Araguaia

  • Horizonte Minerals leaps to 2020 highs as it delivers maiden sustainability report (HZM)

    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 Horizonteis 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’stotal 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’sevolution 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 Horizontehas 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’sshare 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 Horizontepushes 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

  • Horizonte Minerals soars after revealing US$325m financing package for Araguaia nickel project (HZM)

    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

  • REPORT: Horizonte Minerals- Accelerating plans to bring the Araguaia ferronickel project into production (HZM)

    Against a backdrop of surging nickel prices (up over 50% year-to-date), Horizonte Minerals (LSE:HZM) has made great progress at its wholly-owned Araguaia nickel project in Brazil over the course of 2019.

    Araguaia is a tier one mining asset with a high-grade, scalable resource that Horizonte plans to develop as Brazil’s next major source of production for ferronickel – an alloy that contains c.30pc nickel and c.70pc iron.

    With first production scheduled for 2022, MiningMaven has taken a deep dive into Araguaia, its background, and Horizonte’s two stage expansion plans as well as looking at why the project’s economics are so appealing.

    Please click here to read our report in full.

     

     

     

  • Stimulus measures and a strong balance sheet favour Horizonte Minerals in trying times (HZM)

    The future of many junior miners has become rather less clear over the last few weeks in the face of falling commodity prices and uncertainty around when investor demand, cash, and liquidity will return to the market. However, Brazil-focused nickel player Horizonte Minerals (LSE:HZM) could present an exception to this trend.

    Horizonte’s flagship asset is Araguaia, a tier-one ferronickel mining project located south of the Carajas mining district in north-east Brazil’s Para state. A stage two expansion case devised in a 2018 feasibility study gave the property a 26-year mine life, generating cash flows after tax of $2.6 billion with a $741 million net present value and a 23.8% internal rate of return. The company is also developing the Vermelho nickel-cobalt project in Brazil, which it plans to use to supply nickel and cobalt to the electric vehicle battery market.

    The first critical ace in the hole for Horizonte is its funding situation. Although construction on Araguaia is ready to begin – it had not commenced before the Covid-19 outbreak was deemed a pandemic. This means the company will not have to spend cash on continuing or halting production during the outbreak either for financial or health and safety reasons. Handily, this leaves the company fully-funded for the rest of the year. This is an enviable position that few junior miners can currently boast.

    It is also worth noting that Horizonte recently announced that it remains committed to progressing discussions around financing Araguaia’s ultimate construction into a mine in spite of the Covid-19 outbreak. It got the ball rolling here last August, when it revealed a $25 million royalty funding agreement for the property with Orion Mine Finance – one of the world’s most prominent mining investors.

    Macro forces

    Elsewhere, Horizonte is positioned strongly from a macro perspective. Putting aside recent market events for one moment, the firm plans to supply nickel to both the electric vehicle (“EVs”) and stainless-steel industries from its two projects. These are two huge sector opportunities. JP Morgan sees EVs accounting for 30% of global vehicle sales in 2025 compared to 1% in 2016. Meanwhile, the global stainless steel market is forecast to grow at a 6.3% CAGR through to 2027 and looks set to benefit from stimulus packages directed at construction materials.

    Returning to the present day, it is no secret that the world has faced an unprecedented selloff in recent weeks. However, central banks are now stepping in to add massive liquidity and shore up shaky markets. The US Federal Reserve has announced what it called an “unlimited” buy up of mortgage-backed securities and corporate debt, the Bank of England has slashed interest rates to 0.1%, and the European Central Bank has announced plans to buy up to 750 million euros in government and private sector debt, as well as commercial paper, by the end of 2020. 

    With this anchor in place, things look much more encouraging for the nickel market over the long-term – the timeframe of most interest to Horizonte. For example, Wood MacKenzie recently noted that while Covid-19 is having a severe near-term impact on nickel prices, there will be little to no impact in the longer term. As such, the analyst firm has maintained its long-term view on nickel. 

    This is highly encouraging for Horizonte, which based its economics for Araguaia around a nickel price of $14,000 per tonne. This looked conservative in October, when the metal was trading at $18,000 a tonne. Using this figure in the stage 2 expansion case would have increased the project’s NPV(8) to $1.48 billion from $741 million, and its internal rate of return to 34.8% from 23.8%. Once commodities and nickel start to rebound, then this upside will once again become a serious possibility.

    A strong position

    The market situation now heavily favours juniors with little to no debt, which is where Horizonte stands out among its peers. Alongside this, a lack of ongoing cash burn at the construction-ready phase puts the firm in prime position to make the best gains when lockdown procedures come to a close and markets skyrocket as manufacturing and production spins back up again.

    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 own 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.