Business
Change in Royalty Rates in Brazil
Change in Royalty Rates in Brazil.
About this update from Harvest Minerals Limited
[{"type":"text","content":"\n \nRNS Number : 9026X Harvest Minerals Limited 30 November 2017 \n\n \nHarvest Minerals Limited / Index: LSE / Epic: HMI / Sector: Mining\n30 November 2017\nHarvest Minerals Limited\n(\"Harvest\" or the \"Company\")\n \nChange in Royalty Rates to Deliver Signficiant Cost Savings\n \nHarvest Minerals Limited, the AIM listed fertiliser development company, is pleased to inform shareholders that the Federal Senate (Upper House of the National Congress of Brazil) has approved a bill to reduce the royalty rates of fertiliser projects from 3% to 0.2%. The bill was approved by the Chamber of Deputies (lower house) on Wednesday 22 November 2017 and is part of wider reforms to boost the mining sector and the economy in general. This change will allow the Company to benefit significantly due to its low cost of production and forecast high production margin.\n \nOverview\n· Royalty rates of Brazilian fertiliser projects reduced from 3% to 0.2% to support domestic market growth\no Royalty rate change effective from January 2018\no Brazil targeting self-sufficiency in fertilisers by 2020 - currently importing 90% of fertiliser needs\n· Significant cost savings of ~US$1.46/t anticipated at Harvest's Arapua Fertiliser Project ('Arapua')\no Company's August 2016 Arapua scoping study assumed a cost of US$1.58/t in royalties on sales at US$60/t. Under the new regime, this reduces to US$0.12/t in royalties therefore a saving of ~US$1.46/t\n \nHarvest's Executive Chairman, Brian McMaster, said, \"Harvest has received tremendous support from the Brazilian Government at all levels since we started developing our fertiliser projects in Brazil. Whilst we were expecting a cut in royalties from 3% to 1%, the fact that it was reduced further to 0.2% shows the Brazilian Government's continued commitment to developing fertiliser and remineraliser projects to reduce the country's dependence on imports. \n \n\"Due to our low cost of production and high margin, we will benefit significantly from this reduction in royalty rates, especially as we start to ramp up production and reduce per tonne operating costs. For example, in our scoping stud...