logo

Harvest Minerals - Capital Network: It Remains All About Cashflow

Writen by Sam Catalano

The key attraction for investors here is significant, near-term, cashflow generation. The simple, low cost, low capex Arapua fertilizer project has begun production on a trial mining basis. We believe the company can generate free cashflow yields of between 30-80%pa from Arapua, based on a range of reasonable sales price & volume assumptions. The most likely outcome being around ~55%pa FCF Yield (based on US$55/t sales price). The same assumptions generate a project [email protected]% of ~£60m for this project (compared to a current market cap of ~£18m).  We note that the company has no debt, and should not require any fundraising to develop this project further, in our view.

We flag that no material work has progressed on the company’s other projects at Sergei and Capella (which are not included in the valuations above), but note that we had previously advised potential investors to focus on the Arapua potential for now, which should provide meaningful upside on its own.

The Company has additional projects including the Sergi and Capella potash projects, which are located next to Brazils only producing potash mine. Harvest would plan to develop these using the cash flow generated from Arapua.

FULL REPORT CONTINUES…

Latest Research