Horizonte moves towards construction at Araguaia

Brazil-focussed nickel company Horizonte Minerals updated the market on operations at the Araguaia Nickel Project on Friday, which was moving towards construction.

The AIM-traded firm said the value engineering phase had been completed, with improvements made to the plant design and flow sheet to optimise operational performance/

It said both capital and operational expenditure remained in line with the feasibility study, following a “comprehensive” review.

The operational readiness plan was said to be “well-advanced”, with all key permits in place for the start of construction, while key environmental and social programmes were underway, also in preparation for the construction phase.

Horizonte said the project finance process was still progressing, with a number of key milestones delivered, as the company built out its operational and corporate teams to support the transition to construction.

The board noted that the nickel price was trading at $16,300, compared to the Araguaia base case, which was modelled at $14,000, resulting in enhanced project economics.

“Horizonte has made significant progress with the key work streams required to commence construction at Araguaia, despite the challenges posed by the Covid-19 pandemic over the last 10 months,” said chief executive officer Jeremy Martin.

“The project funding package for Araguaia involves multiple components that are being negotiated simultaneously.

“We continue to engage with a number of prospective investors, have recently negotiated a non-binding, term sheet with a major cornerstone equity investor, have reached an advanced stage with offtake agreements, received initial approval for a financing facility of up to BRL 200m ($32m) from Banco da Amazônia and are advancing workstreams with a syndicate of five international banks for the principal project finance package, as previously announced.”

Martin said that at the same time, the company had spent the past eight months undertaking a phase of value engineering to upgrade the feasibility study completed in 2018, and optimise certain aspects of the project to a level where it was implementation-ready.

“This work has included development of a detailed project execution and operational readiness plan.

“These workstreams have further de-risked the project and give us clear visibility on how we will deliver a successful, tier-one nickel project.”

Critical to the project's delivery was the growth of the company’s teams, Martin added.

“The high calibre of the individuals we have been able to attract is testament to the quality of our projects, the growth trajectory of the company, and the culture of best practice that we have worked hard to develop over many years of operating in Brazil.”

At 1129 GMT, shares in Horizonte Minerals were down 4.32% at 6.65p.