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So the next quarterly update will be interesting to see if SRB has seen the organic growth in production in existing assets hoped for. What do people think will be the timeline for Corina to begin production. I think I remember an interview with MH where he indicated it could be relatively near term - any thoughts on the pace of this?
That’s helpful Comcas, I appreciate your point about the government seal of approval. Hopefully this will come through soon. Looks like we are on the same page with regard to sales - its still early days but here’s hoping. All the best.
To nail my colours to the mast - my concern/risk now is that for a new product like KPFertil, can we achieve upwards of 300ktpa of sales. At the moment we seem to be maybe at a sixth of this. 300-450ktpa is a lot of product and a lot of customers. As I’ve mentioned before on this board a big long term order from Veloso would be an indication that we have little to worry about, if it’s good enough for Veloso it’ll be good enough for everyone else.
You're welcome. Personally I'm not concerned about MAPA, firstly all the indications are this next stage is a formality and secondly, even if it's not received it hasn't stopped the product being sold. At one point the market was treating MAPA as if it was 100% mission critical but it just doesn't seem to be the case. The RNS on the 14th May is the one to look at... They're saying it's in the bag. Have you heard the Brian McMaster (Exec Chair) interview with Doc Holiday on the same day? Worth a listen if you haven't already. On the same webpage there is the investor presentation Mark Heyhoe (COO) did which is another useful set of insights. All the best.
ADVFN is another shares site with its own BB and Kreaturea regular poster. Comcas - optimism with a pinch of reality is where I'm at as well. My thoughts are that KPFertil has advantages as a product but it's not necessarily the 'complete fertiliser' some speak about. See below the analysis from the product results. http://www.harvestminerals.net/uploads/asx/pdf/ebce099ccd37aaaf4ab16dffe7d870c27881abac.pdf The good news is it is long lasting and has 2 of the 3 major macronutrients and most of the micronutrients. Also the product is very long lasting meaning a cumulative positive impact on soil. As such I doubt highly a farmer would exclusively use KPFertil. This is reflected in the MAPA registration and the classification as a 'remineraliser' rather than a fertiliser. So for a farmer KPFertil could be an excellent tool in their bag but is highly unlikely to be 100% of what they use as they will need nitrogen. Then comes the good bit... obviously aggrecerado, who have significant know how in what farmers want and need and they obviously strongly think this is a product worth buying. So much so that without any concern they've ordered $2m worth. This was a watershed moment IMV. When you hear some of the anecdote from presentations that farmers are pleased and are coming back for more and the $60 per tonne price is cheaper than what they currently pay to ship their existing resource this begins to make a lot of sense. Better to use KPFertil mixed with another fertiliser than to not use it because farmers who use KPFertil get a useful product they can use in their mix AND they save a ton of hard cash in the process by doing so. The side advantage is this product can be used in this way anywhere. Organic farm? Tick. All different types of crop? Tick. New applications such as pastureland? Tick. With regard to competition I think this will begin to move quickly but the backdrop to this is extraordinarily high levels of imports for fertiliser. Indigenous Brazilian production has a long long way to go before it can meet local demand, so I don't think, as yet, the competition locally is an issue. Perhaps in 5-10 years this will have an impact but right now it feels like the major losers will be international importers. According to the investor presentation 90% of potash is imported and 51% of phosphorus. In addition domestic production has fallen.... there is plenty of space for HMI and others to get in on the domestic production in Brazil. And given the macro-economic picture in Brazil of rising crop exports, rising local population, the need to increase productivity of land... this all points to opportunity for many companies to get in on the act. Saying that you would hope HMI could be ambitious enough to pursue the Sergei project and become big layer in fertilisers in Brazil with multiple products, perhaps that is what the next 5 years looks like for HMI.
There are 3 research notes published on the HMI website, mirabaud, Whitman Howard and another I think. All were suggesting a price target of between 30-45p. The problem with the reports is that they are old and out of date. When you read through most are suggesting metrics that are a little out of date and generally prudent. Also try apply a fairly healthy risk factor of circa 50% to come to the 30-45p valuation. The major question really then is now that - couple of years have passed is risk still at 50%. The outstanding risk now is simple and singular, can HMI sell sufficient quantities to hit the levels quoted? So, at the moment it is clear that the market still has reservations, or it would be significantly higher than where it is now.
It’s still ridiculously low. Personally my feeling is the only missing part of the jigsaw is long term and big contracts that start adding up to the 320kt current capacity with some kind of indication that sales will be no flash in the pan. Veloso signed up for 45kt a year for the next 5 years... that would be an interesting one for the SP!
To be fair you’d only have to read my previous posts to see that I’ve had my own ding dongs with quisad... we’re clearly not the same person. To be fair I may have initially fell for bopd’s potential credibility and I’m always open to hearing a negative that I may not have considered before... in my head this is an important characteristic of a successful investor... to reassure you I didnt sell any of my shares off the back of it.
Just to be clear, this RNS is nothing to do with sales and is not about any 'new' or 'major' contracts. So there's no news here to be excited about. Obviously this simply confirms the arrangements put in place back in February and as much as I don't enjoy being diluted - it is encouraging that all the directors are EXTREMELY keen to get their hands on some shares while they can justify an issue of shares prior to a big SP rerate. To be fair I don't begrudge them, they are working their wotsits off and are delivering us LTHs massive gains - so thanks to BMc / LA / MH & Co. The message is clear, the directors know exactly what is going on and believe owning shares now is a very sensible idea and they all want in.
Well done HM I for sharing a bit more information I feel like I really get this now. It Is encouraging to see that the product fits the bill. Given the Brazilian government‘s ambition is to be fertiliser independent there is no way they will allow this opportunity for a local cost-effective product to slip by. Important formalities to get through but it looks like everyone’s very incentivised to get this done.
So just had a quick glance through the accounts, it looks like the 'little bit of product' sold before the end of the year was around 700t @ if sold at the $60 pt level. This has been written down against exploration costs as 'proceeds from trial mining'. Pleased to see cash & receivables less creditors at $1.56m, assuming payment for the Aggrecerado order is received in full by the end of August (4 months after first delivery), cash will be sufficient to avoid placings etc. As soon as we get to around August time the other orders will be rolling in and the business should be very liquid. Looking solid.