ferronickel

  • Horizonte Minerals to push forward at Araguaia after completing $25m Orion royalty deal (HZM)

    Horizonte Minerals (LSE:HZM) sat at 4p on Monday morning after confirming the drawdown of $25m worth of funding towards its Araguaia ferronickel project in the Para state of Brazil.

    As announced in August, Orion Mine Finance has provided an upfront $25m cash payment to Horizonte in exchange for a 2.25pc royalty on Araguaia. This royalty applies only to the first 426,429ts of contained nickel within the ferronickel produced and sold at the asset. This volume is equivalent to the nickel production estimated over Araguaia’s life of mine as per its stage one feasibility study (FS).

    Orion is a significant player in the mining financing space, deploying around $1.5bn in royalties, streams, debt, and equity over the past three years alone. The non-dilutive funding it has provided to Horizonte will support the business in advancing pre-construction work streams at Araguaia.

    Araguaia is a Tier 1 mining project with a high-grade scalable resource, located south of the Carajás Mining District in the Pará State of north-east Brazil.  The area boasts plenty of well -developed infrastructure such as roads, rail and hydroelectric power.

    Horizonte’s stage one FS for the asset centres around an open-pit nickel laterite mining operation that delivers ore from several pits to a central processing facility. Here, a single line rotary kiln electric furnace (RKEF) extracts ferronickel, used in the stainless-steel industry, from Araguaia’s ore. After an initial ramp-up period, the project will reach full capacity of c.900,000ts of dry ore feed per year to produce 52,000ts of ferronickel containing 14,500ts of nickel annually. Over an initial 28-year mine life, the FS design generates free cash flows after taxation of $1.6bn returning an IRR of more 20pc against on an initial capital cost of $443m.

    On top of this, Araguaia has been designed to allow for a second RKEF process plant, funding through operational cash flow. This stage two expansion would double Araguaia’s ferronickel output, providing for a 26-year mine life generating cash flows after taxation of $2.6bn with an estimated NPV of $741m and an IRR of 23.8pc. All of these figures were reached using a conservative base case nickel price forecast of $14,000/t, well below the $16,462/t at which the metal presently sits.

    Monday’s news comes just days after Horizonte announced that a pre-feasibility study (PFS) confirmed its Vermelho project as a ‘large, high-grade resource, with a long mine life and low-cost source of nickel sulphate for the battery industry’.

    The work estimated that the property, also based in Para, would have a 38-year mine life generating total cash flows after tax of $7.3bn. Elsewhere, the PFS gave Vermelho – which produces nickel suitable for use in electric vehicle batteries- an IRR of 26pc and an estimated base case post-tax NPV of $1.7bn against an initial capital cost estimate of $642m. Finally, the work put Vermelho’s estimated annual production at 25,000ts of nickel and 1,250ts of cobalt when operating at full capacity. This translates into a cash cost of $8,020/t of nickel, defining the project as a low-cost producer.

    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, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    MiningMaven Ltd, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven Ltd is not responsible for its content or accuracy and does 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 well positioned to see out coronavirus as Araguaia work continues (HZM)

    Junior nickel player Horizonte Minerals(LSE:HZM) reassured investors that coronavirus is yet to have a significant impact on its operations on Tuesday.

    The firm said it remains well funded to achieve its goals and see out the spread of COVID-19 – which was declared a pandemic by the World Health Organization earlier this month. To date, nearly 200,000 cases of the virus have been reported globally, claiming 7,500 lives and causing markets around the world to crash at levels not seen since the financial crisis.

    As the world aggressively tackles the ongoing outbreak, we acknowledge there is growing uncertainty around economic growth and underlying business conditions,” said Horizonte. “While it would be inconsiderate to describe the situation as ‘business as usual’, we continue to work on the various workstreams required to achieve our stated goals.”

    Among Horizonte’s goals is the development of its flagship Araguaia project to the construction-ready phase.

    Araguaia is 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 gives 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.

    These figures are based on a nickel price of $14,000 a tonne - well below the $18,000 a tonne the metal was trading at in October before its collapse in the face of falling stainless steel demand and coronavirus’ spread. Despite the short-term weakness, Horizonte believes that nickel market fundamentals remain “robust” for the medium-term and aligned with the planned start of Araguaia’s production.

    The firm also hopes to progress discussions around financing Araguaia’s ultimate construction into a mine. 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.

    Alongside Araguaia, Horizonte is also developing the Vermelho nickel-cobalt project in Brazil, which it plans to use to supply nickel and cobalt to the EV battery market. A pre-feasibility study released in October last year confirmed the asset as a “large, high-grade resource with a long mine life and low-cost source of nickel sulphate for the battery industry”. Specifically, the work gave the project a 38-year mine life estimated to generate total cash flows after tax of $7.3 billion.

    Elsewhere in Tuesday’s release, Horizonte its team on the ground in Brazil were well prepared to continue work safely.

    “We have implemented strict health and safety policies specifically tailored to COVID-19,” said the firm. “To date, we have had no reported cases of the virus at any of our Brazil offices nor in London.”

    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, 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 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.