Horizonte's Araguaia project returns highly encouraging nickel grades; maiden resource imminent

Horizonte Minerals (LON:HZM) said infill drilling at its Araguaia project in Brazil has returned some “highly encouraging” nickel grades over good widths.

The latest 15-hole programme focused on the Pequizeiro West target, and returned a 15.9 metre section at 1.56 per cent nickel and 6.9 metres near the surface at 2.1 per cent.

“This clearly demonstrates the potential for a high grade resource within a large resource envelope, enhancing the overall economics of the project,” said boss Jeremy Martin. 

With 75 holes complete – including this latest infill campaign – the company is preparing to publish a maiden resource imminently.

Four drill rigs are now working on the project in the Carajas mining district in northern Brazil with a fifth planned for deliver to fast-track Araguaia.

Horizonte chief executive Martin added: "Work on the maiden resource calculation is now in its final stages and we anticipate this will be ready for release imminently.  

“Additionally, the process of selecting an engineering consulting group is underway to work alongside Horizonte as we start data collection and preparation work for the preliminary economic assessment which is expected to lead into the pre-feasibility study.  

"Elsewhere on the project, exploration teams are in the field evaluating other regional targets within the extensive landholding that makes up Araguaia with the aim of delineating additional zones that will add to the overall resource base on this world class project." 

Earlier this month Horizonte unveiled plans to raise £8.25 million from investors to fast-track Araguaia.

The company tapped into institutional demand for the stock and is placing the almost 33 million shares at 25 pence each.

The company intends to deliver a maiden resource estimate in the first quarter of this year following an 8,000 metre drilling programme on its flagship project.

A second-phase expanded exploration programme will be initiated at Araguaia to further test exploration targets and convert the high grade zones to the indicated resource category.

The eventual aim is to define a 100 million tonne resource with grades comparable to other projects in the Carajas Mineral District of northern Brazil.   

At the start of February the group increased its land holding around Araguaia by acquiring the neighbouring Vila Oito and Floresta projects.

CEO Martin played a shrewd hand putting together Horzonte’s Lontra nickel laterite area with neighbouring Araguaia, which brought Canada’s Teck Resources on board.

The assets were brought into the Horizonte portfolio for a knock-down 0.7 cents per pound of nickel in the ground.

Valuations of similar projects with equivalent or lower nickel grades are valued at between 1 cent and 6 cents per pound, giving a mean figure of 3 cents.

The fast-track development of Araguaia ought to help unwind this discount, which would have a major impact on the share price.

The dream  result for Horizonte would be to emulate a feat achieved by Canico Resources when it sold its Onca Puma project just down the road from Araguaia.

Having spent US$20 million acquiring Onca Puma and the same again developing it, the Canadian outfit received US$750 million when it sold the mine five years ago.

Little surprise then that Horizonte is speaking to Paradigm, the broker that managed the Onca Puma sale, as the British miner plots a Toronto Stock Exchange listing planned for the first half of this year.

Away from nickel and Horizonte’s interests are focused on gold. It has a joint venture with AngloGold Ashanti in Brazil.