Change in Royalty Rates in Brazil

RNS Number : 9026X

Harvest Minerals Limited

30 November 2017

 

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

30 November 2017

Harvest Minerals Limited

("Harvest" or the "Company")

Change in Royalty Rates to Deliver Signficiant Cost Savings

Harvest Minerals Limited, the AIM listed fertiliser development company, is pleased to inform shareholders that the Federal Senate (Upper House of the National Congress of Brazil) has approved a bill to reduce the royalty rates of fertiliser projects from 3% to 0.2%.  The bill was approved by the Chamber of Deputies (lower house) on Wednesday 22 November 2017 and is part of wider reforms to boost the mining sector and the economy in general.  This change will allow the Company to benefit significantly due to its low cost of production and forecast high production margin.

Overview

·     Royalty rates of Brazilian fertiliser projects reduced from 3% to 0.2% to support domestic market growth

o  Royalty rate change effective from January 2018

o  Brazil targeting self-sufficiency in fertilisers by 2020 - currently importing 90% of fertiliser needs

·     Significant cost savings of ~US$1.46/t anticipated at Harvest's Arapua Fertiliser Project ('Arapua')

o  Company's August 2016 Arapua scoping study assumed a cost of US$1.58/t in royalties on sales at US$60/t.  Under the new regime, this reduces to US$0.12/t in royalties therefore a saving of ~US$1.46/t

Harvest's Executive Chairman, Brian McMaster, said, "Harvest has received tremendous support from the Brazilian Government at all levels since we started developing our fertiliser projects in Brazil.  Whilst we were expecting a cut in royalties from 3% to 1%, the fact that it was reduced further to 0.2% shows the Brazilian Government's continued commitment to developing fertiliser and remineraliser projects to reduce the country's dependence on imports. 

"Due to our low cost of production and high margin, we will benefit significantly from this reduction in royalty rates, especially as we start to ramp up production and reduce per tonne operating costs.  For example, in our scoping study for Arapua, we assumed a cost of US$1.58/t in royalties on sales at US$60/t.  Under the new regime we will be paying just US$0.12/t in royalties, a saving of US$1.46/t."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information please visit www.harvestminerals.net or contact:

Harvest Minerals Limited	Brian McMaster (Chairman)	Tel: [phone]
Strand Hanson Limited (Nominated & Financial Adviser)	James Spinney Ritchie Balmer	Tel: [phone]
Mirabaud Securities LLP (Joint Broker)	Rory Scott	Tel: [phone]
Beaufort Securities Ltd (Joint Broker)	Jon Belliss	Tel: [phone]
St Brides Partners Ltd	Isabel de Salis	Tel: [phone]
	Olivia Vita

Notes:

Harvest Minerals (HMI.L) is a Brazilian 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.  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% K₂O and 2.49% P₂O₅.  This resource translates into a mine life of over 100 years at a rate of 450k tonnes per annum and crucially is based on drilling just 6.7% of the known mineralisation, leaving significant upside potential.  With a trial mining licence in place, allowing Harvest to extract 50kt of product on a rolling basis whilst the full mining licence application process is underway, and official registration of KPfértil as a remineraliser expected by the end of 2017, Harvest is ideally placed to address the significant demand for locally produced fertiliser in Brazil; Brazil has abundant agricultural land but lacks domestic fertiliser, with the country currently importing 90% of the fertiliser it uses.  Furthermore, the Brazilian Government has set a target to be self-sufficient in fertilisers by 2020, creating significant market opportunity for Harvest and its KPfértil product.   Additionally, the Company has four assets at various stages of development and continues to explore other opportunities that fit its investment criteria.

 

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