TIDMHMI
RNS Number : 6800I
Harvest Minerals Limited
28 November 2018
Harvest Minerals Limited / Index: LSE / Epic: HMI / Sector:
Mining
28 November 2018
Harvest Minerals Limited ('Harvest' or the 'Company')
Corporate and Operational Update
Harvest Minerals Limited, the AIM listed fertiliser producer, is
pleased to release the following corporate and operational
update.
Overview
-- Further additions to the internal sales and marketing team
-- KPfértil granted organic registration by the Brazilian Institute of Biodynamics;
-- Product storage expansion set to be completed in Q2 2019;
-- New demonstration farm planted adjacent to Arapuá project
Harvest's Executive Chairman, Brian McMaster, said, "During the
year, we have been working hard to develop our brand and
distribution channels for KPfértil. Whilst contracts with
distributors can allow us to leverage existing sales teams and
their relationships in the market, direct sales through our own
sales team are equally as important to building our brand. We are
therefore delighted to have acquired most of the existing sales,
support and marketing team at Geociclo to support this strategy.
This team has already made excellent progress, establishing first
sales. Additionally, with KPfértil's recently granted organic
status we anticipate this to further enhance sales performance.
"We are pleased with the progress of the plant since it was
commissioned. We are planning the expansion of our product storage
capacity, which will be fully funded from available cash resources.
We have recently slowed production due to early commencement of the
rainy season, but the idiom 'every cloud' is even more true in our
case as our customers are expecting a bumper harvest this year,
which will mean they should be out in force to buy more KPfértil
next year."
To view the announcement with illustrative pictures, please use
the following link:
http://www.rns-pdf.londonstockexchange.com/rns/6800I_1-2018-11-27.pdf
Strategic Alliance with Geociclo Biotecnologia S/A
On 26 July 2018, Harvest announced that it had signed a
strategic alliance with Geociclo Biotecnologia S/A ('Geociclo'), to
enable the Company's product, KPfértil, to be marketed and sold by
Geociclo's sales team, gain access to its MAPA accredited research
and trial production laboratory as well as storage facilities.
Additionally, there was the option for Harvest to acquire equity in
Geociclo, subject to the satisfaction of a variety of conditions.
The alliance has been a success, with Geociclo introducing the
Company to new markets and generating initial sales.
Harvest has now learned that Geociclo has sought judicial
administration due to its existing liabilities base and the
inability of its shareholders to provide further funding to cover
these. The administration has created an opportunity for Harvest,
and consequently Harvest has acquired the majority of the Geociclo
sales team, some support staff and its existing client database.
This allows the Company to build upon the progress the sales team
made in developing new markets for KPfértil, but without having to
pay commissions to Geolciclo and better develop our own brand
without impacting any of our existing relationships or customers.
Geociclo's research facilities are currently being relocated and
once this is completed, Harvest will continue to have access to
these facilities as well. The administration process has not
interrupted Harvest's plans and Harvest has no ongoing strategic
relationship with, or financial commitment to, Geociclo.
Sales and Production
Since its commissioning in July 2018, the plant has been brought
to capacity with the usual "teething problems" having been
identified and worked through. As previously announced, sales are
progressing according to the plans outlined earlier in the summer
and the priority remains to fulfil those orders and complete a full
working capital cycle as well as continuing to identify, develop
and supply new customers and build our customer base for future
seasons. To date, KPfértil is being sold to several distributors,
over 30 different farmers and is being tested by a further 12 more,
ranging in size from small holders to some of the largest producers
in Brazil. These numbers are very encouraging and beyond our
earlier estimates. Coffee and sugarcane are currently the Company's
largest markets, and recently we have experienced preliminary sales
to maize, fruit, soy and pasture farmers.
Figure 1: Product stockpile facility
This year the wet season commenced in October which is earlier
than expected. In anticipation of the wet season, we have
accumulated a stockpile of processed inventory of circa 4,000t,
which we anticipate will be sufficient to meet deliveries until
Christmas. December and January are typically quieter months for
sales. We anticipate some buying in modest quantities between
January and February by fruit and soybean farmers, before an
escalation in buying starts in March. Accordingly, we will utilise
the January/February periods to step up production in anticipation
of the buying season.
Product Storage Expansion
Since the plant was commissioned in July, it has become clear
that in order to meet expected demand for product, the size of the
storage facility needs to be increased. As the plant and
infrastructure design is modular, allowing additional capacity to
be added without impacting existing production, this is a
straightforward process. The Company is currently obtaining quotes
to double the effective size of the current storage facility to
20Kt and add additional silos to reduce the time taken to load each
truck; this work is expected to commence in the New Year. The cost
of this will be fully funded from available resources and is
expected to be less than US$300,000 and should be completed by Q2
2019.
Figure 3: Existing product storage facility and area designated
for expansion.
Organic Registration
KPfértil has been granted certification from the Brazilian
Institute of Biodynamics ('IBD') as a fully organic and biodynamic
product. IBD has conducted an independent inspection at the
Company's Arapuá Project, with the aim of certifying KPfértil for
use in organic agriculture. The IBD is the largest certifier in
Latin America and the only Brazilian certifier of organic products
that is accredited under IFOAM (international market), ISO/IEC
17065 (European market, rule CE 834/2007), Demeter (international
market), USDA/NOP (North American market) and approved for use of
SISORG seal (Brazilian market), meaning its certification is
globally accepted.
The IBD inspection consisted of a detailed examination over the
complete KPfértil production flow, from mining to product storage,
including health and safety and the Company's licenses and permits
for mining, environment and MAPA.
Additionally, the Company has signed a contract with the
Brazilian Institute of Agroecology ('IBA'), a non-profit
association promoting the implementation of agroecological systems
for large-scale food production in Brazil. Harvest believes that
this relationship will help to build the KPfértil brand and lead to
further direct sales.
Figure 2: IBD auditor inspecting the processing plant at
Arapua
Demonstration Farm
Harvest has established a demonstration farm adjacent to the
Arapua site, which has been planted with one (1) hectare each of
soybean and maize. A further hectare of coffee and 0.3 hectares
sugarcane have been prepared with three (3) more hectares of
pasture also being prepared. All the plantation area has been
prepared with KPfértil, with the aim of providing customers direct
demonstration of the benefits of using it for certain crops when
they come to the site.
Figure 4: Area prepared for coffee planting and planting
corn
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
*S*
For further information please visit www.harvestminerals.net or
contact:
Harvest Minerals Limited Brian McMaster Tel: +44 (0) 20 7317
(Chairman) 6629
Strand Hanson Limited James Spinney Tel: +44 (0)20 7409
Nominated & Financial Adviser Ritchie Balmer 3494
Jack Botros
Arden Partners plc Tim Dainton Tel: +44 (0) 20 7614
Joint Broker Paul Brotherhood 5900
Paul Shackleton
Shard Capital Partners Damon Heath Tel: +44 (0) 20 7186
Joint Broker 9900
St Brides Partners Ltd Isabel de Salis Tel: +44 (0)20 7236
Financial PR Gaby Jenner 1177
Notes
Harvest Minerals (HMI.L) is a Brazilian focused fertiliser
producer advancing the 100% owned Arapua Fertiliser Project, which
produces KPfértil, a proven, multi-nutrient, slow release, organic,
MAPA-certified remineraliser. KPfértil offers many economic and
agronomic benefits and addresses the significant demand for locally
produced fertiliser in Brazil, with its abundant agricultural land;
currently, the country imports 90% of the potash it uses but has a
target to be self-sufficient in fertilisers by 2020. Covering
14,946 hectares and located in the heart of the Brazilian
agriculture belt in Minas Gerais, Arapua is a shallow, low cost
mine with an indicated and inferred resource of 13.07Mt at 3.1%
K(2) O and 2.49% P(2) O(5) . This is based on drilling just 6.7% of
the known mineralisation, leaving significant upside potential.
This resource is equivalent over 29 years' production and the known
mineralisation expected to support 100+ years' production at
450,000 tonnes per annum.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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