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: +44 20 7495
Limited Chairman 4323
Strand Hanson Rory Murphy Tel: +44 20 7409
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: +44 20 7466
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
END
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