Harvest Minerals Limited – Final Results

Harvest Minerals Limited – Final Results

Harvest Minerals Limited, the AIM listed remineraliser producer, is pleased to announce its final audited results for the year ended 30 June 2019.  The Company’s Annual Report & Accounts will be posted to shareholders today and uploaded to the Company’s website.

HIGHLIGHTS

·    Flagship product, KPFértil, continues to gain traction in the market

·    Significant potential to be unlocked including broadening the range of commodity applications and markets for KPFértil

·    Continued focus on improving operational efficiency of KPFértil whilst growing the market

·    Well positioned in a dynamic market, given Brazil’s key role in meeting the challenge of feeding the expanding global population

·    Trading update announced separately today states that the Company is aiming to record a maiden profit before tax for CY2020

Key extracts from the Annual Report & Accounts are set out below. The presentation currency is Australian dollars.

 

REVIEW OF OPERATIONS

 

Arapua Fertiliser Project

 

Studies, Test Work and Sales

During the period, the Company announced approval from the Ministry of Agriculture (‘MAPA’) in Brazil to register KPfértil as a remineraliser and also received trademark approval for KPfértil by the Instituto Nacional da Propriedade Industrial in Brazil.  The trademark has been officially registered for an initial ten-year period.  In addition, KPfértil was registered as organic with the Brazilian Institute of Biodynamics (‘IBD’).

 

The Company submitted the Environmental Report and Feasibility Study to the Agência Nacional de Mineração (‘ANM’), formerly the Departamento Nacional de Produção Mineral, which has confirmed its acceptance of the Company’s Plano de Aproveitamento Econômico (“the Company Plan”) submitted by the Company in July 2018.  In essence, the Company Plan is a Feasibility Study wherein the Company demonstrates that the Arapua project is technically and economically feasible. 

 

In September 2018, the Company announced results from recent agronomic studies testing KPfértil on Brachiara (or Signal grass).  Highlights of the testing included:

·    As a slow release source of potassium (‘K’) and phosphate (‘P’), KPfértil outperforms traditional Super Triple Phosphate (‘TSP’) fertilisers, increasing both plant growth (dry matter production) and yield (agronomic efficiency).

·    The application of KPfértil improved the pH and nutrient content of the soil including potassium, phosphate, calcium (‘Ca’) and magnesium (‘Mg’).

·    The study concluded there was a 53% increased concentration of phosphorus in the soil compared to using TSP meaning that KPfértil provided continued fertilisation for further crop cycles, highlighting its slow release and long term properties.

 

To further support the Company’s marketing of KPfértil, as well as increase the number of grow trials, the Company established its own demonstration farm (Fazenda São Bartholomeu) at Arapua, where it grows coffee, sugarcane, soybean, maize and grass to demonstrate the effectiveness of KPfértil.

 

During the period, the Company announced a strategic alliance with Geociclo Biotecnologia S/A (‘Geociclo’), to enable KPfértil to be marketed and sold by Geociclo’s sales team, gain access to its MAPA accredited research and trial production laboratory as well as storage facilities.  The alliance resulted in Geociclo introducing the Company to new markets and generating initial sales. 

 

At the time of this arrangement, GeocicIo and Harvest committed to provide adequate funding to allow the necessary resources from each company to be committed to the arrangement.  As part of that commitment, Harvest advanced an amount of US$350,000 which was to be used towards developing sales channels, research and generally furthering the strategic alliance.  Geociclo failed to commit any funding to the arrangement.  In November 2018, Geociclo sought judicial administration.  The recovery of the amount advanced by Harvest is subject to the judicial administration and the likelihood of any recovery is unknown and considered uncertain.  As such, Harvest has elected to make a full provision for this amount as an impairment which has resulted in a one-off expense totalling A$486,257 being recorded. 

 

Despite the potential loss of this initial investment, Harvest created an opportunity from the judicial administration through acquiring the majority of the Geociclo sales team including associated experienced support staff and its existing client database.  This has allowed the Company to build upon the progress made in developing new markets for KPfértil, but without having to pay on-going commissions to Geociclo.   Harvest has no ongoing strategic relationship with, or financial commitment to, Geociclo.

 

Infrastructure Work

During the period, the Company advanced its business plan through the commissioning of an enlarged modular processing plant and associated infrastructure, which will support the existing and anticipated sales pipeline. In February 2019, the new plant was switched from diesel generators to the local electricity grid, resulting in lower and more consistent power costs.

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