Harvest Minerals begins to build critical mass at Arapua

“It’s good news.” That’s the straightforward statement from Brian McMaster, the chief executive of Harvest Minerals Limited (LON:HMI), following the release of an updated resource estimate for the company’s Arapua fertiliser project in Brazil. Following a second air core drilling campaign the high-grade portion of the indicated resource now stands at 1.21 mln tonnes at 4.4% K2O and 3.45% P2O5, an increase of 37% over the previous number. The overall indicated resource now stands at 3.75 mln tonnes at 3.44% K2O and 3.24% P2O5. “It’s a substantial upgrading of the resource,” says McMaster. “The total of inferred plus indicated is 14 mln tonnes, which gives us 30 years’ worth of mine life off just 7% of the total orebody.” Looked at like that, and Arapua clearly has a lot more to give. The market, however, has been nonplussed, partly one suspects selling last year’s huge gains into the strength generated by this latest news. But if there are sellers around, there’s not much long-term ground for negativity. “The development work at Arapua is done,” explains McMaster. “We’ve put in all the infrastructure, we’ve got a trial mining permit and we’re making an application to get a full permit. From a mining perspective everything’s done. Based on the current capital spent we are ready to produce between 400,000 and 500,000 tonnes of product per year.” What remains to be seen is how exactly Harvest’s direct application natural fertilizer, otherwise known as DANF can be best utilised. Large-scale grow tests are currently underway involving one of the region’s biggest coffee growers, Veloso, and 50 tonnes of product. Already, a marker’s been put down by Veloso as to the likely price, and it looks as though Harvest’s profit margin could be around US$50 per tonne. On the strength of Veloso’s tests other local farmers and plantation owners are likely to come in as buyers, encouraged too by pending government certification and the results of further tests being carried out by an independent laboratory. But, McMaster notes, the encouraging thing is that what Veloso is testing is not whether the product works, but actually how best to apply it to encourage maximum yield. That right there is proof of concept, and it only remains to be seen now to work out just how much of a revenue stream Harvest can really build up from Arapua. But on the production potential that McMaster is talking about, the revenues on offer are clearly quite significant, and will underpin long-stated plans to return cash to shareholders, albeit that there is another project, Sergi, waiting in the wings to the north. Watch this space for further news.