Today saw Harvest Minerals (LSE:HMI) finally report that it has secured the much-anticipated government approval needed to register its KPfértil product as a remineraliser in Brazil, leading shares to rise 5.7pc to 18.6p. It received approval for the product, a multi-nutrient natural fertiliser, from the Ministry of Agriculture (MAPA) in Brazil and also received 10-year trademark approval for the brand name KPfértil.
The government approval has been highly sought after by Harvest and its investors since the business signed a game-changing $2m sales order for KPfértil in a significant move towards profitability in May. The deal saw major Brazilian fertiliser and agriproducts distributor Agrocerrado buy an initial supply of 36Kt of KPfertil at $60/t, with delivery coming in early May this year.
As we wrote at the time of the deal, Harvest has previously reported all-in production costs of $7/t at Arapua, meaning the agreement will provide a profit of $53/t, or an 88pc margin. This equates to a profit before tax of $1.9m, with further orders from Agrocerrado potentially in the pipeline – the company said additional discussions regarding sales are on-going.
Elsewhere in today’s update, Harvest announced that it has submitted final studies to the Brazilian Department of Mines as part of an application for a Full Mining Licence. In the meantime, Harvest continues to operate under the existing environmental licence for trial mining granted in December 2015 for four years.
Finally, the firm said that following its recent £9.7m placing, it has advanced its business plan and commissioned an enlarged 320Ktpa processing plant at its Arapua project, where it makes KPfértil. The expansion of Arapua is intended to support Harvest’s existing and anticipated sales pipeline in line with its expanding sales and marketing activities during H22018.
Brian McMaster, executive chairman of Harvest, said, ‘Gaining certification from MAPA for KPfértil, our proven, multi-nutrient, slow release, organic remineraliser, is a great outcome and places us in an even stronger position to advance sales. Following the recent oversubscribed placing, we have progressed our business plan and commissioned the enlarged plant to accommodate the production of 320Ktpa and its delivery to market; this will support the existing and anticipated sales pipeline. Remaining on the theme of sales, our strategy going forward is to provide updates on sales at our final and half-yearly results, unless significant.’