Horizonte Minerals PLC set to become a major player in Brazilian nickel scene

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Horizonte Minerals PLC set to become a major player in Brazilian nickel scene

What Horizonte does

Araguaia

The Araguaia ferronickel project is in Para State, Brazil.

Phase 1 will see the production of 14.5kt/year of nickel in ferronickel form, with the potential to increase that to 29kt/year through additional capex spending of US$199mln.

The first production should be in 2022 with the mine scheduled to run for 28 years.

Capital expenditure for phase I was estimated at US$443mln in last year’s feasibility study with cash costs of US$3.77/lb.

That feasibility study showed Araguaia to have a post-tax net present value of US$401mln and an internal rate of return of 20.1%.

Vermelho

Vermelho, a nickel-cobalt project in the eastern part of the Carajás mining district, was acquired by Horizonte in December.

A pre-feasibility study in October projected a 38-year mine life, with total cash flows over that time estimated at some US$7.3bn after tax.

The PFS established a base case valuation of US$1.7bn (net present value) and estimated an internal rate of return of 26%.

At full production, the mine would produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt each year, via a high-pressure acid leaching process.

Nickel 

Estimates of higher future nickel prices underline the significant value in its projects at Araguaia and Vermelho in Brazil, Horizonte believes.

Concerns remain about supplies of the metal when electric vehicle production fully hit its stride says Horizonte, with the consensus price around US$16,400/t.

What’s the latest?

The company closed out the quarter ended 31 March with £17mln in the bank. The company said at that point that the project financing process for Araguaia was running to schedule and that there had been no significant coronavirus-related disruption to the company.

 

What the boss says: Jeremy Martin, chief executive

“Producing high purity nickel and cobalt sulphate from the Vermelho project of suitable quality and grade for use in EV battery production is a major milestone in the development of the project,” said Horizonte’s Jeremy Martin.

“The Vermelho project is a value driver for the company, it is a high-grade scalable resource, with good infrastructure and has the potential to be fast-tracked to development.”

Watch the interview

Inflection points

  • Funding agreed for construction of Araguaia

  • Bankable feasibility study at Vermelho

  • Technology advances in nickel battery usage in electric vehicles and energy storage

 

Proactiveinvestors.co.uk

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