Harvest Minerals Limited Updated Resource at Arapua Fertiliser Project (8444X)

TIDMHMI

RNS Number : 8444X

Harvest Minerals Limited

27 February 2017

27 February 2017

Harvest Minerals Limited

("Harvest" or the "Company")

ARAPUA FERTILISER PROJECT - UPDATED RESOURCE ESTIMATE

Harvest Minerals Limited (AIM:HMI) is pleased to announce the results of an updated independent Mineral Resource estimate ("Resource Estimate") completed for the Company's 100% owned Arapuá Fertilizer Project ("Project") in Minas Gerais State, Brazil.

Highlights

-- 37% increase in the high grade JORC (2012) Indicated Resource increased to 1.21Mt at 4.40% K(2) O and 3.45% P(2) O(5) ;

-- Exploration target extended to a JORC (2012) Indicated and Inferred Resource of 13.07Mt at 3.1% K(2) O and 2.49% P(2) O(5;) and

-- Total resource based on drilling covering just 6.7% of known mineralization. The exploration potential remains open at depth and in several directions.

Commenting on the update, Executive Chairman of Harvest, Brian McMaster stated:

"This resource update confirms our expectations on the consistency of the mineralisation at Arapua to support an increased mine life and production rate. The high-grade resource is designed to meet the grades specified in the LOI we signed in December 2016. Additionally, following the completion of the recent round of warrant redemptions Harvest has sufficient cash resources to carry out its business objectives."

Summary

The Resource Estimate is based on the results of the second air core drilling campaign targeting only the weathered kamafugite rock. A total of 39 new air core holes were drilled for a total of 771.05m, with depths ranging from 6m to 40m (average 19.8m).

26 holes were drilled to the east of the current resource thereby extending the resource area by over 140,300m(2) . This takes the total area covered by the current JORC (2012) compliant resource to 214,300 m(2) , which represents approximately 6.7% of the known mineralised area.

The remaining 13 holes were drilled on a more regional wide spacing to confirm the extent of the known mineralisation. Eight of the holes were drilled over outcropping kamafugite that had previously been mapped by the Company's geologists. The assay results are similar to the grades in the current resource area, indicating the potential to substantially increase the mineral resources. The remaining five holes were drilled at the northwest portion of the project area into the kimberlite body which had previously shown P(2) O(5) and K(2) O values. These results were higher varying from 3.3% to 5.86% K(2) O over depths ranging from 6.5m to 10m, suggesting the kimberlite could be another potential source of material, subject to further testing.

The updated Resource Estimate identified a JORC (2012) compliant total Indicated resource of 3.75Mt at 3.44% K(2) O and 3.24% P(2) O(5) at a 1.0% K(2) O cut-off, including 1.21Mt at 4.40% K(2) O and 3.45% P(2) O(5) at a 3.5% K(2) O cut-off.

The total Inferred resource was 9.33Mt at 2.96% K(2) O and 2.18% P(2) O(5) at a 1.0% K(2) O cut-off.

Additionally, the total Indicated resource includes average grades of 6.16% CaO, 6.61% MgO, 0.34% MnO and 34.46% SiO2, which are important in developing a remineraliser product for direct application.

The resource estimate is JORC 2012 compliant and is part of an ongoing technical report being compiled by GE21 Consultoria Mineral ("GE21").

Funding update

As previously announced in December 2016, the Company has progressed the Project to the stage where trial mining has commenced pursuant to a Trial Mining Permit. This progress has seen the Company expend the majority of the capital expenditure ("CAPEX") required for the Project. The remaining substantial costs relate to the operating costs ("OPEX") associated with contracting mining and sales. It is expected that any ongoing OPEX costs will be covered from the sale of KP Fertil product.

The Company previously announced in January 2017, it had received an inflow of funds from the exercise of warrants. These funds were added to the Company's treasury.

Based on the recent inflow of funds and the requirement for no further substantial CAPEX during the trial mining stage, the Company has sufficient cash resources to continue with trial mining and to meet general working capital requirements in the normal course of operations.

The Company is aware that its Admission document dated September 2015 identified additional contingent milestone payments that are due to be paid to third parties as part of the terms governing the acquisition of both the Project and the Capella project.

In order to clarify the position with respect to payments due pursuant to the acquisition of the Project, the Company advises that the current production being conducted under the Trial Mining Permit does not constitute "Commercial Production" pursuant to the acquisition agreement for the Project. Accordingly, the Net Smelter Royalty and US$1m payment (both of which are referred to in more detail in the Admission Document) are not due at this time and will not be due until commercial production is commenced. The Company intends to make an application for a full mining license during 2017, however it is not expected that adjudication on such application will be received until well into 2018. The Company will continue Trial mining whilst the authorities are assessing the full mining license application.

Accordingly, the Company does not consider that these milestone payments are a consideration at this stage.

Additionally, subject to meeting certain criteria, further milestone payments are due pursuant to the acquisition of the Capella project. At this stage, given the focus of the Company has been on the development of the Project, the development of Capella is not regarded as a priority and accordingly the Company has not progressed the work required to trigger any further payments. The Company does not believe this work will be commenced before 2019 and accordingly, the Company does not consider these payments are a consideration at that this stage.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:

 
 Harvest Minerals        Brian McMaster,        Tel: [phone] 
  Limited                 Chairman                          4323 
 Strand Hanson           Rory Murphy            Tel: [phone] 
  Limited (Nominated      James Spinney                     3494 
  & Financial             Ritchie Balmer 
  Adviser) 
 
   Mirabaud Securities     Rory Scott               Tel: + 44 20 
   LLP (Broker)                                        7878 3360 
 
   Beaufort Securities     Jon Bellis 
   Ltd                                              Tel: + 44 20 
   (Joint Broker)                                      7382 8300 
                           Grant Barker 
   Whitman-Howard 
   Ltd                                              Tel: + 44 20 
                           Bobby Morse                 7659 1225 
                           Anna Michniewicz 
   Buchanan 
   (Financial PR)                               Tel: [phone] 
                                                            5000 
 

Background

The Arapua Fertilizer Project is strategically located in the Brazilian Cerrado, 360 km to NW from Belo Horizonte, the capital of Minas Gerais State. The project consists of seven granted exploration licences covering a total area of 12,997.6 hectares, divided across both the Arapua and Maximus prospects.

The initial resource estimate, based on the first air core drilling programme, identified a JORC (2012) compliant total Indicated resource of 883 Kt at 4.21% K(2) O and 3.53% P(2) O(5) at a 3.5% K(2) O cut-off, with an additional exploration potential within the drilled area of between 3.0 to 3.5Mt with average grades from 2.7 to 3.5% K(2) O at 1% cut-off.

Initial agronomic test work, mainly focused on the chemical and physical characteristics of the product, were all well within those required for a soil remineraliser or Direct Application Natural Fertilizer ("DANF"). Harvest commenced further agronomic testwork and growth tests before Christmas of last year with two different laboratories and a major coffee producer in the region.

In late December, 2016, the Company received a trial mining permit from the Departamento Nacional de Produção Mineral ("DNPM"). This has allowed the Company to start mining the first 50kt of weathered kamafugitc ore at the Maximus Target.

Geological Model

At Maximus, the DANF product which includes K(2) O, P(2) O(5) , CaO, MgO and SiO(2) occurs in weathered kamafugitic rocks which were targeted in two air core drilling programmes carried out in 2016.

Together with independent consultants GE21, the Company constructed a geological model through the interpretation of vertical sections based on the drill holes, using lines and polygons to generate solids (wireframes). All the available geological mapping, including the updated topographic and drilling data was used in the 3D geological modeling.

In total, three mineralised layers were modeled based purely on grade. The first layer reflects the lower grade kamafugite saprolite (lg_sap), whereas layers 02 and 03 reflect the higher grade K(2) O (hg K2O) and P(2) O(5) (hg P2O5) layers respectively. An additional layer identified as Saprock, with lower grades of K(2) O, P(2) O(5) , but higher grades of CaO and MgO, was also modeled. However, as these layers are difficult to distinguish in the field, they will all be extracted in bulk and the product homogenised during processing.

Follow link to view Figure 01 - Maximus Target - Vertical Section.

http://www.rns-pdf.londonstockexchange.com/rns/8444X_-2017-2-24.pdf

Mineral Resource

Block models were developed for each of the three mineralized layers and the resource was estimated using Ordinary Kriging (OK) with the results validated with a comparative Nearest Neighbor estimation (NM). A 1% K(2) O cut-off grade was applied to the resource estimate which was categorized as Indicated and inferred with a total global resource of 13.07Mt @ 3.10% K(2) O, 2.49% P(2) O(5) , 8.69% CaO and 8.96% MgO (Table 01).

The total Indicated resource resulted in 3.71Mt at 3.44% K(2) O and 3.24% P(2) O(5) at the 1.0% K(2) O cut-off. This resource included a high-grade zone of 1.21Mt at 4.40% K(2) O and 3.45% P(2) O(5) at a 3.5% K(2) O cut-off (Table 02).

The total inferred resource resulted in 9.33Mt @ 2.96% K(2) O and 2.18% P(2) O(5) at a 1.0% K(2) O cut-off.

 
                                Mineral Resource Estimate - POTASH - Arapua 
                                             Fertiliser Project 
                                 Mineral Resources - Effective Date: 19 Jan 
                                                    2017 
                                Block Sizing: 25m x 25m x 6m (6.25m x 6.25m 
                                       x 1.5m) - Cut-off Grade 1% K2O 
----------------------------------------------------------------------------------------------------------- 
 Classification    Material    Tonnes   K(2)   P(2)     CaO     MgO    Al(2)   SiO(2)   Fe(2)   MnO    LOI 
                      Type      (Mt)      O      O               %      O(3)             O(3) 
                                          %      %       %               %        %       %       %      % 
----------------  ----------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 Indicated         LG-SAP       2.67    3.08   2.98    6.08    6.97    7.36    34.31    22.27   0.34   6.44 
----------------  ----------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
  HG-K2O 
   SAP                          0.81    4.76   3.57    6.12     5.9    7.68    35.69    20.75   0.33   5.17 
 ---------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
  HG-P2O5 
   SAP                          0.26    3.07   4.991   7.07    5.12     7.4    32.26     23     0.36   5.95 
 ---------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 Sub 
  Total                         3.75    3.44   3.24    6.16    6.61    7.43    34.46    21.99   0.34   6.13 
----------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 
 Inferred          Saprock      5.4     2.9    1.73    11.82   11.33   5.37    33.68    16.12   0.24   9.16 
----------------  ----------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
  LG SAP                        3.49    3.04   2.95    6.15    7.52    7.32    34.81    21.7    0.34   6.6 
 ---------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 Sub 
  Total                         9.33    2.96   2.18     9.7    9.91    6.09     34.1    18.2    0.28   8.2 
----------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 Grand 
  Total                        13.07    3.1    2.49    8.69    8.96    6.48    34.21    19.29   0.3    7.61 
----------------------------  -------  -----  ------  ------  ------  ------  -------  ------  -----  ----- 
 

Table 01 - Maximus Target - Mineral Resources (JORC 2012).

Indicated Mineral Resources (included in Total Indicated Resource) - Cut-off grade - 3.5% K(2) O

 
 Material    Tonnes   K(2)   P(2)   CaO    MgO    Al(2)   SiO(2)   Fe(2)   MnO    LOI 
  Type        (Mt)      O      O             %     O(3)             O(3) 
                        %      %      %             %        %       %       %      % 
----------  -------  -----  -----  -----  -----  ------  -------  ------  -----  ----- 
  LG-SAP      0.36    3.65   2.98   5.79   6.46   7.82    34.33    22.09   0.35   6.15 
----------  -------  -----  -----  -----  -----  ------  -------  ------  -----  ----- 
  HG-K2O 
    SAP       0.8     4.78   3.58   6.08   5.84    7.7     35.7    20.79   0.33   5.15 
----------  -------  -----  -----  -----  -----  ------  -------  ------  -----  ----- 
  HG-P2O5 
    SAP       0.05    3.7    4.65   6.92   5.34   7.74    33.78    21.92   0.33   5.66 
----------  -------  -----  -----  -----  -----  ------  -------  ------  -----  ----- 
   Total      1.21    4.4    3.45   6.03    6     7..74   35.21    21.22   0.33   5.47 
----------  -------  -----  -----  -----  -----  ------  -------  ------  -----  ----- 
 

Table 02 - Maximus Target - High grade Indicated Mineral Resources (JORC 2012).

The total drilled area of 214,300 m(2) corresponds to approximately 6.7% of the total area of the geological-geophysical potential, the exploration potential remains open at depth and in several directions (Figure 02).

Follow link to view Figure 02 - Maximus Target - Exploration Potential.

http://www.rns-pdf.londonstockexchange.com/rns/8444X_-2017-2-24.pdf

COMPETENT PERSON STATEMENT

The information in this statement which relates to the Mineral Resource is based on information compiled by Mr. Bernardo H C Viana who is a geologist and full time director and owner of GE21 and is registered as Competent Person in the AIG (Australian Institute of Geoscientists). Mr. Bernardo Viana has sufficient relevant experience to the style of mineralization 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.

CAUTIONARY STATEMENTS

The reader is cautioned that a Mineral Resource is an estimate only and not a precise and completely accurate calculation, being dependent on the interpretation of limited information on the location, shape, and continuity of the occurrence and on the available sampling results. Actual mineralisation can be more or less than estimated depending upon actual geological conditions. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. No Mineral Reserves are being stated.

This information is provided by RNS

The company news service from the London Stock Exchange

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February 27, 2017 02:00 ET (07:00 GMT)