Harvest Minerals (AIM:HMI) is a fertilizer development company listed on the London AIM market with four principal projects in Brazil. ValueTheMarkets.com posed some questions about the demand for their product and operations on the ground to Executive Chairman, Brian McMaster….
Experience past & present
Harvest Minerals has been a popular company during 2017 seeing its share price start the year at 18p and closing just shy of 15p after seeing lows of 7p. I understand the team in Brazil has been through a period of validation to ensure its natural organic fertilizer business meets the government classification criteria, and this milestone has now been reached. Could you give investors some insight into the experience of the management team, both in Brazil, but more so where operating a producing asset of this kind?
“The Brazillian team is comprised of industry professionals with cumulative decades of experience. Luis Azevedo is regarded as one of Brazil’s pre-eminent mining entrepreneurs having been involved directly in the creation and management of numerous companies as well as acting in a professional capacity as an adviser to dozens of clients. Interestingly, Luis has extensive experience in running Brazilian fertilizer companies having previously been at the helm of Rio Verde Minerals before it was sold for $55m. Another interesting tidbit is that Luis was recently awarded “Brazilian Explorer of the Year.” Quite a feat and well deserved.”
Scalability & ease of recovery
Can you explain the ease of recovery and how the mining operation can be scaled up subject to sales orders?
“The deposit occurs at surface and we have already identified decades worth of product. So extracting it is really easy. There’s no blasting or anything it just a dig and crush operation. We have already put in the bulk of the civil works and the first modular crushing plant. If we want to expand production (which we will), we simply have to add more modular capacity. The design of the plant so far has assumed we will be adding more capacity as we go.”
market size for commodity
We understand that the Brazilian government has cut the royalty taxes for the commodity which reinforces the company’s belief that fertilizer of this nature is a critical local need. What are your production targets coupled with the market size for your fertilizer?
“ We have said for a while that we are targeting 400-450kt per annum. We estimate the market within a 200 km radius of us for KpFertil equivalent products is 6-8Mtpa. That means we have lots of room for expansion.”
You are listed in London. Can you give us an understanding of your local in-country business relationships in Brazil?
“Luis is a Brazilian geologist and runs one of Brasil’s pre-eminent mining dedicated law firms. The HMI directors have operated in Brazil successfully for a long time. Brazil has a transparent, workable mining code and is a very mining friendly investment market. The best way to summarise our relationships in-country is to speak to our successes. Since listing 2 years ago, HMI has achieved every milestone it has set out to achieve, ahead of schedule and under budget.”
You have stated that the company could be delivering substantial sales figures in the future should the demand arrive Could you give us any details about the order in which you see future events taking place?
“ We are expecting MAPA certification soon. Alongside that, we are planning to increase production capacity in the coming months. This increased capacity will be needed to service our expected increased demand.”
Reaction to recent RNS
Finally, the shares eased off 10% on the news you had juggled around corporate brokers. Such a move can sometimes lead to assumptions that you may wish to return to the market for additional finance in the near future. While we appreciate this is a sensitive question, can you share a few thoughts with us on this?
“In answer to your question, why did we recently change brokers, the answer is a lot less enthralling than people are speculating.
We did not change brokers because we have a fundraising in place, we raised money recently. The company is going through a strategic review as we are moving rapidly from exploration/development to production. Mirabaud did a great job working with the company through the early stages (including the IPO) but in recent months it has become obvious that the target investor audience for us is much more in the wheelhouse of Shard who gave Aldo being a long-term supporter of Harvest.
We think it’s healthy and sensible that a company looks at all its relationships from time to time and makes changes where required. There will be other changes/additions, coming in the near future and they are all part of the plan to move Harvest well up the value spectrum. Shareholders can be assured, our eyes are on the prize and it’s getting closer every day.”
Author: Stuart Langelaan
Disclosure: The author of this piece does not owns shares in the company written about above