Horizonte Minerals (HZM) has been awarded the construction licence for its Araguaia Ferronickel Project in Brazil. It is a major de-risking step for the project, which is now fully permitted to commence construction.
Jeremy Martin, Chief Executive of Horizonte, commented: "I am very pleased to announce the award of the Construction Licence (LI) for Araguaia as this is a major milestone for the Company.”
The Araguaia Project is in the south-east of the Brazilian state of Pará, approximately 760 km south of the state capital Belém.
“The LI award follows on closely from the completion of the Feasibility Study, demonstrating that Araguaia is a Tier 1 asset with the potential to be a low-cost supplier of nickel in the form of high-grade ferronickel to the stainless-steel industry.”
SEMAS, the Brazilian Pará State Environmental Agency awarded the license, along with the permits required to construct the rotary kiln electric furnace ("RKEF") processing plant and associated infrastructure, which has the potential to double Araguaia's production capacity from 14,500 to 29,000 tonnes of nickel per year.
Shares in Horizonte Minerals were up 9% to 2.35p following the news
Jeremy Martin added: “The LI and FS results combined with the positive fundamentals around the nickel market positions Horizonte well for 2019, with the construction-ready Araguaia project to supply the ferronickel market and our second project, the Vermelho nickel cobalt project, being advanced to supply the Electric Vehicle battery market.”
The nickel market outlook is robust, with demand forecasted at 5% growth over the next several years from both the traditional stainless-steel sector as well as new demand from growth in the electric vehicle battery market.
The mine is forecasted to generate $1.6 billion in cash flows over an initial 28 year lifetime, with cash costs of $8193 per tonne of nickel.
The project has a post-tax NPV of $401 million and IRR of 20.1%, but with a market consensus mid-term nickel price of $16,800 per tonne, modelling results in a post-tax NPV of $740 million and a 28.8% IRR.
Horizonte Minerals is backed by Teck Resources Limited, Canaccord Genuity Group, JP Morgan, Lombard Odier Asset Management (Europe) Limited, City Financial, Richard Griffiths and Glencore.
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