Harvest Minerals offers Arapua fertilizer project update

Highlights from the update include:

• 37% increase in the high grade JORC (2012) Indicated Resource increased to 1.21 Mt at 4.40% K₂O and 3.45% P₂O₅.
• Exploration target extended to a JORC (2012) Indicated and Inferred Resource of 13.07Mt at 3.1% K₂O and 2.49% P₂O₅.
• Total resource based on drilling covering just 6.7% of known mineralisation. 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 6 m - 40 m (average 19.8 m).

26 holes were drilled to the east of the current resource thereby extending the resource area by over 140 300 m2. This takes the total area covered by the current JORC (2012) compliant resource to 214 300 m2, 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 P₂O₅ and K₂O values. These results were higher varying from 3.3% to 5.86% K₂O over depths ranging from 6.5 m to 10 m, 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% K₂O and 3.24% P₂O₅ at a 1.0% K₂O cut-off, including 1.21Mt at 4.40% K2O and 3.45% P₂O₅ at a 3.5% K₂O cut-off.

The total Inferred resource was 9.33Mt at 2.96% K₂O and 2.18% P₂O₅ at a 1.0% K2O 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.

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 required for the Project. The remaining substantial costs relate to the operating costs 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$1 m 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.

Read the article online at: https://www.worldfertilizer.com/phosphates/27022017/harvest-minerals-offers-arapua-fertilizer-project-update/