Harvest Minerals Limited Change in Royalty Rates in Brazil (9026X)
November 30 2017 - 2:00AM
UK Regulatory
TIDMHMI
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 Brian McMaster Tel: +44 (0)
Limited (Chairman) 20 7317 6629
Strand Hanson Limited James Spinney Tel: +44 (0)20
(Nominated & Financial Ritchie Balmer 7409 3494
Adviser)
Mirabaud Securities Rory Scott Tel: +44 (0)20
LLP 7878 3360
(Joint Broker)
Beaufort Securities Jon Belliss Tel: +44 (0)20
Ltd 7382 8300
(Joint Broker)
St Brides Partners Isabel de Salis Tel: +44 (0)20
Ltd 7236 1177
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% K(2) O and 2.49% P(2) O(5) . 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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