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1 Further Reason to add Harvest Minerals #HMI to your Watchlist

The content of this blog (or content associated with it) is not intended as investment advice. The author holds an interest in the company mentioned. Please do your own research.

HARVEST MINERALS #HMI
Share Price: 10.75P
Market Capitalisation: 12.56M

WHAT DO THEY DO?
Harvest Minerals is a South American focused fertiliser company targeting low cost, near term development projects. The Company’s primary focus is the development of its 100% owned Arapua Fertiliser Project from which it produces its KPfértil product, a proven, multi-nutrient, slow release, organic fertiliser and remineraliser, which is produced from a weathered potassium and phosphate rich lava and offers many economic and agronomic benefits.

To read my previous blog on Harvest Minerals, click here

1 Further Reason to add Harvest Minerals #HMI to your Watchlist

 

This week Harvest Minerals announced that is had, “submitted an application to register its product, KPfértil, as a remineraliser to the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA)” and that, “the application is expected to be approved by the end of the year.”

How can Harvest Minerals be so confident that this application will be approved “by the end of the year”?

“During the past year, it has run multiple crop agronomy trials, conducted by four MAPA-approved organisations. As part of this process, on 4th September, Harvest visited MAPA at Barbacena, Minas Geras, and gave a presentation on KPfértil, highlighting the results of the chemical, physical and agronomic tests conducted to date. This was warmly received and the MAPA representative was impressed by the results and the quality of the product.”

These trials have been conducted completely in line with MAPA guidelines and they’ve produced very positive results, as stated in RNS releases on July 3rd, August 16th and September 5th of this year.

If you add to this the fact that Brazil has significant demand for fertilizer but currently imports 90% of it’s needs and that the country intends to be self sufficient by 2020, then Harvest Minerals have some very good reasons to be confident, that their application will be successful.

It’s within the countries interest.

Think about it, if you formed part of  the Brazilian Ministry of Agriculture and you were presented with an application for a remineraliser that possessed the following attributes:

  • Organic
  • Locally Produced
  • More Effective than Current Imports
  • Cheaper than Current Imports

How much time would it take you to stamp that application with, “passed”?

So it’s completely understandable why Harvest Minerals believe KPfértil, “will gain significant market penetration on certification”.

Harvest Minerals are very confident that the application for their product, KPfértil, as a remineraliser is not only, “expected to be approved by the end of the year” but “will gain significant market penetration on certification”.

So what type of revenue can we expect?

Their Arapua Project alone (they have 3 other projects) has a current resource of over 13Mt at 3.1% K2O and 2.49% P2O5, achieved from only 6.7% of identified resource, which translates into a mine life of over 30 years at a rate of 450k tonnes per annum.

HMI’s all in cost of producing this fertilizer is around $7.34 per tonne, so based on a sale price of $60, this is $52.66 profit per tonne. For simplicity sake, let call it $50.

$50 x 450,000 tonnes = $22.5m profit per year, which is around £16m, more than the market cap of Harvest Minerals.

There’s still some way to go yet. The next steps will be to achieve certification and then gain a full mining licence but Harvest Minerals are in the right place at the right time and as they state in their full year results, released on 28th September, “sales expected in Q4 2017, ramping up once certification achieved”.

To add Harvest Minerals #HMI to your Vox Markets Watchlist, click here and tap the, “Follow”, button

The content of this blog (or content associated with it) is not intended as investment advice. The author holds an interest in the company mentioned. Please do your own research.

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Mentioned in this post

HMI
Harvest Minerals Limited (DI)