Trading Update

RNS Number : 5634A

Harvest Minerals Limited

30 September 2020

 

Harvest Minerals Limited / Index: LSE / Epic: HMI / Sector Mining

30 September 2020

Harvest Minerals Limited ("Harvest" or the "Company")

Trading Update

Harvest Minerals Limited, the AIM listed remineraliser producer, is pleased to provide the following update on its trading.

Overview

· Strong year-to-date sales performance, of 37,436 tonnes, which is reflective of increasing market traction of KPFértil as a cost effective, high quality remineraliser product, despite continuing impact of the COVID-19 pandemic that has affected sales:

o  Q1 CY2020 sold 3,334 tonnes, representing an increase on the 3,000 tonnes target

o  Q2 CY2020 sold 6,525 tonnes compared to the 14,400 tonnes target

o  Q3 CY2020 sold 27,577 tonnes against the 30,600 tonnes target

· Following cost saving initiatives, the recurring overall cost of operations is the equivalent of sales of approximately 40,000 tonnes / annum of KPFértil

· Revised year-end sales target of approximately 50,000 tonnes for the full year ended 31 December 2020 in light of the COVID-19 impact

· On track to conclude 2020 by reporting a modest maiden profit before tax

· As at 30 September 2020, the unaudited cash balance was AUD$3,723,397 with a positive working capital position of approximately AUD$4,861,723

Commenting on the trading update, Harvest Chairman, Brian McMaster said:

"Like many others, we look back on the first nine months of 2020 and marvel at the way our world has changed.  Harvest started the year optimistically and on the cusp of its "break-out" year.  The most unforeseen of circumstances has unavoidably affected our activities, but the Harvest team has adopted a resilient approach and continues to take comfort in the fact that the quality of KPFértil will be recognised and sales will recover.  The Board is very proud of the efforts the Harvest team has and continue to make.  Our confidence in the future is stronger now than ever. Disappointingly, the share price tells a different story. We are very aware that our shareholders are not being rewarded. Now that the business is safe and prospering, with a maiden profit expected, we look forward to a renewed vigour in the share price performance."

Annual Report and Accounts

As previously announced, due to the current COVID-19 outbreak, the Company was unable to post its Annual Report to shareholders for the period ended 31 December 2019 by the 30 June 2020 deadline pursuant to AIM Rule 18.  AIM Regulation granted an extension for the Company to publish its Annual Report for the period ended 31 December 2019 by 30 September 2020 and the Company released its Annual Report on 30 September 2020.

As was announced on 17 October 2019, the Company has changed its year end from 30 June to 31 December to better align the financial reporting period to the selling season.  The first period for this amended reporting date was the period ended 31 December 2019.  The first full year of the new reporting period will be for the year ended 31 December 2020.

Trading Update

Given that the Annual Report issued today has a balance date ended 31 December 2019, the Company announces this trading update to provide a summary of more current trading conditions.  As was reported in July, the trading conditions throughout the first half of the calendar year were mixed and were impacted by the COVID-19 outbreak.  The effects of the pandemic continue to be felt severely throughout Brazil, as has been widely disclosed in the international media, which has had some impact on operations, as detailed below.

Harvest's original target for Q1 CY2020 was a total of 3,000 tonnes, which is reflective of the summer season.  The actual sales for the quarter were 3,334, representing an increase on target.

Harvest's original target for Q2 CY2020 was a total of 14,400 tonnes.  The actual sales for the quarter were 6,525 tonnes.  The driver of the decrease in sales has been the COVID-19 pandemic.  Brazil has been reported as amongst the worst impacted countries globally and the decrease in sales volume is directly attributed to a decrease in broader activity related to COVID-19.

Harvest's original target for Q3 CY2020 was a total of 30,600 tonnes.  The actual sales for the quarter were 27,577 tonnes representing approximately 90% of the original target. Whilst the Company believes sales and buying sentiment in general continue to be affected by the COVID-19 pandemic, Harvest believes that the relatively strong sales performance it has still been able to achieve during the quarter despite the current global challenges is a reflection of the market's continued acceptance of KPFértil as a cost effective, high quality remineraliser product, the traction being gained by the Company's in-house sales team and generally a modest improvement in customer confidence. 

Given the impact of COVID-19, the Company has been forced to adjust its year-end sales targets from the original target of 75,000 tonnes to a revised forecast of approximately 50,000 tonnes for the full year ended 31 December 2020.  As was announced on 17 March 2020, the Company has throughout the year implemented cost savings initiatives and as a result the recurring overall cost of operations is the equivalent of sales of approximately 40,000 tonnes / annum of KPFértil.  This means that on the current forecasts, the Company expects to conclude the 2020 year by posting a modest maiden profit before tax.

Encouragingly, Harvest has been able to broadly maintain its sale price compared with CY2019.  Conversely, Harvest has observed that sellers of other remineraliser products have been heavily discounting prices to encourage volumes.  Harvest credits the quality of KPFértil and its in-house sales team, on whom the Company has relied on solely throughout 2020, for this success.  The Company had previously announced that it had entered into sales arrangements with Agrocerrado and Geociclo as agents to assist in developing sales markets.  At the time, Harvest considered these arrangements as a way to accelerate market penetration and brand development.  These arrangements have both proven to be unsuccessful and as such Harvest has continued to develop its sales channels organically from its own in-house efforts.  The Company intends for this to be the main stay of its sales channels going forward.

Financial Position

The Company can report that as at 30 September 2020, the unaudited cash balance was AUD$3,723,397, accounts receivable totalled AUD$1,343,981 and accounts payable totalled AUD$205,655, meaning it had a positive working capital position of approximately AUD$4,861,723.

The movement in the cash balance since 30 June 2020 has comprised:

	$AUD
Beginning Cash Balance (30 June 2020)	4,338,705
Capex	(287,235)
Net normal operating expenses	(328,073)
Ending Cash Balance (30 September 2020)	3,723,397

**ENDS**

Enquiries:

Harvest Minerals Limited	Brian McMaster (Chairman)	Tel: [phone]
Strand Hanson Limited Nominated & Financial Adviser	James Spinney Ritchie Balmer Jack Botros	Tel: [phone]
Shard Capital Partners Broker	Damon Heath	Tel: [phone]
St Brides Partners Ltd Financial PR	Charlotte Page Beth Melluish	Tel: [phone]

Notes

Harvest Minerals Limited (HMI.L) is an AIM-quoted low-cost and high margin Brazilian remineraliser producer, located in the heart of the largest and fastest growing fertiliser market in Brazil.

Our product, KPFértil, is a registered and approved organic multi-nutrient direct application fertiliser. It contains many of the essential nutrients and minerals required by plants and, unlike most fertilisers, it does not require any complex processing or chemically alteration, instead it can be applied directly to crops.

KPFértil is produced at the wholly owned Arapua project, that consists of a fully permitted mine, production and storage facilities able to produce and deliver KPFértil to customers. Known mineralisation at the Project is expected to support 100+ years' production at 450Ktpa.

Our focus now remains on growing our business and we have the dedicated in-country sales and marketing team with the skills, experience and contacts to sell KPFértil into the potential multi-Mtpa market on the doorstep of the Project.

 

END

 

 

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