HORIZONTE MINERALS
LON:HZM | 2p| US$20m
Positive New Pre-feasibility Study for the Araguaia Nickel Project
Horizonte Minerals, the AIM- and TSX-listed company, has announced the results of a new PFS on its 100%-owned Araguaia Ferronickel Project in Brazil. Assuming a long-term nickel price of US$14,000/t, the 14,500tpa project returned a post-tax NPV8 of US$581m and an IRR of 26%. At US$12,000/t the NPV8 was US$328m and the IRR 19%.
COMMENT: The results of the study show the considerable benefit to the project from the addition of the resources acquired from Glencore in late 2015; these were combined with licences on which the company had completed a previous PFS in 2014. We are positive with respect to the outlook for the nickel price, which has increased by 36% from its lows in February to its current level of US$10,460/t. The company now plans to undertake a combined social and environmental impact study over 2016/17 and then a definitive feasibility study.
Horizonte Minerals Plc is an AIM- and TSX-listed nickel development company — It owns 100% of the Araguaia Nickel Project, which is located to the south of the Carajas mining district in the Para State in northern Brazil. With respect to permitting, the project was granted the important Preliminary Licence earlier this year.
The Araguaia Project comprises the Araguaia Nickel Project area (HZMA) and the Glencore Araguaia Project area (GAP):
• Horizonte originally acquired the HZMA from Teck in August 2010. It completed a positive PFS on this part of the project in March 2014.
• The GAP area was acquired from Glencore in September 2015.
Key parameters in the new PFS were:
• 43-101 proven and probable reserves were 24.6Mt, grading 1.77% Ni, containing 435,000t of nickel.
• The average nickel grade for the first ten years of operation was 1.96%.
• A mine life of 28 years producing 14,500tpa of nickel contained in ferronickel from a single line Rotary Kiln Electric Furnace Plant.
• C1 cash costs of US$3.15/lb/US$6,498/t of nickel.
• The pre-production capex for the contract mining-based project was estimated at US$354m, including a 15% contingency, but excluding owner’s costs and working capital. The resulting capital intensity is equivalent to US$24,400/tpa of capacity.
Key parameters show a significant improvement over the previous study — Compared to the similar capacity case in the previous study, nickel contained in reserves were 24% higher in the new PFS, cash costs were down by 24% and pre-production cash costs fell 39%.