Harvest Minerals Limited – Question and Answer Document

26 September 2018

Harvest Minerals Limited, the AIM listed fertiliser producer, is pleased to release this Q&A to publicly answer questions the Company has received from shareholders over recent months.  The questions are repeated here as they have been asked and we have grouped them into broad categories for the ease of reference only.


Is the 320Kt pa current plant capacity based on 8, 12 or 24hr production and can it be scaled up by simply increasing man hours or is its storage/ plant the limiting factor?

The 320Ktpa production capacity figure is based on three x 7.5-hour shifts, 5.5 days a week for 50 weeks a year.  That schedule includes 1.5 days per week for routine maintenance and is a commonly accepted industry shift rotation for an operation as simple as ours.  As we have said previously, to scale up production further, we will need to install another processing line which is a relatively straight forward process that should cost ~US$1m and take circa 3-4 months to fabricate and install.  There are no limiting factors to expand capacity.

Will you need to do any further work at the plant?

No.  The plant is fully operational. We have the option to switch our power supply from generator to the national grid.  The infrastructure is in place for this and we are awaiting the power company’s technicians attending site to facilitate the transfer, which we expect to happen this year. Once we have been connected to the national grid, we have no further work planned at the plant.

There appears to be a lot of dust product – is this a health and safety problem?

We are crushing our product to produce a fine powder which necessarily creates some dust.  We designed the plant and infrastructure to minimise any dust, including installing dust suppression around the crushers and housing the operators in an enclosure to prevent any dust exposure. The area most prone to dust is the storage shed, however, the storage shed is specifically designed so that no dust filters outside it and no staff are required to be in the storage shed during production.  The Ministry of Agriculture (‘MAPA’) in Brazil has carried out an inspection of the new processing facilities, including the storage area and associated infrastructure, and advise that our facilities meet all the required standards for dust suppression.

Are you able to accommodate site visits for shareholders? 

Harvest’s corporate policy is to not cater for site visits for shareholders on an individual or ad-hoc basis, as is the standard across the industry sector.  Harvest is operating an active mine site and related beneficiation plant, (including associated mobile plant movements) and the introduction of non-operational personnel presents potential insurance and health and safety issues.

When do you anticipate the mining permit to be issued?

We expect the mining licence will be issued in the 12 months following the original application submission which was Q2, 2018.

How does the rainy season affect production and when does this season begin/end?

The rainy season in Brazil typically falls during the summer months between November and March.  As all our production units are undercover, processing should not, on average, be impacted by rainfall although there will, of course, be temporary periods where production could be interrupted by excessive rain.


How much revenue will be recorded in your 30 June 2018 financial statements?

Our year end results and Annual Report will be announced on 28 September 2018.  The Company has made a decision to hold off revenue recognition until the new financial year to properly align revenue and related production expenses and additionally to assist investors in seeing performance from a “standing start”.  We believe the full year accounts to be released next summer will be far more meaningful if all the revenue and related expenses are recoded in one year rather than blending in the unrelated capital development expenses incurred during 2017/18.

What is the rationale behind not announcing every sales order? 

The Company has met its objectives of moving to be a revenue production company.  It is not normal, or required pursuant to the AIM Rules, for a company of this nature to report on its sales activity in detail and we are no different.  The Company will be releasing bi-annual financial reports which will include all financial metrics.

Can you give us an idea of sales achieved during Q1 of the new financial year?

We understand that investors have identified sales orders as a key metric to success.  However, focussing on sales orders in isolation is not appropriate as it does not cover the whole trade cycle, which should include sales, production and the amount of product delivered, invoiced and ultimately paid for.  This whole trade cycle can take many months and at this stage, Harvest is at the commencement of its first trade cycle; it has announced substantial sales to date and is now focused on fulfilling those orders.  Considering that the Company has only been in full production for a short period, it is apparent that there is going to be a period of some months where all production will be required to meet the existing sales orders.  Once produced and delivered, the customers will be afforded normal trade credit terms before they are required to pay for the product.  Once we finalise our first trade cycle and establish a trading “rhythm” the working capital cycle will become normalised.  This is the process that every new business goes through.

At the moment, the sales orders that are already in the book are more than sufficient to see the Company reach profitability and become cashflow positive.  Accordingly, our first priority is to fulfil those orders, which we are doing.  Alongside this, we are developing our market across a range of crops and we are educating farmers on the benefits of KPfértil so that we have follow-on orders into 2019 and beyond.  This process is underway and the results to date are outstanding.  The Company remains confident in the strength of customer demand at present and going forward, as evidenced by our investment in enlarged plant capacity.

We are aware that some investors are expecting to see a linear trajectory of sales from zero to 320ktpa without interruption and in quick order.  This is unrealistic.  It is, however, realistic to assume that it is going to take a period for a trade cycle at full production to be achieved, in line with the findings of analyst research.  Achieving profit and becoming cashflow positive in the first year of production is an extraordinary achievement and that is the Company’s primary focus right now.

Does this put you ahead or behind where you expected to be at this stage and what external factors have impacted this? 

At the start of the year we spoke publicly about a sales target of 30Kt. The contracts we have signed significantly exceed that target and so we are well ahead.

How is the relationship with Geociclo working and have you seen any benefit yet?

We announced the strategic alliance with Geociclo at the end of July 2018, so only 2 months ago. The relationship is very simple.  It has an established sales and marketing team which has been fully trained on KPfértil and is selling our product in its region.  Additionally, it has MAPA approved laboratory facilities and we have access to those facilities to conduct test work for product development.  Additionally, we can use its production facilities as a logistical depot.  The relationship is fully operational and to date, we have seen obvious advantages to proceeding with the relationship.

Will your margins be similar for pastural when compared to traditional crops? 


In your recent video, you mention that there is a significant possibility of being profitable by the end of the year based on current contracts that you are delivering against. How likely is it that this number will be exceeded if deals within the current pipeline convert? 

In very broad terms, based on our existing structure, the Company will reach profitability and become cashflow positive once it achieves sales of approximately 25,000 tonnes per annum. We have announced sales exceeding that number for 2018/2019.


What does KPfértil do and why is it a good product?

KPfértil is a natural multi-nutrient fertiliser and remineraliser. It contains potassium and phosphorous, which are two of the three essential nutrients (nitrogen being the third) as well as many other micronutrients required by plants which are released slowly over time with very little loss due to leaching. Additionally, the silica content in KPfértil improves plants resistance to disease and improves their ability to take in water.   As a remineraliser, it rebalances soil PH, improves the soils ability to retain and make available soil nutrients to plants, improves moisture retention and unlike traditional fertilisers, is salt and chloride free improving crop quality.  It is free of any hazardous chemicals making it safe to apply.

Are you going to register KPfértil as a fertiliser as well – will this help sales?

There is no current requirement to register as a fertiliser to assist sales activity.  We monitor customers’ requirements and demand levels and if we identify a need or market potential going forward we may look to register as a fertiliser, but at this stage we are not intending to do so.

What is the cost savings for farmers using KPfértil on coffee/ grass?

Cost savings will vary depending on a range of things including the specifics of application rates, time of season, historical application rates of KPfértil and other products etc.  However, the independent test results indicate that on a like-for-like basis, significant costs savings are available.

We are naturally excited by the potential for Pastural use of KPfértil. Are there alternative products being used by farmers at present or has cost been historically prohibitive?

There are several fertilisers and remineraliser products available, however, within our market area, we believe that there is no other product that offers the nutrient and associated benefits at the same cost point that KPfértil does.  Accordingly, we consider the market opportunity for us is significant, as evidenced by the very early take up of the product by farmers.

It is our assumption that the use of KPfértil will enable farmers to retain an ‘organic label’ – is this correct and how important is this to the pastural industry in Brazil?

We cannot comment on the specifics of whether or not a particular farmer can obtain “organic” certification.  However, it is commonly understood that in order to obtain organic certification, a farmer would be required to demonstrate that the various inputs to the production cycle are organic.  KPfértil is a completely natural organic product and accordingly it follows that the use of KPfértil will meet the criteria of demonstrating that the production input is organic.  The “organic” accreditation is growing in stature in Brazil as in other countries.  We believe that going forward, this will become increasingly important and accordingly bodes well for KPfértil.

Does the application amount per hectare of KPfértil differ significantly for pastural use in comparison to traditional crop usage such as coffee etc? 

Application rates do differ between crops due to the different nutrient requirements and based on individual farms and farmers requirements. There is no blanket answer to this question.


Is there any indication whether HMI will be affected by the current elections?

No. Agriculture is the third largest component of Brazil’s GDP and is a mainstay of its economy.  The Brazilian Government has been demonstrating its support for the agricultural industry and encouraging the development of domestic fertiliser production.

Are sales/ Harvest being affected by the weak Brazilian economy?

No.  We benefit from the increased cost of importing fertiliser products into Brazil.

Is the depreciation of the Real impacting the Company?

No. The increased price of imported fertilisers is making KPfértil more cost effective.

Has the Government updated its target to be self-sufficient in fertilisers by 2020?

The target is still in place but looking less achievable as the demand for fertilisers continues to grow and the sources of local product are not increasing to meet the demand.


Will another placement be needed as it could take a couple of years to get to full capacity?
The Company currently has no plans to raise additional capital.

If the placing was so heavily oversubscribed, why are people not buying now the price is below that of the placing?

One of the principal objectives of the recent capital raise conducted by Shard Stockbrokers and Arden Partners was aimed at identifying and securing the long-term support of particular institutional investors, which was achieved.  It is typical for these types of investors to take a longer-term view and it is not typical for them to buy on market as prices vary.  From that perspective, the recent capital raise has been an outstanding success.

Similarly, at the project level the Company has had continued success.  Harvest has achieved all the objectives identified early in the year and more.  The project is in full production and sales and marketing activities in Brazil are very active.

In contrast, the AIM market has been experiencing a particularly soft period of retail investor interest.  It is typically this interest that buys and sells shares based on momentum and sentiment and for reasons unrelated to Harvest, this interest has been waning throughout the summer.  We believe it is this general market sentiment that has weighed on Harvest (like so many other company’s).

General Comment

Please note that the only party with accurate information is the Company, not individual pundits commenting in unregulated forums.  The Company is committed to full and accurate disclosure through its normal RNS announcements.  However, to assist investors with any matters that require clarification and to avoid any mis-information, either deliberate or otherwise, Harvest aims to release Q&A announcements such as this on a regular basis going forward.  Accordingly, shareholders with questions should submit them to


For further information please visit or contact:

Harvest Minerals Limited

Brian McMaster (Chairman)

Tel: +44 (0) 20 7317 6629

Strand Hanson Limited

Nominated & Financial Adviser

James Spinney

Ritchie Balmer

Jack Botros

Tel: +44 (0)20 7409 3494

Arden Partners plc

Joint Broker

Tim Dainton

Paul Brotherhood

Paul Shackleton

Tel: +44 (0) 20 7614 5900

Shard Capital Partners

Joint Broker

Damon Heath

Tel: +44 (0) 20 7186 9900

St Brides Partners Ltd

Financial PR

Isabel de Salis

Gaby Jenner

Tel: +44 (0)20 7236 1177


Harvest Minerals (HMI.L) is a Brazilian focused fertiliser producer advancing the 100% owned Arapua Fertiliser Project, which produces KPfértil, a proven, multi-nutrient, slow release, organic, MAPA-certified remineraliser.  KPfértil offers many economic and agronomic benefits and addresses the significant demand for locally produced fertiliser in Brazil, with its abundant agricultural land; currently, the country imports 90% of the potash it uses but has a target to be self-sufficient in fertilisers by 2020.  Covering 14,946 hectares and located in the heart of the Brazilian agriculture belt in Minas Gerais, Arapua is a surface, low cost mine with an indicated and inferred resource of 13.07Mt at 3.1% K2O and 2.49% P2O5.  This is based on drilling just 6.7% of the known mineralisation, leaving significant upside potential. This resource is equivalent over 29 years’ production and the known mineralisation expected to support 100+ years’ production at 450,000 tonnes per annum.

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