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Horizonte Minerals looks forward to Araguaia feasibility in near term

At Araguaia, a feasibility study is now at an advanced stage and is due to be delivered by mid-2018
Mining truck
In the quarter, Horizonte completed a fund raise and an acquisition

Horizonte Minerals Plc (LON:HZM, TSE:HZM) has issued its first quarter interim update which provides commentary around the mine developer’s recent progress, including its successful funding and latest acquisition.

It raised £9.2mln in January, leaving the company fully funded for two years – a period in which it plans to deliver work programmes at the flagship Araguaia project and the newly acquired Vermelho project.

At Araguaia, a feasibility study is now at an advanced stage and it is due to be delivered by mid-2018.

WATCH - Big step-change for Horizonte Minerals with 'exciting' nickel-cobalt acquisition

The work programmes at Vermelho are planned to enable a mineral resource to be established for what are seen to be high-grade nickel-cobalt portions of the deposits, and that would be followed up with a preliminary economic assessment.

Jeremy Martin, Horizonte chief executive, said: "Having completed a successful fundraise in early January where we saw continued support from our Institutional shareholders in the UK and North America, 2018 is shaping up to be a very exciting year for the company.

“We are now fully funded for the planned work programmes at both Araguaia and Vermelho over the next 24 months.

“The recently acquired Vermelho nickel-cobalt project is one of the largest nickel-cobalt deposits globally and has a high-grade scalable resource that has undergone a full feasibility study and a subsequent development decision by Vale.

“Vermelho is a high quality asset with the potential to be a significant value driver for the company.”

Martin highlighted that the Araguaia feasibility study is the “core focus” for the near term.

“A significant proportion of the FS has now been completed, and we are currently focused upon optimising the process flow sheet and plant site layout to ensure an optimal outcome both operationally and from a capital cost perspective,” he added.

“In addition, we are also looking at the mining schedule based on the current higher nickel price environment together with a trade off to transport high-grade saprolite ore from Vermelho to the proposed RKEF plant at Araguaia with the objective of optimising the project economics. 

“The company believe that this increase in scope will add value to the project, additionally we want to deliver a high-quality study that can go directly into the detailed design and implementation phase.

“Based on this additional work the FS is now scheduled for completion mid-year 2018.”

Broker commentary

“While the nickel price is now significantly more positive than when the Araguaia Pre-Feasibility Study (PFS) was unveiled in Q4 2016 (c.US$9,000/t at the time, versus c.US$13,000/t today), Horizonte noted that some key opex inputs for its RKEF process (e.g. thermal coal and oil) have also risen”, said Yuen Low, analyst at Shore Capital.

Low added: “The current focus being on optimising the process flowsheet and site layout “to ensure an optimal outcome both operationally and from a capital cost perspective.

“The mining schedule being reconsidered given a higher nickel price environment. Trade-off studies being conducted to examine the potential of transporting high-grade ore from the newly acquired Vermelho to Araguaia’s proposed RKEF (rotary kiln-electric furnace) plant.”

Elsewhere, finnCap analyst Martin Potts repeated a 6p per share medium term target  which suggests some 45% upside to the current price of 4.12p.

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