Horizonte Minerals – wake up and smell the coffee

Down in Brazil there’s an awful lot of nickel as well as coffee.  And at the easternmost edge of the renowned Carajas mineral province, on the border between Para state and neighbouring Tocantins, people are beginning to wake up and smell it…there’s a whole new nickel laterite province brewing up nicely. Xstrata call it the Aruguaia Ophiolite Belt – a north-south trending province of Proterozoic clastic sediments hosting a series of ophiolite zones - and they have two important projects currently under feasibility at Serra do Tapa and Vale dos Sonhos. Eighty kilometres south lies Lara Exploration’s laterite project at Vila Oito, whilst even further south is the undeveloped Quatipuru deposit, marking the southern limit – so far! – of this emerging nickel district. Further afield, to the west and northwest of the ophiolite belt, are Vale’s Onca Puma laterite development and the currently shelved Vermelho nickel mine.

Halfway down the ophiolite belt and just a few kilometres to the northwest of Vila Oito, which until recently was under option by Teck -  is Lontra, the latest grass roots discovery by exploration specialists Horizonte Minerals (AIM:HZM). Lontra was discovered using the traditional prospecting technique of regional stream sediment sampling carried out during late 2006. Seven large target areas of potential nickel mineralisation were outlined – all showing cobalt and copper as well - and follow up regional soil and rock sampling then identified the first targets for a wide-spaced auger drilling campaign. The drilling located four priority anomalies in the 30km–long project area, and demonstrated consistent nickel values in the range of 0.5% to over 2%. Although the 12-metre augur drilling did not test the full depth of the laterite cap, rising grades towards the base of each hole indicated that surface leaching was masking better potential further down.

Diamond drilling to greater depths – deep enough to penetrate the full depth extent of the laterite cap and hit fresh rock - did indeed prove this to be the case. Initially, drilling focused on the Northern Anomaly, which covers an area of peridotite rocks (over which the laterites have formed) approximately 1.5 km by 0.4 km. Results here showed thicknesses ranging from 6-14 metres, with grades of up to 1.58%, which were good enough for Horizonte to formally announce Lontra as a new nickel laterite discovery in September last year. Drilling then progressed south to the Raimundo target, where there are two principal anomalies, a central area covering approximately 1.6km by 0.5km wide and a higher grade anomaly to the east approximately 0.7km by 0.3km. A pattern of vertical holes on a 200m x 200m grid - reduced to 100m x 100m on the eastern anomaly - returned good consistent thicknesses of nickel mineralisation with best interval showing 13.83m at 1.4% nickel.

Satisfied that they have a potentially economic discovery on their hands, Horizonte have focused for the latter part of this year on preparing for resource definition and establishing the likely process route for the Lontra mineralisation. The latter makes a vast difference to the capital costs of a laterite project, and influences the economic grade and thus the tonnage of the mineable resource, and Horizonte were pleased to discover that the Lontra laterites are likely to be amenable to low cost atmospheric heap or tank leaching. Metallurgical testing of representative samples from the drilled anomalies showed excellent recoveries from bottle roll tests over a 31 day leaching period. Recoveries were as high as 99% from the lower silicate layer, between 89-91% from the “transition” layer, and in the range of 57-68% for the upper limonite layer. Cobalt recoveries averaged 70-70% overall.

With that parameter established, and a recent placing providing the necessary funding, Lontra can now proceed to resource definition, and further drilling is planned for early next year.

But clearly CEO Jeremy Martin has not yet had his fill of nickel, and to hedge the laterite bet, the company has just taken on a nickel sulphide project at Tucuma, some 15km SE of Vale’s Onca Puma laterite development near Ourilandia. The project area is some 180km from Lontra, and lies on the north western edge of the Carajas mineral province, just 7km north of Ourilandia, the support town for Onca Puma. The Tucuma area has been explored before, by Codelco, mainly for copper, but Horizonte’s immediate interest is in a 3km long by an average 600m wide nickel soil anomaly showing over 500ppm nickel in soils, with values as high as 4894ppm 0.5%Ni), which Horizonte believe warrants further exploration, particularly considering its location. Initial reconnaissance has been completed, and once targets have been defined, a drilling programme will take place next year.

Nickel, of course, though it may have grabbed investor attention over the last few months, is not the only mineral in the Horizonte portfolio, which contains a variety of projects at varying stages of development. Pursuing the “find it, prove it up and move it on” policy, some of these have moved out of the pipeline and into joint ventures. A good example is the multi-target Tangara gold project, currently being developed by Troy Resources under an option agreement requiring Troy to spend US$2 million on exploration. This threshold has already been passed, and should Troy elect to take up their option, Horizonte will have benefited from direct cash payments totalling US$2.8 million plus royalties on future production. Lontra, too, is a 50/50 jointly funded venture with local partner LGA Mineração e Siderugia Ltda,

Early stage projects are handled by another joint venture with LGA, which is currently progressing the development of the Crixás, Goiás Velho, Carajás Norte, Lobo and the Araguari, and Itajobi pipeline projects. The intention is also to identify and secure additional projects, of which Tucuma is the most recent example.

Other partners include AngloGold Ashanti, who last September entered a three year US$5.3 million exploration alliance with Horizonte, with the intention of making new gold discoveries in Brazil and undertaking their subsequent development. Horizonte will provide the technical and operational input whilst AngloGold will fund the initial work programmes, starting with a first year commitment of US$900,000. New projects defined by the alliance will belong 49% to Horizonte and 51% to AngloGold, although AngloGold can earn further ownership by funding through to pre-feasibillity.
 
In Peru, Horizonte not only have their wholly owned El Aguila silver/zinc project, but has also optioned  the Pararapa silver/gold project in Arequipa from major gold producer, Barrick Gold. Pararapa is a typical epithermal system, dominated by a north-south trending quartz vein structure, which is traceable on the surface for approximately 2km.

Although underexplored by modern methods, the property shows many instances of artisanal mining, with some underground development. Results from surface work have shown good continuous gold and silver grades in the main mapped veins, with multiple zones containing bonanza silver values of up to 1,230 g/t and gold grades to 14.3 g/t.

Horizonte are currently earning 100% by committing to fund 7,000m of diamond drilling over three years, and issue Barrick with 3.5 million Horizonte shares payable in two tranches. In the event of production commencing at Pararapa, further cash payments will be due based on the size of the mineable resource, although Barrick reserve the right to repurchase 70% of the project if Horizonte define more than 2 million ounces of gold.

Busy, busy. Three serious nickel, gold and silver joint ventures advancing steadily towards resource status. More than half a dozen pipeline projects that are being progressed with partner funds . Systematic and diligent field work in the search for new projects, on their own behalf and that of AngloGold Ashanti. Cash in the bank following a recent successful placing.

All for less than £5 million. You have to wonder what the market has got against exploration and development. And if the market thinks the next 2 million ounce “find!” will spring freshly minted from the ground, without any need for soil sampling, rock chipping, channel sampling, geophysics and drilling…..they’d better wake up and smell the coffee!