Horizonte Minerals (HZM) has released its much-anticipated feasibility study for its Araguaia nickel project in Brazil’s Pará State.
The feasibility study forecasted $1.6bn in cash flows over the initial 28 year lifetime of the mine, with cash costs of $8193 per tonne of nickel, confirming its profile as a low-cost producer.
Horizonte CEO, Jeremy Martin said “Horizonte owns one of the largest undeveloped ferro-nickel project's in the world, in a mining friendly jurisdiction, with good infrastructure and a compelling set of economics as defined in today's FS.”
It revealed a post-tax NPV of $401m and an IRR of 20.1%, but with a market consensus mid-term nickel price of $16,800 per tonne, the modelling results in a post-tax NPV of $740m and an IRR of 28.1%.
Horizonte has strong shareholder backing including Teck Resources Limited, Canaccord Genuity Group, JP Morgan, Lombard Odier Asset Management (Europe) Limited, City Financial, Richard Griffiths and Glencore.
The open pit mining operation is expected to mine 27.5 million tonnes of nickel from a 119 million tonne mineral resource to produce 52,000 tonnes of ferronickel (containing 14,500 tonnes of nickel) per year.
Additionally, the feasibility study design allows for future construction of a second Rotary Kiln Electric Furnace 'RKEF’ process line, a proven technology used in 40 mines worldwide, with the potential to double Araguaia's production capacity from 14,500 to 29,000 tonnes of nickel per year.
It has projected capital expenditures of $443m, which includes $65.3m of contingencies (17% of total capex). The compelling economic and technical results from the Study are expected to provide the company with options for favourable project financing and offtake agreements.
Jeremy Martin added: “The Study represents the most significant milestone in the Company's development to date. From initial discovery by Horizonte combined with the acquisitions from Teck and Glencore, this is the culmination of a long journey and one that not many companies successfully achieve.
"The nickel market fundamentals are positive for the short to long term, driven by robust demand from stainless steel growth and strong electric vehicle (EV) penetration rates. Physical LME metal inventories continue to be drawn down to levels not seen in the last five years. This combined with a lack of new major projects scheduled to come online in the short term, means that this is an opportune time to develop Araguaia.”
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