On Thursday, Horizontal Minerals (LSE:HZM) reported positive results from metallurgical and smelting test work at its Vermelho nickel cobalt project. Samples from Vermelho, which is located in northern Brazil, returned an average grade of 31.8pc nickel. The firm says the results confirm the suitability of a proposed conventional Rotary Kiln Electric Furnace for processing ore from the resource.
The data will add to a pre-feasibility study for Vermelho which is currently underway. A study produced by the previous owner, Vale S.A. demonstrated the project had the capacity to produce 46k tonnes of nickel and 2.5k tonnes of cobalt per year.
Horizonte CEO Jeremy Martin said, "We are pleased to report the test work has confirmed that it is possible to produce high grade, commercial specification ferronickel from the saprolite and transition ore at Vermelho. These results confirm the suitability of the proposed conventional Rotary Kiln Electric Furnace ("RKEF") process selected for the Company's Araguaia ferronickel project is also suitable for processing Vermelho ore. In parallel the test work at SGS Lakefield on limonite samples from Vermelho to demonstrate its suitability for production of high purity nickel and cobalt sulphate to supply the EV battery markets is at an advanced stage and we look forward to reporting on the results of this work.
The company is also developing the Araguaia Nickel Project in the same region of Brazil. The project is expected to produce an average of 14.5k tonnes of nickel a year, with an opportunity to double this through the construction of a second Rotary Kiln Electric Furnace process line. Horizonte produced a feasibility study confirming Araguaia as a Tier-1 project with a large, high-scale resource last October.
Jeremey Martin added: Elsewhere we continue to advance the construction financing on the Araguaia Project. Against a backdrop of global growth in nickel consumption running at around 4 to 5% per year with stainless steel currently accounting for two thirds of demand. Going forwards and coupled with this continued growth in stainless steel, nickel use in battery chemistry is set to increase significantly. This robust demand story for nickel positions Horizonte well, owning 100% of two Tier 1 nickel projects, within trucking distance of each other with the potential to produce 40,000 to 50,000 tonnes per year of nickel.
Horizonte’s share price was hit recently with a TR-1 notification of major holdings released on 5th March revealing significant holder City Financial had sold the bulk of its stake. The investment firm was forced to sell its holding as it is entering administration, offering a potentially good opportunity for other interested investors to enter the stock.
Author: Stuart Langelaan
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