10th Aug 2016 08:53
LONDON (Alliance News) - Harvest Minerals Ltd shares rose on Wednesday after an independent scoping study demonstrated the Maximus direct application natural fertilizer project has "robust economics" using a "simple low cost mining and processing" method.
Harvest shares were trading up 16% to 7.28 pence per share on Wednesday morning.
Maximus is part of the Arapua fertilizer project in the Brazilian state of Minas Gerais and the scoping study was completed by consultants GE21 Consultoria Mineral, which looked at pit optimisation and design, mine scheduling, capital and operational expenditure requirements and carried out a preliminary economic assessment of the current resource.
Harvest said the study has supported the idea of producing 100,000 tonnes of fertilizer per year from the initial indicated resource of 883,000 tonnes, giving it a seven-year mine life, but Harvest believes the current resource only represents "3.0% of the estimated mineralisation" at the project.
Contract mining will be used for an open pit operation and a "very simple" dry processing method will be used that will require crushing and milling. Operating costs, in turn, will be low at USD4.77 per tonne mined and processed and USD7.34 per tonne once selling and administrative costs are taken into account, it said.
To put that into perspective, Harvest said the estimates have been made based on price scenarios of USD50 and USD65 per tonne - far ahead of the cost estimates. At USD50 per tonne, the net present value of the project stands at USD15.0 million and that rises to USD21.0 million under the USD65 per tonne scenario.
However, other price scenarios were also carried out at prices between USD15 to USD120 per tonne, producing net present values of USD1.1 million to USD42.8 million, but that also suggests the project can deal with even the lowest prices imaginable.
"We expect to be able to refine and improve on the numbers presented in the scoping study and we are in the process of appointing contractors to carry out the mining and processing, which could significantly reduce the initial capital expenditure requirements and potentially reduce these already low operating expenditure costs even further," said Executive Chairman Brian McMaster.
The initial capital expenditure needed to purchase equipment for the development is only GBP800,000, and Harvest said the whole project can be funded using existing cash resources.
"We are busy working towards first production later this year and whilst our trial mining permit application is being processed, our technical team and consultants continue to conduct further test work including an agronomic study, the initial results of which we expect to receive during the current quarter," said McMaster.
By Joshua Warner; [email protected]; @JoshAlliance
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