Harvest Minerals (LSE:HMI) — Final results

0:01 Good morning, and welcome to the HARVEST MINERALS LIMITED investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. It could be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Simply click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd I'd now like to hand you over to Brian McMaster, executive chairman. Good morning.

0:31 Good morning. Morning, everybody. Thank you very much for your time this morning. I appreciate it. First thing in the morning, I'm sure you've all got busy days ahead, so grateful for your time. And considering that, and and everybody's pressed for time, we we do have a presentation which will be on the investor meet platform at the end of this session. Rather than delay things further and and go through a presentation which you can read at your own leisure, I'm I'm just going to get straight into the the questions that we've received to date. We've actually received a number of questions, and I'm not sure how long it will take to answer them. So just if everybody's in agreement, I'll just get straight into the questions and answers. And as Paul said, if you have any questions along the way, please feel free to ask them, and I'll endeavor to answer them as best I can.

1:20 From the outset, I will say I apologize profusely that this is a a very difficult way to hear things. I mean, I'm going to read the question in full without any without any editing, and then I'm going to give you an answer. So you're gonna hear a little bit of my voice over the next thirty or forty minutes, and I apologize because my wife tells me that's not fun for anybody to listen to. So question one, given that HARVEST MINERALS appear to be at a new stage of its evolution, profitable, and with positive cash generation, do you believe it might be time to get a more sophisticated professional PR firm on board that can attract a new pool of investors? I know many have questioned the presence of the firm currently instructed. This is certainly the first this issue has ever been brought to my attention, and I'm I'm actually not sure that it is an issue. I mean, we've been with some bridesmaids for quite some time, and they are very intimate with the company, and they know our affairs quite well. And we've we've never had reason to to doubt that they were the right firm for us, but certainly somebody's raised the question. It's something we'll take on notice, and we'll we'll consider it in due course.

2:29 Question two, what is the current cash position? So as at the July 5, so yesterday, we had just under $2,400,000 in the bank. Question three, what is the average price for the product across the categories of products sold? What kind of gross margin should one model and think of? Similarly, I see that somebody has now just asked the question, what is the price which KP Fertile is sold? As I've said to investors various times in the past, we don't disclose our sales price for commercial reasons. We have competitors in the market, and, you they don't disclose to us their sales price, and we don't disclose to ours. Similarly, we have, you know, some competition between our our own customers and, you know, all pricing is with a very tight band. It may be that some customers are getting slightly different prices to others. So it it's not in our interest to disclose pricing. I think you can a simple calculation would work out based on the information that we have made public would work out roughly what the price is. And in terms of the gross margin, again, we've just produced our audited accounts. I think the gross margin in those accounts ran at something like 75%, and we have previously said that a margin in the order of 75%, 80% to 80% is is what we would expect. So that would be an appropriate number, I think, to go forward

4:00 and and model from. Question four, why does it take so long to produce results? You're on December year end, so surely final results should be published before the end of June.

4:12 From a company perspective, we have our results ready for auditing sometime well, so for using this year as an example, we had our accounts ready for audit sometime in early February. The reason why it takes so long is quite literally we are then at the mercy of the auditors and the scheduling that they have, and they have their own priorities and their own pecking order and the way they do things, and we just slot into that. So it's not something that we control, and that's just unfortunately the way it works. So, you know, we will have a chat to our auditors going forward and endeavor to get the accounts done sooner. Although, I will caveat by saying, you know, they are historical accounts and to some degree, whether they're three months late or six months late is a little bit irrelevant because they are late. You know, they are historical information, and the business isn't static. It is moving forward. So, you know, we we will indeed talk to our auditors, however, and see if we can get that done faster.

5:13 I'm just looking at the questions that are coming through while I'm talking to you, and a couple of people have asked for clarification. The $2,400,000 that I mentioned is Australian dollars. Excuse me. Somebody else has asked, would you ever consider a return to the ASX given many Australian based holders? Well, I mean, you'd you'd never say never, but we we left the ASX to to move to London, you know, six or seven years ago in anticipation of sunny ashore. So I'm not sure that there's a great motivation at this stage to move back to the ASX. And the Australian based holders that we have are typically legacy holders that were with us, you know, back in that six or seven years ago. So, you know, the the new investors or the new interest has been garnered through the the the stock is coming from London.

6:05 Also, you know, the ASX is quite dense at the moment with, you know, fertilizer related entities. So, you know, I I think we're pretty happy. I think we're pretty happy on on AIM at the moment. The next question, question five, why do you not employ a finance director? The company's finance function has, for some reasonable time, been done by third party consultants. That seems to work pretty well for us. And and at this stage at this stage in the the company's evolution, we will will stick to that process, I think. Why is there question six. Sorry. Why is there no broker research with modeling slash forecasts?

6:51 I mean, the short answer is I I I mean, you know, that the brokers that we have haven't been providing research on the company for a little while. We did have proactive think it was published some broker some research recently. We don't, as a company, forecast. And if you want to do if you want to get broker research with forecasting it, they basically ask you for the forecasts. So that would be a de facto way of us forecasting our own forecast, which we don't do. So, you know, I think that's probably the simple reason. Question seven, what should we be thinking Net cash at the end of June, I've asked I've answered that already. Question eight, is it not in everyone's interest to improve disclosure, shareholders own the business, etcetera?

7:41 Yes. Of course, it is. It's absolutely in everybody's interest to improve disclosure. I'm not sure what exactly that question is driving at. You know, we are publishing our sales volumes on a quarterly basis. We're obviously announcing anything that material as it goes along. I mean, other than that, you know, I'm not not a 100% sure what else we can do. Question nine, can I explain how the Arapure Cape Fertile Mine life is guaranteed for a hundred years at $400,000 sorry, 400,000 tons per year from a resource of circa 13,000,000 tons? And the answer to that's probably a little bit more complicated than this call will allow other than to say whoever it is that wrote that question, I'll refer you back to our admission document in the middle of or the summer of twenty fifteen.

8:33 And in that, you'll find an extremely detailed report from the external consultants which outline all of that. There is obviously a oxide layer and a hard rock layer, you have to combine them both and extrapolate out. Even even still, you know, the drop is also 13,000,000 tons of $400,000 a year, that gives you 26 odd years of mine life. So, hopefully, we'll all be satisfied that the investment's been worthwhile before twenty six years is up. Question 10. What is the maximum economically sensible annual production rate from Arapura? I assuming one hundred years at 400,000 tons can be sustained, could you see the company targeting 800,000 tons for fifty years instead for an example? We've been asked this question before, and the the answer remains the same. That it doesn't work that way. The the current plant has a nameplate capacity of about 320,000 tons, and there are logistical issues around moving product from the mine site itself into the plant capacity, etcetera, etcetera. So it wouldn't be as simple as just simply saying, we'll ramp this up to 800,000 tons and half the mine life. I mean, there's gonna be a whole lot of logistics around that, which to be fair, we we haven't turned our mind to at this stage because, you know, that's something that's, you know, really quite academic at this point.

9:57 Question 11, could you tell us what the current construction at Harapua is? Assuming it's either additional covered storage or another processing facility or a mixture of both, it is covered storage. We've said in the past that the Achilles heel for the business is the product being wet, and we we can't process the product when it is wet. It doesn't go through the crushing plant properly, and it doesn't become, you know, a rock dust properly. And so we we need to keep adequate quantities of the product dry at all times. So it's current sorry, covered storage. And the current stage of construction is we have all groundworks completed. We have the slab down, and the shed itself is currently under construction, and we anticipate it to be completed sometime next month.

10:54 Question 13, how can you justify the incredible expenses and director fees that are bleeding this company when it has precious little money? I am disgusted. I guess there's two aspects to that. One is, you know, the the director's fees are something that are regulated by the remuneration committee and then supervised by our NOMAD. And now NOMAD hasn't and this question comes up every year, so there's nothing new here. Our NOMAD has said repeatedly that the fees are within the the the realms of market acceptability for a company of this size and complexity. So I don't know if the use of the word incredible is applicable at this stage. And secondly, to the person who wrote this question, you know, truly, if you are disgusted by any aspect of the company's affairs, you you shouldn't be a shareholder. You should sell your shares away, obviously.

11:53 So, you know, I mean, we get this question every year. It seems it's it's pretty easy cheap shot, but, you know, if somebody's got an alternative plan or a way that they can move management along, then that the AGM is coming up, and, know, you're more than welcome to to voice your dissatisfaction through value management there. Question 14, please, can you explain how 2021 was profitable when cost of goods sold plus annually recurring expenses totaled more than the 2021 revenue? That question is just simply not true. I mean, just simple arithmetic will show that if you deduct the expenses from the cash expenses from the revenue line, the company is left with a profit.

12:45 Question 15, how come you had 70,000 tons of sales generated to March and only 40,000 tons March to June? Investors were misled in anticipating higher sales after March, just an accounting trick again. The sales quarter on quarter are are simply a function of demand. I mean, we have previously said that we didn't anticipate to receive such a high demand of for our product in the first quarter. That is unseasonal and unusual, and it probably was driven in part by the goings on in The Ukraine and other and other macro environmental factors. And and maybe there was some bring forward of of orders that would have otherwise been received in the March to June quarter into the January to March quarter. So, you know, if you wanna look at it on that basis, then, you know, there is maybe a little bit of a mismatch there.

13:44 Overall, however, the total sales for the HARVEST are a 100 and almost a 120,000 tons, which is, you know, extremely encouraging. I'm not sure what the writer is getting to by saying we're misled. We we never forecasted or we never predicted that sales for the second quarter would exceed the first quarter. So there's been any anticipation that the reader or the writer has had in that regard as something they've generated for themselves. And similarly, the comment about just an accounting trick. Again, I don't know how to answer that because I don't understand what it means. Question 16, what is the royalty expense figure in relation to the net smelter provision in the cost of sales, and will it adjust up like the smelter rate as sales move from 85 to plus a 150,000 tons?

14:31 If so, then is it relatable to the percentage rise in sales? The royalty figure is is exactly that. It's a a royalty payable on sales. So the more we sell, the higher that royalty number will be. The royalties come price of two components. One is a 2% royalty to the government, and the other is a 2% royalty to the original vendor of the project. So as sales rise, obviously, that number will continue to rise. Question 17, without an idea of actual sales quantities that are booked as revenue in any reporting period, it is not possible to establish an OpEx cost against the cost of sales stated in the counts. Can you therefore give some insight into OpEx costs in 2022 and how significantly these are affected as production ramps up?

15:30 I do have an answer for that, which I just have to find on another page. So I'm gonna park that question and come back because I don't wanna hold people up and lose momentum, but I will answer that question. I will answer that question

15:49 before we finish. Question 18, are all other administration expenses now stabilized such that twenty one twenty one twenty twenty one figures can be employed for future years? I know the other expenses jumped mainly due to site administration expenses. Was this a one off rise, and do you expect it to fall back?

16:11 Yes. Yes and no. Administration expenses are are pretty stable. There are elements within that number that are quite variable. So within that number are some sales and marketing team related costs. And, you know, obviously, the more activity the sales and marketing team have, the higher those costs become. So but the flip side is the more activity they have historically, the more sales it generated, the more revenue in a 75% margin, we're better off. So it is likely that those expenses will, in dollar terms, increase and in real terms, stay steady or go down would be the expectation. Question 19, can you please provide some color on the expected completion of the next phase of expansion communicated earlier in the year and what the production capacity will be at that stage?

17:05 So that's what I was talking about earlier in terms of the extra storage facility. Production capacity won't be altered by this in terms of we still only have the one processing facility, but we need the extra undercover storage to keep sufficient product dry to maintain production, particularly in the rainy season, which is traditionally sort of Christmas through to, you know, January, February. I'm just gonna break for a second because there's half a dozen questions on on the that have come through while I've been talking, and I'll I'll just run through those quickly. First question, is the maximum limit on sales volume for twenty twenty two two hundred thousand tons being equal to the current upgrade to a 200,000 k production limit.

17:55 I'm not a 100% sure what that question is driving at because there is no limit on sales at 200,000 tons, nor is there a limit on production at 200,000 tons. So I think whoever the author of that question is might be a little bit confused, and maybe contact me separately, and we can talk about it offline. The next question is the corporate tax, the business is subject 26 or 30%. Corporate tax I mean, the company is subject to operational taxes in Brazil, and there are when money is repatriated, there are other taxes in Australia. We're actually have our lawyers at the moment currently looking at appropriate taxing structures on how we can stream profits out of Brazil back to The UK using appropriate or the the most efficient taxing methods.

18:54 So at the moment, I mean, you'll see from the audited accounts, the Australian company has significant tax losses carrying forward. And so we don't anticipate that paying tax will be an issue for the coming alright. So there's a heap of questions. Sorry. We don't anticipate the tax will be an issue going forward. Well, not not for the foreseeable future anyway. Somebody says here, if you cannot tell us what price we are selling at, can you tell us if prices are being increased consistent with regular fertilizer prices being up a 170% year on year? Yes. Our prices are being increased. We've increased our prices three times during the course of this year.

19:44 I don't think the price increase has been as high as a 170%, but it is certainly a a material increase from the prices that we were seeing last year. And it's something that we have under sort of watch on a regular basis and, you know, coming into the second half of the year and the anticipation that q three will again be a a good sales season for us. We, you know, we are currently monitoring our ability to increase prices again. So it's something that we're, you know, we're very across.

20:21 What else have got here? Why has HARVEST written off so many failed projects at such high expense given management have said their focus is on developing higher production, our peers, all the waste of shareholder capital seems excessive. Thoughts, please? So HARVEST is written off the Capella potash project and the Surgi project. If you go back to 2015, they are the projects that the company brought to London and and sought to seek an AIM listing on. At the time, you know, the CapEx associated CapEx bills with those projects were were published. And if you go back into the announcements around that 2015 time, you'll see and it was many tens of millions of dollars, and the company was unable to secure the funding at that stage. And and out of necessity, we we found the HARVEST MINERALS project and developed that and and brought that forward to where we sit today.

21:17 We've continued to carry those projects on our books because we thought they might we thought two things. One, there might be a change of sentiment around the importance of those traditional deep potash assets in Brazil going forward and and or HARVEST financial position may change sufficiently that we'd be able to develop them. We elected to write off the Capella project last year because Capella was quite evident that the likelihood of that asset coming into production in in the foreseeable future was was quite low, and the CapEx bills and the exploration bills associated with it were quite were very high. And that given the alternative, which is for shareholders to benefit from the exploitation of our Apura, Capella didn't make much sense. Similarly, a similar discussion was had with the auditors this year regarding surgery. At this stage, we haven't dropped the surgery project. We still think it has potentially some merit, but it does have the same caveats around the necessity for substantial amounts of CapEx whilst the auditors were minded to or convinced, I guess, to say that keeping the asset had some commercial merit.

22:33 They weren't minded to think that keeping the assets capitalized value on the balance sheet had merit, so they asked that it'd be written down. And and, I mean, it's noncash expense at this stage, so we just as a cling of the slate of the balance sheet, so to speak, we wrote it down. So I don't think it it's reasonable to say it's a waste. I mean, they were decisions that were made at that time. That is back in 2015, the world looked different. Arapiura didn't exist, and it was thought that pursuing deep traditional potash assets in Brazil had some merit. Now roll forward seven years, Arapura exists. It's doing what it is doing, and and circumstances have changed. So, you know, it's a little bit, you know, maybe can be said that, you know, it was part of the evolution of the company. So some may see that as waste, and some may see it as just, you know, a growth phase. I don't know.

23:37 Somebody's saying, have you raised KPE fertilizers twice this year? Is the current market still tight with regards to competition?

23:43 Yeah. I mean, market remains tight. Mean, HARVEST sorry. Brazil is an extremely sophisticated agricultural market. The farmers and other customers are extremely sophisticated purchasers, and they have effectively the global market from which to source their product. So, you know, we are a very small fish in a very big pond, but we have a very specialized product which is resonating very strongly with with our current customers and our new customers. And so so, you know, I think whilst competition will always be strong in this sector, what you know, our niche is is quite unique. We we have some really strong characteristics that are resonating. We're local. We're organic.

24:29 We're cost effective. We are effective as a fertilizer. And so we're we're quite happy with the space that we're that we're working in.

24:41 So somebody here says, thank you for the clarification. There seems no reason why you report in Australian dollars given you are a UK company. Please save confusion and money by just reporting in pounds, saving us reporting time and money. The reason we are reporting Australian dollars is because we actually are an Australian company, and we're governed by the Australian Corporations Act. We were have been an Australian company for some considerable time. We originally listed on the ASX, and we moved as a jewel list to the AIM market and then dropped the ASX listing. But our the the act that governs the company is the Australian corporations act, which requires that we must report in Australian dollars. So 100% agree with you on the confusion point, and it's very unfortunate. But unfortunately, there is nothing we can do about it.

25:31 Somebody asked, could you please give some color on the average payment period for sales and the lag in cash receipts?

25:40 There is it varies. So the way we are going about things and the way we we sell our products. So a customer comes along and says, look, I I wanna buy some of your product, and they fill in an application for credit with us. We run that application through various internal processes to determine whether or not we think the customer is credit worthy. And when they say when we determine that they are, we allocate them a certain amount of with whatever amount of product they're seeking, and we take from them a 10% deposit. It's at that point that we record a sales order, and we publish in our quarterlies that we have a sales order. So those sales orders are all subject to contract with a 10% deposit. Then the turn then the delivery timetable for that will be, you know, individualized to the particular customer, and the term the payment terms that they get will be individualized to that particular customer.

26:38 So I don't have a proper answer for you in terms of averages. It is something that's done on a case by case basis. And, you know, it is and I have said this numerous times in the past, it is normal in this industry for farmers to be given quite long credit terms. You know, there's sort of a seasonal term. So if it's where you might give farmers the product and then not expect them to pay until they've had their crop and being paid themselves. So whilst I don't have a a proper answer for you in terms of averages, I do have, you know, that explanation for you in terms of how the process works for us. I'm just gonna get back to some of the questions that we received earlier, and I'll I'll keep sort of alternating between the two. I'm I'm sort of just cognizant of the time, and I'm just gonna endeavor to try and get get through all the questions as as best I can.

27:43 So question 20 that's been pre submitted. Am I right in thinking if we want to add another 320,000 tons mine capacity at Arapure, it would be a 1,000,000 price. The answer is no. You're you're not right in thinking that. If we want to add another 320,000 tons in mine capacity, we'd have to effectively duplicate the infrastructure that we have now. So we would need, and I I alluded to this earlier, we would need new roads to come from the mine because we can't bottleneck the existing facility. We would need new similar sized storage to to what we have now. We would need a new processing plant, etcetera, etcetera. So, I mean, the bill would be more than 1,000,000, and that would be sort of akin to the bill that we've paid today. And I think, you know, so you'd probably be, you know I don't I don't know enough from my head, so I'd just be guessing, which would be foolish, but it's it's not a million dollars.

28:39 Question 21, and somebody on the call now has written a why somebody on the call right now has asked a similar question through the q and a. Other than progressing the limestone assets through the production and expanding capacity at Arapura, would the company look to return the excess cash to shareholders? I've made no secret of this for some considerable time that at the earliest possible juncture, the company will be returning cash to shareholders. And some of the other questions that people have asked in this forum today and have asked previously, would we consider a share buyback or would that be by way of dividends? The answer is I don't know. All I know is at this stage that the board is united that returning cash to shareholders in the earliest possible opportunity is something that is a major target for us to achieve as quickly as possible.

29:38 The considerations that need to be taken into account about whether it's a share buyback or a dividend would include taxation considerations, the price of the shares, and other things. You know, I understand, and I'm not across the exact legalities at this point, but I have asked the question. The answer I've been given is that share buybacks are not as simple as they may seem. But, you know, we will bottom those things out. And, again, at the risk of repeating myself, it is absolutely 100% the company's goal to start returning cash to shareholders as quickly as possible. The next question, what is the feedback from farmers on the ground about our product? What is making KP fertile, fly off the shelves, better taste of food, bigger crops, significant cost savings? Well, the simple answer is yes. All of those things and more. So, you know, the feedback from the farmers about our product is that they they think the pricing's good.

30:31 It it and we have said this in numerous r and s's. The our product acts at least as well, if not better than a traditional fertilizer. So, yes, they are seeing better yields, better taste of food. The answer is, yeah, absolutely. You know, we've had some anecdotal commentary, for example, saying that because our fertilizer doesn't contain any contaminants, Some of our coffee growers are saying their coffee tasters can taste the lack of chlorine in in the the coffee. So there's all of those things that are absolute positives. You know, as I mentioned before, we're 100% organic, 100% local, and those they're all very important factors. And when you put all of these factors into one big basket, you know, the farmers are liking what they see.

31:21 Question 23, do management see triple digit growth rates in sales year on year continuing for the next few years?

31:28 To be honest, yeah, we probably haven't looked too far past the end of this year at this stage. I mean, the other job in hand in processing the orders we're we're getting and converting those things into cash and moving that through forward, I think it would be I think it would be a bold expectation to expect triple digit growth year on year continuing for the next few years. And if if you, you know, certainly if you looked at our capacity and you looked where we are now and you did a function of our current sales, the triple digit growth, you know, you'd very quickly hit our capacity. So I think that probably answers the question. These couple of questions were covered already. Question two question q three has traditionally been the quarter we sell the most product. Do you expect this trend to continue this q three now?

32:21 Yep. Look. I mean, q three has always been a strong quarter for us. You know, I was talking to the guys in Brazil last night in anticipation of this call, and I asked them that very question, and their response was that, you know, they're expecting a very strong q three. So, yeah, everything's everything's looking bright, I guess, in that regard. So I'll go back to some of the questions here we've got coming through as we has the fertilizer accreditation helped in terms of pricing, or are you just using that to mainly generate further demand for now? The fertilizer accreditation helps in a in a few different ways. So one year, I mean, it obviously helps in in terms of pricing. We are now selling a fertilizer. We're not selling a remineralized.

33:07 And whilst the distinction might seem to be splitting hairs in some respects, it's really important. Additionally, the fertilizer accreditation allows the farmers to access pots of money, both commercial and government that gives them basically access to to cheap credit. And that is not something that has historically been available to to remineralizers, but it is available now to fertilizers. So it it expands the pool of potential customers for us. There have been farmers in the past who we've tried to sell to who have said, look. I'd like to buy your product, I can't because I'm relying on these these credit lines and and you don't qualify. So, you know, have we seen any massive movement of the dial because of their accreditation?

33:58 The answer is we don't know. We just don't know at this stage because of, you know, other factors that are happening, but it's certainly it's a huge feather in the cap of the team down there that they've been able to achieve this accreditation and, you know, it that can only bode well for the future. I don't know if I meant to delete this one. If demand was there, could HARVEST achieve nameplate in 2023 without significant CapEx? Well, there there's not a lot of CapEx. There's not a lot of opportunities to spend any more CapEx based on the current structure. I mean, as I've said, you know, the potential for a bottleneck for us relates to the product being wet, and so we're now working hard to work out ways to dry it, you know, and obviously, we're building a new shed to to incorporate that. We've also opened up larger faces of the mine, which give us the opportunity to keep more products because, you know, when it rains and it goes to to a certain level through the surface, if we've got a larger exposure, you know, and it does rain, we can just take that layer off and then get to the dry stuff underneath, etcetera, etcetera. So I don't think there's any significant places left for us to spend CapEx other than other than than what we've we've already done

35:32 or or doing. So, yeah, I don't I don't anticipate any large CapEx bills coming down there. So we've got the same question sort of repeating itself, and, you know, I I answered it earlier, but, you know, a few people now have asked it through the q and a panel, and it's the same theme. I mean, I can read one of them, but it's all the same thing, which is how are management or, you know, director fees and travel expenses or a significant share of cost for HARVEST. Would you consider cutting these expenses to increase shareholder value by paying out the savings in dividends, share buybacks, or invest in growth instead? You know, how are management minimizing high consulting executive management costs going forward for what is a simple business and so little productive promotion of the company? I mean, there's five or six people have asked the a variation of the the same question.

36:21 You know, I can take you back to my earlier answer, which which is the answer. Oh, shit. I think I've just deleted all the questions. An earlier answer, which is the answer, but, I mean, other than that, all I can say is, you know, there seems to be a a reasonable amount of discontent among holders relating to the performance of management and and how much management are costing. And the best way to deal with that, obviously, and the way it's always open to shareholders is to is to favor your fate. The AGM is coming up and, you know, certainly feel free to to cast your vote against management. And installer management team, do you think will be a more cost effective and more productive solution than the current ones? I mean, I don't think that, you know, cutting executive salaries is and saying that that money will be, you know, better return to shareholders is still not a I don't see how that's a feasible solution, but, you know, obviously, I have a vested interest in saying that. So, you know, we we don't need or want to be in an environment where people aren't happy with us. If If that's the case and people think that these things are unreasonable and they think that the no bad's assessment of those costs are unreasonable and the auditors views on those costs are unreasonable, then absolutely, the the only alternative less left is for management to resign and and or be removed.

37:51 Now if that's what shareholders wish, then rather than just pose the questions, you know, present an alternative, and it can be considered. Just getting back to Paul, I think I might have deleted some of those questions. I'm not sure if we can get them back, but there was about two or three there that that I've accidentally deleted. I'm sorry. No problem. I'll bring I'll bring them back for you, Brian. Let me see if I can do that for you now. So the next point is livestock is used widely in Brazil, unlike KP, is not a new product in the market. Therefore doesn't require the farmers testing it and trying it for a growing cycle before they buy larger quantities. If the limestone asset proves economical and goes through to mine build and production, is the thinking that farmers who already buy KP fertile from you will also buy the limestone they need. Deals can be made with farmers who buy both products from the company, and it would create another huge revenue stream overnight.

38:52 The simple answer is absolutely. That is 100% thinking. And to boot, the limestone is in a slightly different geographical location to where we are currently selling, so it gives us a foothold into a territory expansion. But whoever wrote that question has hit the nail right on the head. Next question. Whilst you know you don't want to give away pricing, that's understandable and best for the business, is there any way you could give us a hint as to roughly what sort of increase in price has been attributed? I think we've answered that question already. It's it's not a 170% year on year as the other person alluded to for fertilizer, but it is a we so far have been able to manage substantial increases.

39:43 Next question. Clearly, KP Fertil is getting real traction in the market and posting some big year on year increases. What would be the maximum amount of tons per year Arapure could produce? Could this mine produce 1,000,000 tons, for example, in the coming years if demand was there? Again, we've covered this off substantially. Nameplate capacity is 320,000 tons. With regards to the 70,047 sales orders figures, are these orders for 2022 delivery, and do the farmers only pay once they pick up the product from the mine site? Yes. They are for 2022 delivery. And as I alluded to before, the farmers pay a deposit, and then, yes, they they they often more often than not, they are given credit terms. So they pick the product up, and they're given some sort of credit terms following that. Next question just asks, again, in relation to those payment terms. So if if so the next question, I have only one investment criteria.

40:41 If sales continue to grow in line with your expectations, is it your intention to bring the medium term projects, Arapura plus the limestone and phosphate online and up to capacity without raising additional funds or diluting shareholders? Again, I think, you know, we've been quite open about that in the past that we don't want to be raising external funds for expansion. We have a a cash generative asset that's rapidly turning into a cash cow, and we want to use those funds where possible to for expansion and returning to shareholders. The assets that we are identifying to become the backbone of our expansion plans for the near future are ones that we think are have low CapEx bills. So we don't anticipate spending huge amounts of money on those assets.

41:36 And so, yeah, there is absolutely no discussion of any description around raising additional funds or diluting shareholders. Next question. I'd like to raise the following questions. Outlook sales orders for the rest of the year. Update on increasing capacity for the site. Have the company been approached by any strategic investors, including larger institutions in the past six months? So the first couple of points in relation to that, I've answered. The last point, have we been approached by any strategic investors, including larger institutions in the past six months? The answer is we're in regular discussions with a variety of people. The business is clearly extremely attractive to to others.

42:26 The characteristics that are making the business profitable are characteristics which others are finding very interesting. But in fairness, you know, how small market cap is is a stumbling block. I mean, larger institutions in particular who might want to become just a passive shareholder struggle to invest in companies of this size. They have minimum market cap investment criteria, and we don't qualify to meet them. So so that is something that we have to work on to to try and attract the interest of larger institutions. In terms of strategic investors, again, you know, I mean, the strategic investors that we speak to are probably more likely are probably more likely to be acquirers rather than investors.

43:16 Excuse me. Next question. One would think there would be interest in in the remaining potash mine in the current climate might now be the best time to put it up for sale. Yeah. I'm not sure that's a 100% true. You know, the it's a it's a it's not a simple asset. And, you know, running a sale process for it would be extremely time consuming and complicated, I think. And and at this point, you know, our focus really is in getting these getting this year that we've got underway, taking the bull by the horns and getting cash in the in the coffers as quickly as possible. So I don't think putting that asset on the block right now makes a whole lot of sense.

44:23 Was the KP fertile price higher in q two than in q one? Yes. Next question. We are currently sitting around 10 p or adding million pounds market cap with the expected healthy profit this year and onwards. If the market was to value us at such a low valuation for whatever reason, would management consider a share buyback instead of dividends? At a reasonable valuation and share price, dividends seem the best way to go. However, if our stock is so cheap, surely buying back our own stock at such low levels would be a potential consideration. That is clearly a question written by somebody who's actively in the market buying shares because if they think the stock is cheaper 10 p, they should be pinning their ears back. On the basis that I accidentally deleted half a dozen or probably more like three or four questions, I've actually gone through all the questions that we've received, and I apologize profusely to those people whose questions I have deleted. If you think you might be one of them and you're still on the call, feel free quickly to type it again, and I'll I'll be happy to answer.

45:32 So that leaves me with the one point that I sort of come back to, which is this question. Without an idea of actual sales quantities that are booked as revenue in any reporting period, it is not possible to establish an OpEx cost against the cost of sales stated in the accounts. Can you therefore give some insight into the OpEx costs in 2022 and how significantly these are affected as production ramps up? So you can you can clearly see from the accounts, we're working on a gross margin of 75%, which sort of tends to allude that the OpEx costs are running at around about 25%. Historically, we've been selling the product for around $40 a ton, $50 a ton. 25% of 50 is $12.50. We have said in the market numerous times that our OpEx cost would sit around $10 a ton. So I think there's plenty of evidence to to point to that number as being appropriate number to model going forward.

46:28 The question then goes on to talk about how these costs ramp up as production increases. And clearly, mean, OpEx costs are a variable cost historically at least, and and well, not historically, but traditionally, you would expect that production increases, those costs will come down. So I think, you know, I think, you know, you're you're pretty safe at your modeling at the moment going forward using that 25% margin that's in the 2022 accounts. So that looks like it. I mean, we've probably got five more minutes time for one or two more questions if anybody's got them.

47:19 Otherwise, I assume everybody's fallen asleep at the sound of my dose of tones, and and we can end it there. Brian, thanks very much. And as Brian said, we'll just leave that q and a tab open just for a few more moments just if there are any further questions that do come through that Brian you can and or have have scope to answer. I'd also like to remind the attendees and thank them for their question today. Recording the presentation along with a copy of the slides will be published on the investor meet company platform. Brian, don't know if there's anything further that's just come through before we can ask you just for a few closing comments and then we'll redirect the attendees to give you some feedback. Yeah. No. No other questions have come through, Paul, so I think that must be it. In closing, I'd like to say thank you to everybody on the call who is a a current or potential shareholder. I mean, the company has gone through its fair share of trials and tribulations over the last six or seven years since being in London. But whilst the stock market's been a bit of a rocky ride, the one thing that we can say unequivocally is that the development of the business itself in Brazil has been going extremely strongly.

48:25 The messaging around the timing of the accounts and the perceptions of the quantum of overheads relating to to management are noted, and, you know, I'll certainly feed that information back to the board. And as I said, you know, if if shareholders certainly feel, you know, that that way inclined, they absolutely should, you know, rely on their rights to shareholders and and have a crack at at moving the board along at at the forthcoming AGM. So, anyway, other than that, we look forward to continued strong performance in the back half of this year. We look forward to updating you as we go along with more positive information and watch these spaces. I think things for HARVEST just get better and better from here. And again, thank you all very much for your time. Right. Thank you indeed for updating investors' sake. Please ask investors not to close this session. It should be automatically redirected to provide your feedback in order Brian and team can better understand your views and expectations.

49:32 This will only take a few moments to complete. I'm sure it's greatly valued by the company. On behalf of the management team of HARVEST MINERALS LIMITED, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good morning to you all.