Horizonte Minerals PLC (AIM:HZM, TSX:HZM, OTC:HZMMF) agreed to buy some new and unused ferronickel processing equipment, originally commissioned by Votorantim SA, for its Araguaia ferronickel project in Brazil.
The processing equipment comprises the key components of a conventional rotary kiln electric furnace plant (RKEF), excluding the furnace, and is already located in Brazil.
The equipment was originally commissioned in 2006 as part of a US$250mln ferronickel development at Niquelândia in Goiás state in Brazil, but the project was placed on care and maintenance during construction and was never completed.
Horizonte said it is evaluating the use of selected components as spares and back up as part of the development of the first RKEF line at Araguaia, although it also sees the potential to use some of the large-scale equipment, including the rotary kiln, to fast-track and lower the cost of development of a second RKEF line at Araguaia.
"The acquisition of the processing equipment is a compelling opportunity for Horizonte to fast-track the development of a second RKEF line at Araguaia, to reach 28,000 tonnes of nickel per year, and at a lower development cost,” said chief executive Jeremy Martin.
It agreed to pay the seller, Companhia Brasileira de Alumínio, up to US$7.0mln (£5.3mln) for the equipment. It will pay an initial US$600,000 in cash, with the balance payable upon achieving future milestones related to the development and operation of Araguaia.
“We expect to be able to realise significant savings on our planned development costs given the low cost acquisition of this high quality equipment relative to the original purchase cost of approximately US$60mln,” said Martin.
“Today's news follows the announcement of the US$633mln funding package for the development of the first RKEF line at Araguaia. Fully funding phase one of the project is transformational for Horizonte and the ability to fast-track phase two highlights our ambition to become a globally significant nickel producer.
“With a strong outlook for the nickel price underpinned by growing stainless steel and EV battery demand driven by the clean energy transition and limited new supply with comparable credentials to Araguaia, Horizonte is well placed to capitalise on the significant emerging nickel market deficit," Martin concluded.