Organic Growth means plenty of cash for Harvest Minerals
“…We get bigger by selling more of our existing product, and as we sell more we’ll have surplus cash and that cash will be returned to Harvest shareholders as a dividend…”
The existing product that Harvest Minerals mines and produces is a multi-nutrient, slow release, organic remineraliser called KPfertil at its Arapua fertiliser project. We recently covered #HMI on @TMSreach here, and this article may give some further background on the company.
At a cost of approximately £10 million over five years, Executive Chairman Brian McMaster says: “We’ve taken it (Arapua) from a paddock to a producing mine that’s generating cash. The life of mine is calculated at 100 years so the opportunity for the company to be paid back is huge.”
He explains the maths. “Our operational breakeven is the equivalent of selling about 40,000 tonnes of product. Last year we sold 54000 tonnes. On that basis we’ve made a profit.”
The company is forecasting sales of 80,000 tonnes this year.
McMaster says Harvest is very good at building things from scratch so is eyeing grass roots operations which can be tacked on to what the company already has.
The most recent ‘tack on’ is the June acquisition of mineral rights over an area highly prospective for the exploration of agriculture limestone used to improve nutrients in soil. McMaster describes the returns for this critical soil input as ‘eye watering.”
Harvest’s operations are based in Brazil which is ravaged by the Covid pandemic. Weekly reported infection rates average 67,000, yet the country prevails as the bread basket of the world.
“Without detracting from the human crisis that is Covid,” says McMaster, “We have seen our business grow this year.”
“The amount of cash this thing can throw off, and the yield that can be produced on a share price of 3-4p is quite astronomical.”
And despite the current low share price, Brian explains to Sarah Lowther about the reasons for shareholders to be cheerful, and the company’s aspirations to be 100% organic, 100% carbon neutral by the end of this year.
Read Harvest Minerals’ latest corporate presentation
Follow the company’s updates on its Twitter feed @harvestminerals
The author was remunerated but does not hold shares in the company
