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
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