("Harvest" or the "Company")

Transcription

1 1 of 6 23/08/ :03am Regulatory Story Go to market news section Harvest Minerals Limited - HMI Released 07:00 10-Aug-2016 SCOPING STUDY FOR ARAPUÁ FERTILIZER PROJECT RNS Number : 7252G Harvest Minerals Limited 10 August 2016 Harvest Minerals Limited ("Harvest" or the "Company") 10 August 2016 SCOPING STUDY FOR ARAPUÁ FERTILIZER PROJECT CONFIRMS LOW COST PRODUCTION OF DIRECT APPLICATION NATURAL FERTILISER AT MAXIMUS TARGET Harvest Minerals Limited (AIM:HMI) is pleased to announce that that an independent Scoping Study (the "Study") has been completed for its Maximus Direct Applica on Natural Fer lizer (DANF) Project, highligh ng the robust economics of the project and the simple low cost mining and processing required to support the ini al trial mining permit. Maximus is part of the Arapua Fer lizer Project and is located in the Brazilian state of Minas Gerais. The Study was conducted by consultants GE21 Consultoria Mineral (GE21) and includes pit op miza on and design, mine scheduling, capital expenditure (CAPEX), opera onal expenditure (OPEX) es mates and a preliminary economic assessment based on the current ini al resource, which represents only ~3% of the es mated mineralisa on. The study highlights are: Produc on of 100ktpa for 7 years, based on ini al 883Kt Indicated JORC (2012) resource Open pit with very low strip ra o of 0.38:1 and amenable to contract mining Very simple dry processing, including only crushing and milling Low opera ng costs of US$4.77/t mined and processed and US$ 7.34/t including selling costs and general and administra ve expenses (G&A) Ini al Capital expenditure of US$800k for own equipment Scenarios with sales prices of US$50/t and US$65/t generated NPV's of US$15.0m and US$21.0m post tax, with a 10% WACC, and IRRs of 408.8% and 562.8% respec vely Pricing scenarios between US$15/t to US$120/t generated NPVs of between US$1.1m to US$42.8m with IRRs of between 44% and 1,129% demonstra ng the economic robustness of the project when stress tested En re project can be funded from exis ng cash reserves, with first produc on expected later this year.

2 2 of 6 23/08/ :03am Commen ng on the scoping study, Execu ve Chairman of Harvest, Brian McMaster stated: "Comple on of this study demonstrates the robust economics of the project and brings us one step closer to our objec ve of designing a simple and efficient project that delivers significant value for Harvest and its shareholders. There is significant upside to the project both in terms of the current resource and poten al to expand the planned ini al produc on with the project ideally located in the prime agricultural Cerrado region where fer lizer demand is high. We expect to be able to refine and improve on the numbers presented in the scoping study and we are in the process of appoin ng contractors to carry out the mining and processing, which could significantly reduce the ini al CAPEX requirements and poten ally reduce these already low OPEX costs even further. We are busy working towards first produc on later this year and whilst our trial mining permit applica on is being processed, our technical team and consultants con nue to conduct further test work including an agronomic study, the ini al results of which we expect to receive during the current quarter." Enquiries: Harvest Minerals Limited Brian McMaster, Chairman Tel: Strand Hanson Limited (Nominated & Financial Adviser) Mirabaud Securi es LLP (Broker) Beaufort Securi es Ltd (Joint Broker) Buchanan (Financial PR) Rory Murphy James Spinney Ritchie Balmer Rory Sco Jon Bellis Bobby Morse Anna Michniewicz Tel: Tel: Tel: Tel: Background The Arapua Fer lizer Project is strategically located in the Brazilian Cerrado, 360km NW from Belo Horizonte, the capital of Minas Gerais State. The project consists of seven granted explora on licences covering a total area of 12,997.6 hectares, divided across both the Arapuá and Maximus targets. Previous geological mapping at Maximus has iden fied a con nuous kamafugite rock layer containing both phosphate and potassium, over an area of approximately km 2. The ini al resource es mate, based on an air core drilling programme of only the weathered kamafugite over only ~3% of the es mated mineralisa on, iden fied a JORC (2012) compliant total Indicated resource of 883Kt at 4.21% K 2 O and 3.53% P 2 O 5 at a 3.5% K 2 O cut off, with addi onal explora on poten al within the drilled area of between 3.0 to 3.5Mt with average grades from 2.7 to 3.5% K 2 O at a 1% cut off. In addi on to the phosphate and potassium oxide mineraliza on, grades of CaO (ranging from 0.80% to 15.60%), MgO (ranging from 3.21% to 17.90%), MnO (ranging from 0.18% to 0.55%) and silicon dioxide (SiO 2 ) (ranging from 27.70% to 41.00%) were detected in the kamafugite weathered rocks. The kamafugite is therefore being studied as a mul nutrient silicate agro mineral which could

3 3 of 6 23/08/ :03am produce a direct applica on natural fer lizer (DANF) and/ or soil condi oner. Infrastructure The project benefits greatly from being located in the Brazilian Cerrado, the most robust and expanding agricultural region in Brazil. Combined with good exis ng infrastructure at and in the vicinity of the Project, including easy road access to established regional towns of Patos de Minas, São Gotardo, Araxá and Uberlândia, transporta on costs for the product are significantly reduced. The total infrastructure capital costs at Maximus are es mated to be US$85.7k to support 100ktpa produc on and include an administra on office, maintenance workshops, refectory, weighing scale for trucks, area for ore stockpiles, fences and ordinance. Mining and Processing The kamafugite will be extracted from an open pit at a proposed rate of 100ktpa run of mine (ROM). In order to reduce ore loss and reduce the transport distance for ROM ore, the open pit shell was op mized using strategic mine planning so ware, Geovia Whi le 4.3 and has a life of mine strip ra o of just The final pit design for 100ktpa is shown in figure 1. FOR FIG. 1 CLICK HERE: h p:// pdf.londonstockexchange.com /rns/7252g_ pdf Mined ore will be trucked to the stockpile area where a loader will be used to feed the processing plant. The processing plant will work on a dry basis and include a primary crusher and a hammer or ball mill which should produce no tailings. Capital Costs The capital cost es mate of US$800k for the 100 ktpa process plant and associated site infrastructure includes the purchase of mining equipment including a loader and bulldozer. The es mated cost of the mining equipment was US$428k with the remaining US$372k being for the processing plant, stockpile area, environmental licensing and general infrastructure. Opera ng Costs Table 1 CAPEX Summary Cost Descrip on US$k Mining Processing Stockpile 57.1 Environmental Licensing 85.7 Infrastructure 85.7 Total The opera ng costs were es mated based on the cost of similar projects in the GE21 database. The opera ng costs include mining, processing, labour, general and administra ve expenses (G&A) and selling cost. The total opera ng cost (OPEX) for producing 1 tonne of product is US$7.34/t. This includes G&A and marke ng/ selling costs as shown in table 2. Table 2 OPEX Summary Descrip on Cost US$/t ROM Mining 1.79 Processing 1.29

4 4 of 6 23/08/ :03am Project Economics Labour 1.69 G&A Selling Cost Total 7.34 The financial assessment of the project was based on 100ktpa produc on over a 7 year mine life. For the Maximus project, GE21 based the product price on the market price of chemically concentrated potash fer lizers. As the price es mate for DANF is based on the overall efficiency of the product, which will require further test work, GE21 produced an economic assessment stress tes ng the project against a product sales price ranging from US$15/t to US$120/t and specifically for prices of US$50/t and US$65/t. Table 3: Economic Assessment of the project (post tax and 10% WACC) NPV 10% Price (US$/t) (US$m) IRR (%) Payback (Years) , At the lowest price es mate of US$15/t, a post tax IRR is 44% with an NPV 10% of US$1.05m, whereas at the US$120/t price point the IRR rose to 1,129% with an NPV 10% of US$42.8m. Given the wide spread of prices, the results demonstrate the inherent robustness of the project and gives the Company a lot of flexibility over how it develops the project and product(s). Next steps The Company has already applied for the trial mining permit and is in discussions with the landowner over leasing the property covered by the planned mine and associated infrastructure. Meanwhile the Company has already contracted Campo Agricultural and Environmental Analyses in Paracatu to conduct the ini al chemical and physical tests, following the Brazilian Ministry of Agriculture, Livestock and Food Supply (MAPA) guidelines. This will be followed by an agronomic study as part of the process of registering the product as a "stonemeal soil condi oner" fer lizer with MAPA. COMPETENT PERSON STATEMENT The informa on in this statement which relates to the Mineral Resource and Explora on Target is based on informa on compiled by Mr. Bernardo H C Viana, a geologist and full me director and owner of GE21 and is registered as Competent Person in the AIG (Australian Ins tute of Geoscien sts). Mr. Bernardo Viana has sufficient relevant experience to the style of mineraliza on to qualify as a Competent Person as defined in the JORC Code (2012). Mr. Viana also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies. The informa on in this statement which relates to the Scoping Study is based on informa on compiled by Mr. Porfirio Cabaleiro Rodriguez, a Mining Engineer and full me director and owner of GE21 and is registered as Competent Person in the AIG

5 5 of 6 23/08/ :03am (Australian Ins tute of Geoscien sts). Mr. Rodriguez has sufficient relevant experience to the style of mineraliza on to qualify as a Competent Person as defined in the JORC Code (2012). Mr. Rodriguez also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies. CAUTIONARY STATEMENTS The Company's Explora on Target includes poten al quan ty and grade and is conceptual in nature. There has been insufficient explora on to define these mineral resources and it is uncertain if further explora on will result in the determina on of mineral resources. The reader is cau oned that a Mineral Resource is an es mate only and not a precise and completely accurate calcula on, being dependent on the interpreta on of limited informa on on the loca on, shape, and con nuity of the occurrence and on the available sampling results. Actual mineralisa on can be more or less than es mated depending upon actual geological condi ons. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. No Mineral Reserves are being stated. The Scoping Study referred to in this announcement is based on low level technical and economic assessments, and is insufficient to support es ma on of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised. This information is provided by RNS The company news service from the London Stock Exchange END MSCSSDFMUFMSEEA CLOSE Sponsored Financial Content Stocks set to outperform. Access analyst reports and stock valuations. StocksInValue The do's and don'ts of trading the share market for success Wealth Within 3 stocks set for strong cash-flow growth Morningstar China and your share portfolio. Mining stocks to buy, and to avoid Fat Prophets London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

6 6 of 6 23/08/ :03am 2014 London Stock Exchange plc. All rights reserved SCOPING STUDY FOR ARAPUÁ FERTILIZER PROJECT - RNS