Harvest Minerals Share Discussion Threads

[brooko19] 07/3/2018 16:40

Incase you can’t access link it was 14th March 2017 “permit update”

[brooko19] 07/3/2018 14:58

Cfro it’s a rolling 50kt it does not need to be applied for it’s just rolling until the full mining licence is either granted or rejected I’ll find the podcast in which it’s specified for you later when I have time

[chipperfrd] 07/3/2018 14:51

Saucepan,

I have not looked at it for ages. But given your prompt, perhaps I will and then get back to you. Thanks :-)

[chipperfrd] 07/3/2018 14:49

cfro,

Well, I can only repeat what I have heard from the COO.

It is a rolling process which allows them to re-apply after each 50kt is completed.

However, with this initial sales contract in the bag and with certification looking imminent and, given the government desire to reduce imports, it does look highly likely they will get a full extraction license soon anyway.
Chip

[saucepan] 07/3/2018 14:46

Noted, Chip; thanks.

On that score, and o/t, have you looked at HZM? I wondered if it would appeal. I am recently invested there, as I thought it sounded a very promising story. I readily acknowledge, however, that you have far more expertise and insight than me when it comes to miners!

[cfro] 07/3/2018 14:44

chip - sorry to be pedantic but i still have clouded thinking here. I thought that the trial license only allowed 50kt a year. AM i not correct in assuming this then?

You are saying that once 50kt is produced over say for instance 2 months that another trial license can then be applied for. Is it really as simple as that though. If that was the case then you would not need a full license.

Surely there are limits to how much can be produced and in what time contraints within this trial license?

[chipperfrd] 07/3/2018 14:40

Saucepan,

It makes such a nice change to be getting results so fast and at such a low CAPEX.

As you probably know I invest mainly in mining projects that take 8-10 years from resource definition to production and that usually require US$100-150m of pre-production CAPEX.

Very pleasant to have holdings in such a high margin start-up with early cash flow.

Perhaps I should spend a bit more time looking beyond my usual mining universe :-}
Chip

[saucepan] 07/3/2018 14:32

parisv: Thanks for the podcast link.

Heyhoe on the Agrocerrado sales order: "It's huge for us, to say we are pleased is an understatement".

Agreed, all sounds very bullish.

Thanks, too, for the number crunching, chip.

[parisv] 07/3/2018 14:23

$7.50 opex too.

[brooko19] 07/3/2018 14:02

It’s rolling so once they have produced 50kt they can produce another 50kt so yes they could produce the full

[chipperfrd] 07/3/2018 13:59

cfro,

It has been repeated multiple times by the company that they can re-apply once they have extracted each 50kt. So from Q2 onwards they may well get c. 6 separate trial license approvals in order to reach the c. 320kt mentioned. Obviously, once they are granted a full mining license they would not be required to keep re-applying.

I am assuming that once they get their certification the full mining license will be granted, but that remains to be seen.
Chip

[chipperfrd] 07/3/2018 13:53

Thanks Parisv,

MH quoted a sales price of US$62/t rather than the US$60/t in the RNS. So that would be another US$72,000 of revenue.

It does sound as though the US$62/t is the agreed price to HMI from the distributor, so looking very good for cash inflows from May onwards.

Also sounds positive for the certification by the end of March.

All in all, very good news at this early stage of growth.
Chip

[cfro] 07/3/2018 13:47

chip -

Just to clarify from your earlier post to me as im still a little baffled: Can or cannot 320kt be produced over a year on the current trial license or will a full license be required to achieve these run rates?

My understanding is that only 50kt can be produced over a year max?

[rafboy] 07/3/2018 13:29

Just listened to the podcast. Significant revenue generation going forward in my view. Not only that but very profitable. Do like the company strategy here. Well worth listening to, thanks.

[parisv] 07/3/2018 13:10

Podcast:



Mark Heyhoe, Chief Operating Officer of Harvest Minerals #HMI discusses the detail of the major sales order they've signed with Agrocerrado, a key fertiliser distributor in Brazil.

(Interview starts at 1 minute 21 seconds)

[chipperfrd] 07/3/2018 12:38

Jaknife,

Wholesale terms would normally require settlement within 30 days, at least that is what my family business used to normally do when I was involved with it, although sometimes better terms could be negotiated.

It is not clear whether the sales price quoted is wholesale or retail. But either way they would appear to be able to operate at a stonking margin over OPEX.

Interim financials will eventually clarify early revenues and net profits.

To eventually reach the 320kt pa rate does imply a pretty intensive hourly rate (c. 37t/hour) if they are sticking to the 1 tonne bagging method shown in their presentations. Perhaps they will shift to a more efficient bulk loading system in order to supply wholesalers. One would think that this would be preferable.

My assumption is that they will eventually operate at more than one site across the license as the proposed 450kt pa capacity looks way too low in the light of their current mineral reserves at Arapua.

IMO of course
Chip

[amaretto] 07/3/2018 11:17

With a modest PE of 10 would be a $1.20 share price.

[chipperfrd] 07/3/2018 11:09

So, a rough forward estimate looks like:


Production over 12 months = 320ktRevenue per tonne = US$60Gross revenue = US$19.2mRoyalty (Govt) = US$0.04mNet revenue = US$19.16mOPEX @ c. US$7.5/t = US$2.4mGross profit = US$16.8mG&A (estimated) = US$1.7mOp profit (estimated) = US$15.1mTax (assuming recovery) = US$0.0mNPAT (estimated) = US$15.1mShares in issue = 128.8mEPS = US$0.12 (c. 8.4p)AIMHOChip

[chipperfrd] 07/3/2018 10:58

Yes, the 320kt refers to a 'rate per annum'. It would have been better if they had clarified that.
So it looks like they are expecting to hit c. 26.6kt/month by Q2. So around 2 months between each application for another 50kt license.
Chip

[cfro] 07/3/2018 10:37

Thanks Saucepan, perhaps i had interpreted the RNS wrong.

The grant of the full license now though is the key. Im pretty sure they can then produce 320kt+ pdq once they have it.

[kreature] 07/3/2018 10:03

okay I think I understand; 'Delivery will commence in early May 2018' ...but doesn't say when delivery will finish does it ?

[saucepan] 07/3/2018 09:54

cfro: HMI is saying it will have the capacity by Q2 to produce 320kt. That is very different to what you have interpreted. They are not claiming to output that amount by then. They will gradually (perhaps even quicker!) start ramping up to that amount as orders come in and MAPA and license are granted. They have confirmed the infrastructure capacity to do so will be there.

[kreature] 07/3/2018 09:53

Obviously there's a difference between a distributor, and an actual paying customer, and I don't see a paying customer in that RNS. The only thing I don't understand is why 'Delivery will commence in early May 2018' without a MAPA cert or a customer for the distributor to sell to ? What could possibly go wrong ?