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Harvest Minerals is now on the cusp of completing the production jigsaw at Arapua

Harvest Minerals is now completing tests on KPfértil and should secure full certification by the end of the year
Harvest Minerals is now on the cusp of completing the production jigsaw at Arapua
Harvest's KPfértil product has performed well in tests

Shares in Harvest Minerals Limited (LON:HMI) have enjoyed something of a fillip lately, following a brief flurry of news that looks like the start of what could be a busy period.

Key at this stage is the ongoing success of agronomic testwork on Harvest’s Brazilian fertiliser product, KPfértil.

Looked at one way, this is a pretty simple matter.

“The tests literally just involve putting the product on plants,” says Harvest’s executive chairman Brian McMaster

But looked at from another point of view, it’s likely to mark the moment that Harvest really comes of age. All the capital that’s likely to be needed for production from Harvest’s Arapua project has now been spent. The mine is ready to go. Harvest’s own independent tests on coffee, potatoes and carrots have come up trumps.

All that’s needed is the certification from Brazil’s Ministry of Agriculture, Livestock and Supply, also known as MAPA, and this is based on a test on rice, which has also gone well.

The application is now anticipated to be processed early this quarter (Jan–Mar 2018), having been delayed by an extended Chirstmas break in Brazil.

After that, production is just a short hop away, and given the huge resource at Arapua, it’s really then just a matter of judging the demand.

“We’ve pitched the ball down the fairway at 450,000 tonnes per year,” says McMaster, “but if our sales team come back and say it’s actually 250,000 tonnes or a million tonnes, that’s fine.”

Harvest will be able to adjust output accordingly.

“For us the market is as big as the sales team can make it,” says McMaster. But because the company is aiming to sell directly into the surrounding agricultural communities in Brazil, a little bit of local knowledge is called for.

To that end Harvest has just appointed Lino Furia as sales manager, a man who has worked with several major fertiliser companies, including Mosaic (NYSE:MOS), and local Brazilian champion VALE (NYSE:VALE).

In the announcement that accompanied Furia’s appointment, McMaster also drew attention to Brazil’s stated intention to becoming fertiliser self-sufficient by 2020, just two-and-a half years away.

Whether Brazil as a country will hit that target remains to be seen, but Harvest at least looks well on track to pass its own milestones.

“The fundamentals of why people invested in this company is that they wanted to see Arapua come on stream and start creating cash,” says McMaster.

That’s now about to happen and recent news on agronomics and sales strategy is a “continuation of the thing we’ve been saying we were going to do.”

So all the pieces in that cashflow jigsaw are now falling into place.

Indeed, it won’t be long before investors start to look to the upside that lies elsewhere in the company.

“There are three other projects inside Harvest,” says McMaster.

“One of them is similar to Arapua, and two are traditional potash projects. In addition we’ve publicly said the company is actively pursuing opportunities to grow. So watch this space.”

At 15p, Harvest is valued at a shade under £18mln.



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