Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
At 400kt with a 20% uplift in sales price-
24m aud rev
4m aud opex per tonne at 10 aud a tonne - Mark heyhoe mentions 7.5 usd opex once we’re generating 320kt due to economies of scale. Since then real has depreciated vs usd so these would come down even more so a long term 10 aud opex per tonne is reasonable in my view.
So 10 aud x400,000kt = 4m aud + the 3m aud running costs= 7m aud
24m aud - 7m aud = 17m aud profit at 400kt.
We’ve no idea what the new project may or may not produce but that’s another exiting add on that could definitely add to these numbers in time.
Harvest sell their product for 200 Brazilian real = 50 aud when converted. This has been stated several times in crux interview with mark heyhoe, Brian McMaster interviews etc. They always have sold at 200 real. The depreciation in the real tho has meant over the years they effectively receive less when converted back
Okay chique I converted to usd. I’ll stick to aud.
So 3m aud a year business basic running costs.
200 real sales price = 50 aud = 50 aud x150,000 next years target= 7.5m aud
Opex for producing 150,000 = 8-10 usd = 11-13 aud =
11 aud x150,000 = 1.65m aud or 13 x150,000 = 1.95m aud
1.65m + 3m aud = 4.65m aud or for the higher opex 1.95m + 3m aud = 4.95m aud
7.5m aud ~ 4.65 for the lower opex = 2.85m aud profit.
This is no price increase which we know is coming. What that price increase is to be determined and I believe the company stated more information around this for the year will be out this month. Cheers
At £10.5m mcap. With £2.2 profit this year. 74% yr on yr growth. Cash in the bank, management stating dividends will be on the cards, 3m tonne market just for coffee on their doorstep and 3x that for sugarcane market. Selling into Paraguay now. Excellent organic growth projected. As of today very conservatively I believe we should be 10p even though a 10pe is laughable with that growth and market on our doorstep. Medium- long term holders will see multibagger in the next 18months IMO
Disagree trading4good, I welcome the discussion, it’s healthy. If it were smalleyus up to his usual antics I’d agree with you. I am very bullish over and short, medium and long term, and hold a large chunk of shares.
I’m no expert at all at balance sheets etc, but if we look at half year report on 29th September 2021. I’ve added up all basic costs in those accounts for 6 months ended 30th June 2021 and they total 1.53m aud so if we double for full year we get approximately 3m aud for easy numbers. These are basic costs, directors fees, expenses, accounting etc.
3 million aud = 2.2 m usd. We know the product sells at 200 reals = 36 usd. 36x 85,000 = 3.1 m usd. We now have the costs to produce the product which mark heyhoe quoted when they were doing 50,000 and product was selling for 50 usd equivalent that costs were 17.50 usd so at 36 usd price we can assume ruffly a 13usd cost ruffly. 12x85,000 = 1m usd cost. So yes you have 1m added to the 2.2m usd of running the company = 3.2m usd. So you could say we will be breakeven this year on a basic level. We’ve had some expansion to the mine and solar panels installed, they are all one off costs however. Mark heyhoe has left and with economies of scale our costs should come down greatly again next year as we get a nice uplift in sales to 150kt.
As of June 30 2021 we had 1.6m usd cash and our second half of the year is where the real buying occurs so I would expect cash position to be similar as of today. Also as of June 30th we had 1.6m aud in receivables = 1.15m usd to be received.
As for full year 22 I really expect a minimum 20% price increase= 240 real = 44 usd. 44x 150,000 sales target = 6.6m usd. Let’s keep basic costs the same at 2.2 and assume with solar panels and economies of scale cost per tonne to mine is 8-10 usd = 1.2m or 1.5m usd cost to mine per tonne = 1.2-1.5m usd. Add that to the 2.2 = in the region of 3.5 m usd. 6.6m usd ~ 3.5m leaves a 3.1 m usd profit for year end this year.
Welcome the discussion and feedback. A couple of notes- mark heyhoe has left the company as his job of seeing the mine through build etc is done, he left H2 2021. Potential cost saving for 22 and beyond. We tend to meet our sales targets and have a good guide on what farmers want to buy. And the price increase could be more. With wider fertiliser costs going through the roof we could see a nice increase. I’ve used 20% and I see that as being a conservative figure. Best to work conservative though in my opinion.
I believe the opportunity for organic growth is huge here. We have cash, Brian stated that a month ago saying “we have a couple million dollars in the bank” we have 74% yr on yr growth in sales and a price increase to match and a mammoth market on our doorstep which we’ve only just scratched the surface of! My second biggest holding and I expect a dividend within 18 months. All in my opinion and please DYOR
Follow on- profit from these figures is to be determined. Previously management have mentioned it costs 18 usd to mine 1 tonne, these come down significantly as we sell more due to economies of scale and recent solar plant instillation certainly helps us move towards a lower cost. Management also mentioned 40,000kt is breakeven. So should be able to come to some reasonable profit estimations
Yes In comparison to revenue for that year they were high. We had a new product then and it’s been tough to sell our totally new product to the market. Thankfully it seems we really are starting to get significant uptake in 2021 and now in 2022 with a 74% growth target. We’re at a stage now where we know we sell the product for 200 reis = 50 aud. We also know we sold 85k tonnes this year = 4.25m aud. So we should see a very different set of figures for this year and beyond. 150kt target for next year = 7.5m aud. This year coming management have already said in a recent interview that we will see a price rise for this years selling season, what that is is unknown but the 7.5m aud should be minimum for next year.
I do understand your concerns and I think it’s great to have these discussions. In my opinion the fees and expenses aren’t an issue going forward for me as we start hitting these types of revenue figures.
Chique those numbers are aud just in case you thought they were usd. Consultants fees I would have thought would relate to GE21 mining consultants to progress the full mining licence.
The management have mentioned before about the lag in customers paying for the product, I believe this was becoming a reoccurring issue hence why we signed an agreement with a large bank to provide credit to HMI’s customers- 3rd November 2020 rns “ Agreement signed with Banco do Brasil, Brazil's largest rural credit provider, allowing Harvest's clients to access to the bank's line of credit to fund orders of KPFértil product” interested to see this years financial figures. DYOR
Gotabesirius can I ask you a question because it seems your in the agricultural market yourself. I’m looking into verde agritechs product k forte and trying to compare to ours kp fertil. Main difference I see is k forte 10% k2O and ours is 3.1%. Verde however sell there product at 780 real vs ours 200 real, thanks.
Not sure we will see $55 price this year. We sell for 200 real atm = $35 usd price. Let’s say we see a 25% increase which I think could be realistic = 250 real or $44 usd selling price. Costs will come down to roughly $12.50 = $32 profit per tonne as a rough guide. Management previously stated breakeven is 40,000 tonnes. Therefore 110,000 tonnes at $32 profit = $3.5m usd profit this year. Just some of my rough calculations. I’m the most bullish person you’ll find on this stock and have been in since 2018 so I’ve seen it all with the company. Averaged down heavily over the last 2 years and I see profits growing every year substantially with dividends next year is likely IMO. DYOR please
https://youtu.be/Rk75l35K-Wk
Mark heyhoe crux investor- gives a very detailed insight into the company and potential
https://youtu.be/xi8kCpj90DI
Brian McMaster- 3 weeks ago short 15 min interview
As I mentioned a couple months ago, as these farmers see the benefits for themselves over the course of a growing cycle then sales numbers should really start to take off as they buy in larger quantities and new customers come on board too. 150kt next year or 70+ % increase in growth is just the start in my opinion. Wouldn’t surprise me if these numbers were slightly conservative also. All the big capital costs of building the mine are over, now here is where we really reap the rewards of of sales growth and a price increase to follow. The market in Brazil is huge. Just in the 300km surrounding us where we have full coverage with our sales team, there is 3.5million tonnes worth of potential coffee demand and sugarcane is 10million tonnes of potential demand in that area. I’d urge anyone to go back and watch crux investor podcast with mark heyhoe. Turns out the majority of what he said in that interview was true and is coming to fruition. I’d expect a dividend next year 2023. Sitting only at a £10.5m mcap. Profitable, no need to raise, 70% yr on yr growth, lower costs due to solar panels and economies of scale, huge market, 100yr life of mine. What’s not to like? Only thing I can think is the 12 months sales cycle is a long one and takes time for farmers to see the difference and order more the next year. That’s a matter of patience and any investor with a medium to long term horizon should do very well out of this share in my opinion. Please DYOR!!
https://youtu.be/xi8kCpj90DI Proactive investor interview with Brian this morning if anyone hasn’t seen it. Excellent interview backing up all my thoughts I’ve posted here. Cash in bank (2-3m usd), increase in sales price next year, increase in sales number this year and next year, soon to be lowered opex cost with completion of solar panels, expanded market to Paraguay, potential dividends on the cards in next 12-18 months onwards, all expensive capital work behind them, 100 years worth of product. All for a £7.5m… this is grossly undervalued. I really don’t like sp predictions however once they announce their targets for the year in January and it’s laid out for everyone in a rns in black and white I really can’t see how we wouldn’t be trading at a £20m mcap ( 10p +) Feb 22. All in my opinion of course. DYOR!
Forgot to mention we’ve just started selling into sugarcane market with increased marketing. 3x the size of coffee market which accounts for majority of sales so far.. this doesn’t sound like changing strategy or not focussing on Arapua anymore…
I’m really baffled people think this is a bad thing. I’m very encouraged by this. Management in my eyes aren’t not focusing on Arapua and changing strategy… we’ve had 100% yr on yr growth with the arapua project, with growing engagement and buy in from farmers. We’ve had customers enquire about our product and as such we’re selling into Paraguay now.
Management are looking at the business for the longer term. No hiding just how big the agricultural market in Brazil is. Brian in his interview says about how the company knows how to take a mine through the development curve for low cost. It’s paid for by arapua profits. Arapua growth will still continue nicely alongside. People need patience here. Sales cycle is a year. You should be looking at this with a 3-5 yr time horizon and you’ll get exceptional returns IMHO. Sergi and Capella projects are deep underground = high capex! I wouldn’t want to see that. I’m quite happy with Arapua growth that will continue as more and more farmers see the benefits. Alongside a cheap low cost phosphate mine with similar economics to Arapua… what’s not to like. All just my opinion of course. We’re progressing fast and In the right direction! Bring on sales numbers end of this quarter!