Chief executive Jeremy Martin added that the recent initial metallurgical testing was a major step in de-risking the Brazil-based project. 

He said that the “highly encouraging” metallurgical results will feed into the Preliminary Economic Assessment (PEA), which is due to be delivered in the next three months. 

"We have delivered on our key milestones at Araguaia, within budget and on schedule, as we take the project through to feasibility stage. 

 With a strong cash position of £5.8 million we are well placed to meet our commitments in 2012 as we work towards completing our prefeasibility study at Araguaia in the first half of 2013. 

We are also looking to further consolidate our land position around Araguaia with the aim of increasing our resource potential and maximising our exposure in a country with significant nickel production, as demonstrated by Vale and Anglo American's new nickel mines in the region,” he added.

“Going forward, all the foundations are in place from which to deliver significant growth as we develop what we believe is the next major nickel project in Brazil," Martin said.

Horizonte Minerals (LON:HZM) said its Aragauaia nickel project in Brazil had passed a major milestone after metallurgy tests indicated good recoveries from two different types of process.

Metallurgy, or extracting the metal from the ore, is crucial for nickel projects.

Horizonte said tests using the ferronickel and atmospheric heap leaching methods both produced positive results.

The ferronickel or pyrometallurgy process recovered 94.4 per cent to 96.1 per cent nickel from lab tests while a commercial grade of ferronickel was produced from smelting tests on two ore blends (35.3% nickel to 40.5% nickel).

Jeremy Martin, Horizonte’s chief executive, said that a ferronickel product within this grade range can be sold directly to stainless steel producers.

“The mineral resources on the project are saprolite and transition dominated, which combined with the good infrastructure and low cost hydroelectric power in the district made the tried and tested pyrometallurgical route a key process option,” he added.

The next stage for Horizonte is to award the contract for the Phase 2 pyrometallurgical test work to run a pilot plant of approximately 100 tonnes of ore on a continuous feed basis.

Horizonte also undertook hydrometallurgical test work focused on Atmospheric Tank Leach (ATL) and Bottle Roll Leach (BRL) as a precursor test for atmospheric heap leaching.

“The results from the ATL tests were positive showing that there are high nickel recoveries up to 89% with moderate acid consumption and the BRL tests also indicated good nickel recoveries,” Martin said.

"The completion of the initial phase of metallurgical test work is a significant milestone at Araguaia with both process routes returning positive results, which is an excellent outcome.

The completion of the preliminary metallurgical testwork is a major step in de-risking the project, we are now able to demonstrate two process routes that with additional testing are potentially suitable for commercial production”.

Horizonte owns 100 per cent of the advanced Araguaia nickel project located to the south of the Carajas mineral district of northern Brazil.

The prospect has more than 100 million tonnes including 39 per cent in the indicated category and totalled 24.2 million high grade tonnes averaging 1.6 per cent Ni.

Araguaia has an Indicated resource of 39.3 million tonnes grading 1.39% nickel and an Inferred Resource of 60.9 million tonnes averaging 1.22% nickel.

Chairman David Hall said that even if metal consumption didn’t pick up, a “critical” lack of supply of new quality projects would likely maintain metal prices at reasonable levels. 

Global stainless steel production is forecast to reach new highs in 2012 with a steady increase in following years, he added, which should see nickel prices at levels capable of sustaining a large nickel project such as Araguaia’.  

“When economies and markets recover, as no doubt they will, Horizonte will be well placed with the ownership of a quality nickel asset in a stable and well served country and in a region with excellent infrastructure that enables rapid development of the project,” Hall said.

He added the preliminary economic assessment on Araguaia to be released shortly and would “be a significant milestone for the company in proving the economic potential of the Araguaia project.”

Horizonte also has two early stage gold projects in Brazil in a joint venture with AngloGold.

Results from five further drill holes are expected this quarter and will determine the 2012 follow-up programme. AngloGold has already confirmed a US$1.6 million exploration budget for the Falcao prospect in Brazil.

Horizonte made a loss of £1.8 million for the year to December as it stepped up the development work at Araguaia.

Cash at the December year-end totalled £5.86 million.

Horizonte entered into definitive agreements to buy 100 per cent of the Vila Oito and Floresta nickel laterite projects in July last year.

The group will pay current owner Lara Exploration about C$2 million in shares for the two sites, which will give the Canadian group a 2.95 per cent stake in Horizonte. 

Lara has agreed to a minimum 12 month lock-up for the shares it will receive from 9 February. 

The 100 per cent owned Araguaia nickel project located to the south of the Carajas mineral district of northern Brazil is its key project.

Last month, the group published a new resource estimate showing more than 100 million tonnes including 39 per cent in the indicated category and totalled 24.2 million high grade tonnes averaging 1.6 per cent Ni.

The group is expected soon to release the results of its metallurgical testing on Araguaia, which will be the basis of a pre-feasibility study.

Horizonte already has two major partners in Canadian group with a 44 per cent stake and AngloGold Ashanti (LON:AGD), which is its partner on the gold portfolio. 

Horizonte and AngloGold Ashanti have a US$5.3 million exploration alliance to generate and develop new and existing gold targets within two areas of Brazil.

Veteran geologist Dr Owen Bavinton will join as a non-executive director to replace Nicholas Winer, who has left to pursue other interests.

A geologist, Dr Bavinton has 40 years experience in the industry and since 2003 has been group head of exploration and geology at South African giant Anglo American, overseeing and advising on acquisitions and exploration programmes on key projects. 

Horizonte said today he was instrumental to discoveries such as the Jacare nickel deposit in Brazil and the Los Sulfatos copper project in Chile.

He was also involved in the feasibility studies for the producing Barro Alto and Morro sem Bone nickel projects, both of which are also in Brazil.

Horizonte chief executive Jeremy Martin said: "I am delighted to welcome Owen to the Horizonte Board.  His vast experience and knowledge of the South American mining industry, primarily through his exposure at a senior level within Anglo American and WMC, will substantially increase our team's strength further as we advance the Araguaia nickel project through to the feasibility stage.”

The Araguaia nickel project in Brazil was recently upgraded to a resource of more than 100 million tonnes and is Horizonte’s key development.

Horizonte upgraded the resources estimate at Araguaia, in Brazil, by over 30% to more than 100 million tonnes, which included a 39% increase in indicated reserves.

Araguaia accounts for over 80% of the 30.6p per share value attributed by finnCap to the company.

The remainder consists of the two gold prospects Falcao and Strategic that are also in Brazil and where Anglogold Ashanti is Horizonte’s partner.

The house broker says while Araguaia still only has a resource statement, a “first pass” scoping study is in progress, which should contain estimates of the principal capital and operating costs in addition to mining and processing parameters.

It assumes construction starts in 2014 and that production starts in 2016, building to full capacity in 2017.

FinnCap added it sees further upside with the progressive reduction in the risk discount rate of its valuation as all three projects progress towards a development decision.

The broker added that all of the company’s operations are all in Brazil, a country with no recent history of expropriation and a positive attitude to mining development.

Horizonte chief executive Jeremy Martin today said: "We believe that the updated resource places Araguaia in the upper quartile of developing global nickel assets in terms of size and grade.“ 

“Further drilling is planned to convert additional material into the measured and indicated resource categories once the company has completed the PEA, its next milestone, which will give a range of project economics”.

The 43-101/ JORC compliant indicated resources are now estimated at 39.3 million tonnes grading 1.39% nickel using 0.95% Ni cut-off, while inferred resources are 60.9 million tonnes averaging 1.22% Ni using 0.95% Ni cut-off.

High grades in the indicated category at a 1.20% Ni cut-off grade totalled 24.2 million tonnes averaging 1.6% Ni.

Describing the upgrade as “excellent news” chief executive Jeremy Martin said the group had converted 39% of the resource to the indicated category and had demonstrated the existence of higher grade zones which are vital for early mine life economics.

"We believe that the updated resource places Araguaia in the upper quartile of developing global nickel assets in terms of size and grade.  Further drilling is planned to convert additional material into the measured and indicated resource categories once the company has completed the PEA, its next milestone, which will give a range of project economics,” he added.

The group added that work on the Preliminary Economic Assessment (PEA) is on schedule for the middle of this half of 2012 while initial metallurgical test work results to determine ore characteristics are due this quarter.

The new resource estimates was based on 1,087 boreholes for a total of 25,773 metres and included targets within the North, Centre, Pequizeiro, Baião and Lontra sectors of the greater Araguaia project.

The previous resource estimates at Araguaia was 76.6 million tonnes.

Reporting its interim results for the six months to the end of June 2011, Horizonte chairman David Hall said the firm had made exceptional progress in terms of developing its portfolio of assets in the world-class Carajas mining province in northern Brazil during the period. “We believe Horizonte’s investment case is currently stronger than ever,” he said. “The current value of Horizonte at time of writing... values our nickel resource at some US$0.02 per pound ignoring our gold projects. Our peers still trade in the range of US$0.06 to US$0.10 per pound. This positions Horizonte at a significant discount to the current market peer group.”

Horizonte said it delivered a number of significant milestones during its first half. At its flagship Araguaia nickel project it defined a maiden resource of 76.6 million tonnes grading at 1.35 per cent nickel. It also consolidated its position within the Araguaia region through the acquisition of the Vila Oito and Floresta nickel projects.

At its Falaco gold joint venture with AngloGold Ashanti it began a 3,000-metre drilling programme. And it also strengthened its balance sheet by raising £8.25 million, while also successfully listing on the Toronto Stock Exchange in June 2011 – a move that was part of management’s overall growth strategy to see Horizonte gain enhanced market exposure in North American capital markets.

Horizonte made a pre-tax loss of £676,533 during H1 2011, compared with a loss of £687,058 in H1 2010.