Horizonte Minerals Plc (LON:HZM) has revealed the results of a feasibility study at the Araguaia nickel project in Brazil's Pará State.
The study shows that over a 28-year mine life Araguaia will generate US$1.6bn in cash flows, with the potential to go even beyond that.
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The feasibility study worked to a design that allows for future construction of a second rotary kiln electric furnace process line, with the potential to double production capacity from 14,500 tonnes per year nickel up to 29,000 tonnes.
The study showed Araguaia to have a post-tax net present value of US$401mln and an internal rate of return of 20.1%.
Cash costs are expected to be US$3.72 per pound of nickel, or US$8,193 per tonne, making Araguaia a low-cost producer.
If the market consensus mid-term nickel price of US$16,800 per tonne is used in the modelling then the post-tax NPV increases to US$740 million, and the IRR to 28.1%.
The capital cost estimate stands at US$443mln, including US$65.3mln of contingencies.
The outlook for the nickel market is robust, with demand growing at around 5% over the next three to five years from both the traditional stainless-steel sector as well as new demand from growth in the electric vehicle battery market.