Horizonte Minerals (LSE:HZM) bounced 5.3pc to 1.8p on Tuesday after revealing that strong sampling results will allow it to push ahead with the development of its Vermelho nickel-cobalt project in Brazil.
The business said test work on samples of limonite ore from the project, which is based in the Carajas mining district, revealed a high-purity product containing 21.8pc cobalt. This exceeds the reference grade used for sulphate pricing. Meanwhile, the outfit said that nickel sulphate is produced as a solution ready for purification to a final battery-grade product.
When put together, Horizonte said these results confirm the suitability of the Pressure Acid Leach process and subsequent purification stages. This method was selected by the firm in its previous work at Vermelho and will be used to produce cobalt and nickel sulphate that can supply the electric vehicle (EV) battery markets.
As such, the positive test work results will be integrated into Horizonte’s ongoing pre-feasibility study at Vermelho. A study produced by the asset’s previous owner, Vale S.A., found that the project could produce 46k tonnes of nickel and 2.5k tonnes of cobalt per year.
Tuesday’s update follows test work earlier in the year that showed that Vermelho saprolite ore is also suitable for conventional processing. This can take place at the Rotary Kiln Electric Furnace that Horizonte is constructing at its nearby Araguaia ferronickel project.
Horizonte’s chief executive Jeremy Martin called Tuesday’s results a ‘major milestone’ for the organisation, adding:
‘The Vermelho project is a value driver for the Company, it is a high-grade scalable resource, with good infrastructure and has the potential to be fast-tracked to development. The successful completion of this sulphate test work confirms that the selected process flow sheet is suitable to treat the Vermelho ore and when combined with the earlier successful RKEF test work demonstrates that alternate process routes exist for the project. The data from the test programmes will be incorporated into the Vermelho Pre-feasibility Study, for release in early H2, with the objective of demonstrating a robust set of economics for the project.’
Martin also highlighted robust conditions in the EV market, which are leading miners and battery manufacturers to accelerate efforts to seek out high-quality battery metal projects.
‘We see Vermelho as an attractive strategic asset with the ability to produce nickel sulphate and a non-conflict, ethical source of cobalt,’ he said.
Elsewhere, Martin said that Horizonte is continuing to advance project financing at Araguaia, with seven international banks showing interest in a project financing syndicate. He added that discussions are also underway with numerous groups around product marketing and offtake agreements.
A feasibility study last year gave Araguaia an initial 28-year mine life, a post-tax net present value (NPV) of $401m and an internal rate of return (IRR) of 20.1pc using a base case nickel price forecast of $14,000/t. Horizonte expects the project to produce an average of 14,500 tonnes of nickel a year, housed within 52,000 tonnes of ferronickel. Against this, the asset has a capital cost estimate of $443m. This includes $65.3m of contingencies.
In Tuesday’s update, Martin once highlighted favourable macro conditions as a potential driver of third-party interest in the project: ‘The medium term consensus nickel price is around US$16,200/tonne which, based on the Feasibility Economics on Araguaia, deliver over US$2 billion of net cash flow over the life of mine at a C1 cash cost of around U$6,800/t nickel placing the project in the lower quartile of global laterite nickel operations and one of a very limited number of scalable, high grade, fully permitted, construction ready projects globally.
‘This robust demand picture 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 to service both the traditional stainless and EV battery market as well a cobalt revenue stream from outside of the Democratic Republic of Congo (DRC ) and service both the traditional stainless and EV battery market.’
Author: Daniel Flynn
The Author holds a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.