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viewHorizonte Minerals PLC
(
AIM:HZMTSX:HZMOTC:HZMMFFRA:H5W
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Horizonte Minerals set to become a major player in Brazilian nickel scene

Snapshot

  • Construction permit granted for Araguaia ferronickel mine
  • Cornerstone equity investor lined up
  • Banking syndicate finalising debt
  • Low carbon emmissions, relative to sector 
Araguaia mine

Quick facts: Horizonte Minerals PLC

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AIM:HZM

Price: 9 GBX

Market Cap: £153.01 m

 

What it does

Araguaia

The Araguaia ferronickel project is in Para State, Brazil.

The plan ultimately is to have the project producing 28,000 tonnes per year.

Vermelho

Vermelho is a nickel-cobalt project in the eastern part of the Carajás mining district.

Production could reach upwards of 30,000 tonnes per year, with total cash flows over that time estimated around US$7bn.

Nickel 

Projections that nickel prices will go higher underpin the significant value in its projects at Araguaia and Vermelho in Brazil, Horizonte believes.

Concerns remain about supplies of the metal when electric vehicle production fully hit its stride, says Horizonte.


 

How it is doing

In August, Horizonte Minerals PLC (LON:HZM)(TSE:HZM) mandated five banks to raise US$325mln required for the debt portion of the Araguaia financing package.

In December 2020, Horizonte said it had completed of the value engineering phase of project design, with improvements made to plant design and flow sheet to optimise operational performance.;

Under the new parametres, the capex and opex remain in line with the feasibility study estimates.

Key environmental and social programmes are now underway in preparation for construction phase. 

The company also said in December that the project finance process continues to progress, with a number of key milestones delivered. A cornerstone investor for the equity portion of the Araguaia financing has been lined up. 

 

What the boss says: Jeremy Martin, chief executive

"Horizonte has made significant progress with the key workstreams required to commence construction at Araguaia, despite the challenges posed by the Covid-19 pandemic over the last 10 months," said chief executive Jeremy Martin.

"The project funding package for Araguaia involves multiple components that are being negotiated simultaneously. We continue to engage with a number of prospective  investors, have recently negotiated a non-binding, term sheet with a major cornerstone equity investor, have reached an advanced stage with offtake agreements, received initial approval for a financing facility of up to R$200 million (around.$32mln) from Banco da Amazônia and are advancing workstreams with a syndicate of five international banks for the principal project finance package, as previously announced."

He added: 

"In parallel, we have spent the past eight months undertaking a phase of value engineering to upgrade the Feasibility Study completed in 2018 and optimise certain aspects of the Project to a level where it is implementation ready.  This work has included development of a detailed Project Execution and Operational Readiness Plan."

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Video

 

What the broker says

House broker Peel Hunt started coverage of the miner in September with a 'buy' recommendation and a target price of 14p. Analysts forecast potential for underlying earnings (EBITDA) to reach nearly £90mln by 2025.

“We see HZM as a medium risk, but strong growth prospect for greater exposure to nickel and (eventually) cobalt,” they commented.

“We expect further announcements on Araguaia Stage 1 funding in the coming six months, and also expect further nickel price momentum in the coming two years. Araguaia’s strong cash flow profile from Stage 1 should enable HZM to self-fund Stage 2 by Years 3-4 of production.”

 

Inflexion points

  • Funding agreed for construction of Araguaia

  • Bankable feasibility study at Vermelho

  • Technology advances in nickel battery usage in electric vehicles and energy storage

 

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