Horizonte Minerals (LSE:HZM) was trading another 13% higher on Monday morning at 4.75p after delivering its first-ever sustainability report – an important milestone in its ongoing transition into a nickel producer.
The report provides an overview of the company’s environmental stewardship, social responsibility, and corporate governance progress over the 2019 financial year.
Primarily, the work focuses on work at Araguaia, the tier one project based in Brazil’s renowned Carajas mining district that Horizonte is developing as the country’s next major ferronickel mine.
However, it also includes data from the company’s Vermelho nickel-cobalt project, which was also confirmed as a low-cost tier one project with a large high-grade resource and long mine life last year.
Among the highlights of the sustainability report were US$1.5 million of direct economic contribution in Brazil, zero lost time injuries & fatalities, and over 200 community engagements.
Meanwhile, the work noted that 55% of Horizonte’s total purchases came from local suppliers, 42% of its employees are females, and nearly half of its workforce has been sourced locally within Brazil’s Para state.
Chief executive Jeremy Martin noted that producing such a report for the first time marks an “important step” in Horizonte’s “evolution and development into a nickel producer”.
"As we continue to build momentum in our journey towards production, we remain committed to helping our communities grow alongside us, protecting the environment in which we operate and delivering value to our shareholders."
Here, he refers to the strong progress made by the firm at Araguaia over the past year.
This culminated in the news last week that Horizonte has secured a game-changing US$325 million financing package for the project lead arranged by the likes of BNP Paribas, Natixis, and Société Générale.
The institutions were won over by Araguaia’s strong economics, which were laid out in a recent feasibility study.
Araguaia's development is divided into two stages, the first of which will see it process 900,000ts of dry ore feed per year to produce 14,500 tonnes of nickel per year for an initial 28-year mine life. A second stage will then increase the project's production capacity to 29,000 tonnes of nickel per year by adding a second process line, increasing its mine life to 26 years.
Using a conservative US$14,000/t nickel price, this Stage 2 scenario would generate an estimated net present value of US$741 million and an internal rate of return of 23.8%. However, these figures increase to around US$1 billion and 30% when a US$16,000/t nickel price more in line with today's prices is used.
The money secured last week covers a significant portion of the pre-production capex required to complete stage one construction at Araguaia, and prompted a 24% increase in Horizonte’s share price on the day.
Following the release of Monday’s sustainability report, the company has now risen by more than a third over the past month and close to 90% over the last year.
However, with a market cap of just over £60 million, there could scope for much more upside moving forward as Horizonte pushes forward across its portfolio at pace with renewed financial support and ESG credentials.
Author: Daniel Flynn
The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and MiningMaven Ltd are not responsible for the article's 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
Shares in Horizonte Minerals (LSE:HZM) broke out to a 2020 high of 4.2p on Wednesday after the nickel company announced a game-changing US$325 million financing package for its flagship project.
The firm, which was trading up 24% at writing, has executed a mandate to arrange a senior secured project finance facility with a syndicate of five international financial institutions.
BNP Paribas, Natixis, and Société Générale are all acting as mandated lead arrangers for the money, which will be put towards the construction and development of Horizonte's Araguaia ferronickel project in Brazil. The firm said these financial institutions all have extensive experience in providing project financing to greenfield mining projects and were chosen specifically due to their capabilities in Latin America.
Jeremy Martin, Horizonte's chief executive, said the new financing package would cover a significant portion of the pre-production capex required to complete stage 1 construction at Araguaia.
"We are targeting completion of the project financing package for the project by the end of 2020, provided that restrictions related to the Covid-19 pandemic do not cause further delays. We aim to start construction in early 2021," he added. "This major milestone moves us closer to our goal of becoming a nickel producer. We look forward to updating the market throughout the rest of this year on our progress."
Horizonte is developing Araguaia as Brazil's next major ferronickel mine. It is a Tier 1 project with a high-grade scalable resource based in the south of the renowned Carajas mining district in north-east Brazil's Para State.
A feasibility study for the project is made up of an open-pit nickel laterite mining operation that delivers ore from several pits to a central rotary kiln electric furnace metallurgical processing facility.
Araguaia's development is divided into two stages, the first of which will see it process 900,000ts of dry ore feed per year to produce 14,500 tonnes of nickel per year for an initial 28-year mine life. A second stage will then increase the project's production capacity to 29,000 tonnes of nickel per year by adding a second process line, increasing its mine life to 26 years.
Using a conservative US$14,000/t nickel price, this Stage 2 scenario would generate an estimated net present value of US$741 million and an internal rate of return of 23.8%. However, these figures increase to around US$1 billion and 30% when a US$16,000/t nickel price more in line with today's prices is used.
As it stands, Horizonte's market cap sits at just £60.8 million. With the financial firepower to develop Araguaia and fulfil its vast economic potential now behind it, this company's current valuation could soon end up looking very cheap as progress continues.
Author: Daniel Flynn
The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and MiningMaven Ltd are not responsible for the article's 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
Brazil-focused Horizonte Minerals (LSE:HZM; TSX:HZM) has revealed that it is in a strong position to trade out of the current lockdown with £17 million cash on hand - £11 million ahead of the same period last year.
The London-headquartered nickel developer said in a quarterly report for the three months to 31 March 2020 that it was “well-funded” to advance its key prospect in the state of Para in the north of Brazil.
The 100%-owned Araguaia project is considered Brazil’s next major ferronickel mine. Feasibility studies put the mine’s lifespan at 28 years, with 52,000 tonnes of ferronickel produced annually for a total production run worth $1.6 billion. Civil engineer Pedro Rodrigues dos Reis joined the Horizonte team in October 2019 to advance Araguaia as project director.
Work is underway to take Araguaia from the study stage to being “implementation ready”, said Horizonte. All major workstreams are continuing as planned, it said, while project financing is on schedule with “no negative effects” as yet seen from the pandemic. By the time Araguaia comes into production in 2022, the price of nickel is expected to reach $16,150/t, according to market analysts.
The AIM and TSX-listed firm did report some short-term headwinds, including an increase in its pre-tax losses from £482,000 to £1.02 million for the period, due to a lack of revenue coming through in lockdown. But due to a weakened dollar, the company reported operational profits rising to £266,988 in the three months to 31 March 2020 compared to a £574,000 loss in the same period last year.
Market strong
The nickel market has remained buoyant since the Covid-19 pandemic breakout, driven by some long-term trends and some newer factors. Across 2019 the annual nickel price clipped to its highest since 2014.
Why? Well, there has been significant supply reduction because of the Indonesian government making the surprise move to bring forward an export ban from January 2022 to January 2020. On the demand side, interest in rapidly growing electric vehicle markets continues. The metal is highly prized for its use in lithium-ion batteries that power electric vehicles and is being consumed in ever larger quantities. According to metals market analysts Roskill between now and 2029:
“The push for automotive electrification is set to provide a dramatic upside to nickel. Its outlook is supported not only by the rapid volume of growth of the electric market, but also owing to the increased intensity of use of nickel, as part of efforts to improve the energy density of batteries and extend driving range.
“[Over the next decade] Roskill forecasts that nickel use in batteries will grow from around 3%-4% of nickel demand, to account for as much as 15% to 20% of the market.”
Horizonte’s share price has recovered strongly from recent lows in the wider market crash. In fact, it has added 70% since late March to hit 2.82p in early May trading.
Author: Mark Sheridan
The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, does not a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven 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 MiningMaven Ltd are not responsible for the article's 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
