Horizonte Minerals secures $25m finance package for Araguaia

Brazil-focussed nickel company Horizonte Minerals has signed a royalty agreement with Orion Mine Finance to provide funding to advance its Araguaia ferro-nickel project, it announced on Thursday.

The AIM-traded firm said Orion would provide an upfront cash payment of $25m (£20.51m), in exchange for a 2.25% royalty on the project.

It said the royalty would only apply to the first 426,429 tonnes of contained nickel within the final product produced and sold, which was equivalent to the nickel production estimated over the life-of-mine for Araguaia in the first stage feasibility study.

Horizonte said Orion had a “strong track record” in financing successful mining construction projects, and had deployed around $1.5bn in royalties, streams, debt and equity over the past three years.

“Orion is delighted to become a major investor in Araguaia, one of the leading nickel development projects globally,” said Orion Resource Partners portfolio manager Philip Clegg.

“We look forward to supporting Horizonte as it enters the next phase of development of its world-class portfolio of nickel assets.”

Jeremy Martin, chief executive of Horizonte, added that the company was “extremely pleased” to secure the royalty agreement, which would enable the company to build out its owner's team, advance engineering and early works packages as it proceeded to the start of full construction at Araguaia.

“This royalty financing is non-dilutive for shareholders, and has been pre-designed to be compatible with the project funding package.

“Nickel has been an outstanding performer this year, currently trading almost 50% higher than at the start of 2019,” Martin explained.

“At current nickel prices of $15,500 per tonne, the Araguaia feasibility study stage one returns a net present value of more than $580m.”

Jeremy Martin noted that Orion was “one of the largest” mining finance groups in the marketplace, with around $5.1bn under management.

“We look forward to working with their team as the Araguaia project advances through to construction.”