mechanical completion of the H1/NDR project and delivered first ore from the new mine to the Conda plant during the fourth quarter.
At Arraias in Brazil, Delaney said the segment generated over $13 million in Adjusted EBITDA, surpassing the cumulative amount recognized from 2022 through 2024 following the fertilizer restart program. He said the team took advantage of domestic market conditions to produce and sell 24% more excess sulfuric acid than 2024 and at higher gross margins, which drove results. Delaney also said Itafos recorded its first sales of granulated dry fertilizer products since 2020 after restarting and upgrading its granulation circuit. On a year-over-year basis, he reported P2O5 production increased 170% and P2O5 sales increased 115%.
Development segment and special dividends
Delaney said Itafos closed the sale of its Airex Ag project and received the first cash installment, which funded the company’s first special dividend paid in the second quarter. He added that, during the fourth quarter, Itafos monetized the equity it received as part of the Airex Ag consideration, citing “favorable market dynamics of the rare earth sector,” and combined those proceeds with remaining cash installments to fund a second special dividend in Q4.
Delaney said the two special dividends together returned CAD 0.22 to shareholders. He also noted that the company’s share price was CAD 1.38 when the sales transaction was announced in August 2024 and said Itafos’ stock price rose by approximately 65% during 2025.
Safety, environmental performance, and balance sheet
From a corporate standpoint, Delaney said Itafos had no reportable environmental releases and posted a consolidated safety rate of 0.54 versus 0.86 at the end of 2024. He said net leverage declined to 0.1 on a net debt-to-trailing 12 months EBITDA basis, and the company ended the year with liquidity of over $150 million, including year-end cash plus availability on its revolving credit line.
2026 outlook: Conda guidance, Arraias upgrades, and Farim work
Looking ahead, Delaney outlined operational and strategic initiatives planned for 2026 and beyond.
- Conda guidance: Delaney said Itafos expects Conda sales of 335,000 to 355,000 tons on a P2O5 basis, consistent with prior years where production was at or above nameplate capacity.
- Magnesium reduction project: He said the company will progress a magnesium reduction project intended to maintain operating levels after full integration of H1/NDR ore and provide flexibility to produce MAP or SPA. He said Itafos is targeting integration of new flotation circuits and machinery upgrades in the second half of 2027.
- Reclamation and exploration: Delaney said reclamation work is underway at the retired Rasmussen Valley mine, with most associated ARO cash spend expected over the next 48 months. He also described exploration and permitting work aimed at extending mine life beyond 2027, including plans in 2026 to drill over 30 reverse circulation and core holes totaling over 13,000 feet, begin environmental studies and geological models supporting an updated NI 43-101 technical report for a Dry Ridge extension, and continue baseline work at Freeman Ridge and Husky 2 ahead of a planned drilling program in 2027.
- Arraias SSP restart path: Delaney said Itafos will implement upgrades needed to restart SSP production, with a primary focus on upgrading the beneficiation circuit. He said the company is targeting first SSP production with domestic sales in 2027, and once fully operational expects an annual SSP run rate of approximately 170,000 tons, consistent with its updated preliminary economic assessment.
- Farim development work: Delaney said Itafos plans to commence drilling and engineering at its Farim project in Guinea-Bissau to support a “low capital phased development option,” and added the company has seen interest from end users for offtake agreements and explored outside investment or financing.
Market volatility: Iran conflict, tight supply, and raw material costs
In response to a question about phosphate market volatility and the Iran conflict’s impact, Delaney described a market that was already tight even before the conflict. He said sulfur prices had spiked above $500 per ton on the spot market, citing demand from downstream markets such as nickel smelters in Indonesia, along with supply disruptions tied to refinery shutdowns and export restrictions in Russia. He said higher input costs hurt fertilizer industry margins, including Itafos, and noted that marginal supply had been idled due to elevated operating costs.
On phosphate, Delaney said tariffs during 2025 reduced trade flows into the U.S. and left inventories low, particularly for MAP. He added that China announced additional export restrictions for 2026, stating it would have no international phosphate sales until August, implying another year-over-year decline in exports. He also cited weather and ocean conditions that constrained Morocco exports earlier in the year.
Delaney said MAP prices were above 670 at the end of February after falling to around 615 in December, following highs around $800 the prior summer. However, he said high fertilizer prices have not been accompanied by higher crop prices, creating farmer affordability issues that were expected to reduce demand.
Turning to the Iran conflict, Delaney said roughly 25% of global phosphate trade originates in Middle Eastern countries exposed to the conflict, and that about two-thirds of those volumes normally transit the Strait of Hormuz, which he said had effectively been shut down, with Iran targeting tankers and insurance difficult and expensive. He said international DAP and MAP prices moved higher as buyers sought limited supply, with MAP surpassing $800 per ton CFR in Brazil and India, while U.S. prices had not responded as strongly due to weaker demand.
On sulfur, Delaney said about 45% of global trade in sulfur moves through the Strait of Hormuz. He said prices had been starting to roll over due to demand destruction, but that trend reversed as the market anticipated a supply shock from the Middle East. He added that North American supply did not appear short, but international pricing still influences the market. Delaney said Itafos produces about 40% of the sulfuric acid needed at Conda from purchased sulfur, while most remaining sulfuric acid needs are purchased under a long-term contract from Rio Tinto’s Kennecott operations in Utah. He said the company has steady access to raw materials but is exposed to high sulfur prices, which negatively impacted margins in Q4 2025 and into 2026.
Delaney also pointed to ammonia, saying nearly 30% of global ammonia trade comes from the Middle East and that constraints through the Strait of Hormuz have driven price increases, potentially pressuring industry margins. He said Itafos sources its ammonia at Conda via a long-term contract supplied from Canada and indexed off AECO natural gas prices, resulting in less volatility for that key input.
In closing remarks, Delaney said he remains confident in long-term phosphate supply and demand fundamentals and emphasized Itafos’ operating rates, asset maintenance, ore quality, and liquidity position as factors he believes will help the company navigate near-term volatility.
About Itafos (OTCMKTS:MBCF)
Itafos Inc is a phosphate-based fertilizer company focused on the acquisition, development and operation of phosphate mines and integrated fertilizer facilities. The company’s primary activities include the mining of phosphate rock, the production of phosphoric acid and sulfuric acid, and the manufacture of a range of phosphate-based fertilizers such as monoammonium phosphate (MAP), diammonium phosphate (DAP) and single superphosphate (SSP). Itafos aims to leverage vertically integrated assets to enhance efficiency in the supply chain and ensure consistent quality for its customers.
Headquartered in Boca Raton, Florida, Itafos maintains its core operating assets in Brazil, with key projects including the Arraias phosphate complex in the state of Tocantins and the recently acquired Catalão and Cajati fertilizer operations in Goiás and São Paulo.
