Arapua Fertiliser Project Update

23 August 2016

Harvest Minerals Limited

("Harvest" or the "Company")

 

Arapua Fertiliser Project Update

Agronomic and additional Metallurgical Testwork Results at the Maximus Prospect - Arapua Fertiliser Project

Harvest Minerals Limited ("Harvest" or "the Company") is very pleased to announce the positive results for the latest agronomic and metallurgical testwork conducted at the Maximus prospect, part of its Arapua Fertiliser Project ("Arapua"), located in the Brazilian state of Minas Gerais.

Highlights:

·    All results were well within the required specifications. Notably, no toxic elements are present;

·    The solubility results were excellent with total solubility for P₂O₅ ranging from 50.40% to 53.36% and for K₂O ranging from 90.99% to 95.00% in 2% citric acid, which is close to the acidity levels of the soils in Cerrado area where the Maximus project is located;

·    The pH ranged from 6.54 to 6.74 (almost neutral) supporting the products potential as a soil neutralizer as well as remineraliser; and

·    Metallurgical testwork supports that the product grades can be increased through a simple wet sieving process.

 

Agronomic & Metallurgical Testwork Results

Harvest has elected to make an application for its Direct Application Natural Fertiliser (DANF) product(s) at Maximus to be classified as a "soil remineraliser" with the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA).

Whilst not a compulsory registration, Harvest considers that seeking the accreditation could offer long term marketing benefits moving forward.  As part of the application process, agronomic testwork has been carried out at the Campo Agronomic Lab in Brazil in accordance with MAPA guidelines for testing fertilisers.

The results of this testwork were all well within the required specifications for a soil mineraliser and have exceeded the Company's expectations.  Full details of these results are contained in the commentary below.

Both ALS in Australia and SGS Geosol in Brazil have conducted metallurgical testwork. Both sets of results indicate that the high grade K₂O material could be upgraded to produce a higher grade K₂O product through a simple low cost wet sieving process.

For example, a 4.69% K₂O/3.49% P₂O₅ sample was split via wet sieving to produce a 6.06% K₂O/3.09% P₂O₅ product (26.31% by weight) and a 4.08% K₂O/ 3.69% P₂O₅ product (73.69% by weight).

The significance of this testwork is, in part, that it offers Harvest the option to be able to produce and market products with different grades in order to service different market sectors as commercial production develops.

 

Next steps

The trial mining permit application is progressing.  The environmental permit, which is a precursor to being issued the trial mining permit is expected in the next few weeks and the trial mining permit is expected thereafter.

Harvest expects to retain a mining contractor within the next month and site works will commence at the time of granting of the environmental permit.

Additionally, based on the strength of the drilling and lab results to date, Harvest intends to undertake a drilling programme by the end of the year to define the limits of the known mineralisation, in particular the depth of weathering and to increase the current indicated resource to increase the mine life and/ or allow for increased production as demand grows for Harvest's products.

Harvest expects to commence further kinetic and agronomic efficiency (plant growth) testing, the scope of which we are currently finalising with MAPA and the Campo Agronomic Lab by late September.  The results of this testwork will assist in identifying product classification and optimization for commercial production, post the initial trial mining period.

Commenting on the agronomic and metallurgical test work, Executive Chairman of Harvest, Brian McMaster stated: 

 

"These latest results are excellent and well beyond our expectations, in particular regarding the solubility, which we believe, is better than for any similar product currently in the market. Additionally, the ability to further uplift the product grade through simple wet-sieving, demonstrates that we are developing an attractive product range, which could be varied to target specific crops and customer uses. We are able to sell our products without registering with MAPA and to assist in the marketing, we are planning to register them initially as a "stonemeal/remineraliser" and then as a Potassium and Phosphorous fertiliser, which is likely to broaden the potential client base.

 

 

The works at the Arapua project are progressing on schedule and we expect to be regularly updating shareholders as developments unfold over the coming months, leading into trial mining production later this year."

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

Enquiries:

Harvest Minerals Limited	Brian McMaster, Chairman	Tel: +61 8 9200 1847
Strand Hanson Limited (Nominated & Financial Adviser)	Rory Murphy James Spinney Ritchie Balmer	Tel: +44 20 7409 3494
Mirabaud Securities LLP (Broker)   Beaufort Securities Ltd (Joint Broker)   Buchanan (Financial PR)	Rory Scott     Jon Bellis     Bobby Morse Anna Michniewicz	Tel: + 44 20 7878 3360     Tel: + 44 20 7382 8300     Tel: +44 20 7466 5000

 

 

Background

The initial exploration programme at Maximus identified the significant potential for the kamafugitic rocks to be used as a multi-nutrient silicate agro-mineral which could produce a Direct Application Natural Fertiliser (DANF). A small area (~3% of the estimated mineralization) was drilled targeting only the weathered kamafugite to produce a JORC (2012) compliant total Indicated resource of 883 Kt at 4.21% K₂O, 3.53% P₂O₅, 6.34% CaO, 5.95% MgO and 0.33% MnO.

On 10^th March 2016, the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA) published in the Brazil official gazette (Diário Oficial da União) normative Instrument N°5 (NI5), which set out the definition and specifications for soil "remineralisers" or "stonemeal". In order to be registered as a remineraliser, the product must undergo chemical and physical analysis to confirm it meets the minimum specification and in particular does not contain toxic heavy metals which could enter the food chain. This is then followed by kinetic studies to look at nutrient extraction followed by agronomic efficiency testwork (growth tests). All this must be carried out by a MAPA approved institution.

Whilst registration is not required to sell the product from Maximus, the Company considers that by registering the product initially as a remineraliser, which is a quicker process than registering as a straight potassium ("K") and phosphorus ("P") fertiliser, it will be able to broaden the market as well as enhancing the products marketability. The results of this process form the basis of registering the product as straight K and P fertiliser.

As the kamafugite would create product of "pure mineral origin", it is classified as a Class "E" remineraliser, the specifications for which are shown in table 01.

Table 01 - Minimum specifications and guarantees for soil remineraliser product.
Total Bases (CaO + MgO + K2O)	≥ 9% wt.
K2O	≥ 1% wt.
SiO2 free	≤ 25% vol.
As	≤ 15 ppm
Cd	≤ 10 ppm
Hg	≤ 0.1 ppm
Pb	≤ 200 ppm

 

Agronomic Lab Results

Two representative bulk samples (2.2kg each), which had been previously tested at the SGS Geosol lab in Belo Horizonte, Minas Gerias, Brazil, were submitted for physical and chemical tests to the Campo Agronomic Lab at Paracatu, Minas Gerias, Brazil. The analysis was carried out according to the methodology for fertilisers as defined by MAPA. The results were excellent with both samples passing all the tests and all the results were inside the minimum specifications and guarantees for a soil remineraliser product as defined by MAPA (Table 02).

 

Table 02 - Chemical results for samples MXBS003 and MXBS004.
Element/Oxide	MXBS003	MXBS004	Unit
As	1	0.66	mg/kg
Cd	<0.2	<0.2	mg/kg
CaO*	4.61	3.19	%
Pb	<0.2	<0.2	mg/kg
Cu	<0.05	<0.05	%
Cr	69.7	222.8	Ppm
S	<1	<1	%
Fe	17.07	13.75	%
P2O5	3.79	2.23	%
MgO*	4.17	8.39	%
Mn	0.31	0.28	%
Hg	<0.2	<0.2	mg/kg
Mo	<0.2	<0.2	mg/kg
Ni	365.8	300.3	mg/kg
Ni	<0.50	<0.50	%
K2O	1.20	1.11	%
Se	<0.2	<0.2	mg/kg
Zn	<0.05	<0.05	%
CaO + MgO + K2O	9.98	12.69	%

* Results originally reported for element and converted to oxide.

 

The only outstanding physical test is the one for free silica (SiO₂) which should be <25% by volume. The Company expects this work to be completed by mid-September, but expects to pass this test as previous petrographic descriptions indicate no occurrence of free quartz crystals (SiO₂) in the samples, which is expected for ultrabasic rocks as kamafugites.

Although they do not have a minimum limit or threshold, several other physical parameters are required as part of the physical characterization of the product (Table 03). These include Electrical Conductivity (EC), potential hydrogen (pH), water retention capacity (WRC), cation exchange capacity (CEC) and water content (WC).

 

 

Table 03 - Results for physical tests with samples MXBS003 and MXBS004.
Parameter	MXBS003	MXBS004	Unit
EC	62	64.19	%
pH	6.59	6.74
WRC	56	49	%
CEC	280	254	mmol/kg
WC	5.06	5.39	%

 

The pH is almost neutral, ranging from 6.59 (MXBS003) to 6.74 (MXBS004) indicating the potential additional use as a soil neutralizer as well as remineraliser.

For the solubility results, whilst there was little solubility in water or Neutral Ammonium Citrate as expected, the solubility results for both P₂O₅ and K₂O in citric acid (2% concentration), which is very similar to the acidity of the Cerrado soils, are excellent. For P₂O₅ the total solubility results were between 50.40% and 53.36%, which again is excellent and reinforces the view the phosphate is more related to apatite than crandalite.

Table 04 - P₂O₅ grades and Solubility results

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

The K₂O grade estimates from the Campo Agronomic lab are lower than the original estimates from SGS Geosol. The difference is due to the different methodologies used by the two labs, as the Campo lab used the methodology designated by MAPA. However, this is normally applied to soils rather than rock and so the weak acid concentration is likely to have impacted the results and underestimated the K₂O grades.

The total solubility results were between 90.00% and 95.00%, which is well beyond the Company's expectations and, we believe, those of any other product in the market.

The following example helps to explain the importance of the solubility numbers. A product currently being sold in the Brazilian market has K₂O grades of 8% and 1% solubility in citric acid. This means that the effective grade of K₂O available to plants is 0.08%.

In comparison, based on the grades measured at Campo, the product at Maximus has an available grade of 1.14%. Using the grade measured by SGS this rises to 3.9% K₂O and the Maximus product benefits from having P₂O₅ as well as Ca and Mg.

 

Table 05 - K₂O grades and Solubility results

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Metallurgical Tests Results

Metallurgical testwork looking at potentially upgrading the final product through simple sizing was carried out at ALS Global Laboratory in Australia and in SGS Geosol Laboratory in Brazil.

Sample KMF01 was sent to ALS Lab in Australia and was sieved into the following grain sizes via wet flow: 0.71 mm, 0.50 mm, 0.250 mm, 0.150 mm, 0.090 mm, 0.045 mm, 0.032 mm (Table 06).

Table 06 - Sample KMF01 - Summary of chemical results by grain size.

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Samples MXBS001 and MXBS002 were sent to SGS Geosol Lab in Brazil. The sample were sieved into the following grain sizes via wet flow: 0.71 mm, 0.50 mm, 0.250 mm, 0.150 mm, 0.106 mm, 0.045 mm, 0.038 mm (Tables 07 and 08).

  

Table 07 - Sample MXBS001 - Summary of chemical results by grain size.

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Table 08 - Sample MXBS002 - Summary of chemical results by grain size.

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Samples MXBS003 and MXBS004 were also sent to SGS Geosol Lab in Brazil. The sample were sieved into the following grain sizes via dry flow: 0.71 mm, 0.50 mm, 0.250 mm, 0.150 mm, 0.106 mm, 0.045 mm, 0.038 mm (Tables 09 and 10).

 

Table 09 - Sample MXBS003 - Summary of chemical results by grain size.

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Table 10 - Sample MXBS004 - Summary of chemical results by grain size.

http://www.rns-pdf.londonstockexchange.com/rns/8331H_-2016-8-22.pdf

 

 

Both sets of results indicated that the high grade K₂O material could be further upgraded to produce a higher grade K₂O product by simple low cost wet sieving. For example KMF01, which has a K₂O grade of 5.6%, could be improved through simple wet sieving to produce a 7.33% product and a 5.1% product split 23%/77%, whereas sample MXBS001 could produce a 6.05% and 4.08% K₂O product split 26%/74%. However, this is not the case for lower grade material where the grade is distributed more uniformly.

The Company considers additional work should be undertaken in confirming the processes and results on upgrading the product, however, this will not form part of the trial mining phase.

COMPETENT PERSON STATEMENT

The technical information in this release which relates to exploration results is based on compiled and reviewed data by Mr. Paulo Brito. Mr. Brito is a consulting geologist for Harvest Minerals Limited and is a Member of AusIMM - The Minerals Institute, as well as, a Member of Australian Institute of Geoscientists. Mr. Brito has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Brito also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies and consents to the inclusion in the release of the matters based on their information in the form and context in which it appears. Mr. Brito accepts responsibility for the accuracy of the statements disclosed in this release.