Work is continuing at Arapura, the flagship fertiliser project of Harvest Minerals Limited (LON:HMI), according to chief executive Brian McMaster.
“Things are progressing quite nicely,” he says. “The upshot is we expect we’ve got an economically viable project.”
The numbers he quotes certainly point to it. Harvest expects to sell fertiliser from Arapura at between US$50 and US$70 per tonne, and to mine it for an all-in cost of around US$10 per tonne.
What’s more the construction costs will be fairly low too, as the mine will be shallow and open cast, and very little subsequent processing is involved.
Harvest won’t talk precise numbers for Arapura publicly for a few weeks yet, as a scoping study is due out in the second or third week of July, but at this stage what McMaster can say is that it won’t be prohibitive.
“Our capex bill won’t be seven figures,” he says. “It’s really shallow. It’s just taking the topsoil off. There’s not even really a crush involved.”
But just exactly how much product Harvest will pump out is still up for grabs. Investors will be hoping for big numbers with those margins, but initially it all depend on the parameters laid down by the government in the trial mining licence, which is expected shortly.
At the moment, the working assumption is that there is between eight and 10 mln tonnes of fertiliser in the ground and that mining as much as 500,000 tonnes per year might be “optimistic”, according to McMaster.
But even ramping up to a few hundred thousand tonnes per year over a few years could prove very lucrative to the company, especially as it would just be the start of a wider Brazilian footprint.
Longer term, the aspiration is to take the company’s overall production – from several sites around Brazil – up to the million tonnes per year mark.
That will take some doing, and possibly some new projects. But Harvest does already have some secondary projects in the pipeline that are coming along behind Arapura. There’s the Mandacaru phosphate project, for example, in Ceará State.
“We got this asset for free,” explains McMaster. “Then we spend US$20,000 on it proving up a JORC resource. The results from that showed over 4 mln tonnes of phosphate with potential for as much again from as yet only tentatively explored ground.
At this stage, McMaster doesn’t want to overplay the significance of this development. Instead, he says, it’s about know-how.
“We’re trying to demonstrate that we know our way around Brazil,” he says. “We’re putting together a stable of assets. We’ve got Arapura, but we’ve got others, and they won’t take a lot of capex. These projects do exist, you’ve just got to find them.”
And once they’ve been found, it’s unlike the company will be sort of a market for its product. Farming in Brazil is big business, and there are plenty of local farmers within a radius of around 150 kilometres of Arapura who might be interested in taking fertiliser from Harvest.
There are also six established fertiliser blending facilities in Brazil that take all kinds of product and which would almost certainly be interested in the Arapura output, which has a higher than average potassium content.
“We’ve got quite a few channels,” says McMaster. “We’re starting to work through who our prospective customers may be.”