Horizonte Minerals Plc, (AIM:HZM) (TSX:HZM)
(‘Horizonte’ or ‘the Company’) the nickel development company
focused in Brazil, is pleased to provide an update on its
operations covering its 100% owned flagship Araguaia nickel project
(‘Araguaia’) and the recently acquired Vermelho nickel cobalt
project (‘Vermelho’). Horizonte is a multi-asset company focused on
its objective of becoming a nickel producer with targeted
production at Araguaia in early 2021. The Araguaia Feasibility
Study (‘FS’) is scheduled for completion mid-year 2018.
Highlights
- Completion of the Vermelho acquisition from Vale SA;
- Successful fundraise for £9.2m ensuring the Company is fully
funded for 24 months to deliver the Araguaia and Vermelho 2018/19
work programmes;
- Araguaia Feasibility Study at an advanced stage with delivery
planned for mid-year 2018; and,
- Vermelho work programmes to include a 43-101 Mineral Resource
Estimate for the high-grade nickel-cobalt portions of the deposit
followed by a Preliminary Economic Assessment (‘PEA’).
Horizonte CEO, Jeremy Martin,
commented:“Having completed a successful fundraise in
early January where we saw continued support from our Institutional
shareholders in the UK and North America, 2018 is shaping up to be
a very exciting year for the Company. We are now fully funded for
the planned work programmes at both Araguaia and Vermelho over the
next 24 months. The recently acquired Vermelho nickel-cobalt
project is one of the largest nickel–cobalt deposits globally and
has a high-grade scalable resource that has undergone a full
feasibility study and a subsequent development decision by Vale.
Vermelho is a high quality asset with the potential to be a
significant value driver for the Company.
The core focus is advancing the Araguaia
Feasibility Study to completion in the near-term. A significant
proportion of the FS has now been completed, and we are currently
focused upon optimising the process flow sheet and plant site
layout to ensure an optimal outcome both operationally and from a
capital cost perspective. In addition, we are also looking at
the mining schedule based on the current higher nickel price
environment together with a trade off to transport high-grade
saprolite ore from Vermelho to the proposed RKEF plant at Araguaia
with the objective of optimising the project economics. The
Company believe that this increase in scope will add value to
the project, additionally we want to deliver a high-quality study
that can go directly into the detailed design and implementation
phase. Based on this additional work the FS is now scheduled
for completion mid-year 2018.
Elsewhere on the Araguaia project there has seen
positive progress working towards the award of the construction
licences and on the data collection and preparation of the
documentation for the power line into site.
Horizonte is now a multi-asset nickel and cobalt
company, the new Vermelho project adds a second development
opportunity and large-scale growth option with the resource
flexibility to either produce high grade ferronickel or nickel and
cobalt into the EV battery market depending on the selected process
route. All of this is against a backdrop of strengthening
commodities markets with a limited number of new nickel mines with
the ability to come online in the short term. I am confident that
during 2018, as the Company’s projects are advanced and de-risked
there will be significant value created for shareholders and I look
forward to updating the market throughout the year on
progress.”
Araguaia Nickel Project Feasibility
Study Update
The FS for Araguaia is designed around an open
pit mining operation targeting 900,000 tonnes per annum of ore
feeding a central processing Rotary Kiln Electric Furnace (‘RKEF’)
smelting facility, and designed to produce 14,500 tonnes of nickel
per annum contained in 52,000 tonnes of ferronickel. The current
mineral reserve supports a 28-year mine life with a 2 year
construction period. Work on the ground is nearing completion, with
the following work streams either in near final form or
complete:
Geology and Mining
The geology and mining sections of the study
being undertaken by Snowden Mining Industry Consultants (‘Snowden’)
include, the successful trial excavation programme where
approximately 27,000 tonnes of overburden and ore was extracted.
The programme confirmed good reconciliation between the estimated
grades/tonnes and the actual mined material. It also allowed the
collection of data related to slope stability, hydrogeological
conditions and material trafficability. Based on the positive
results from the trial excavation programme, the 43-101 Mineral
Reserve Estimate is being updated with the objective of converting
a portion of the current reserve from the Probable Category to
Proven. Snowden have also completed the 28-year, detailed mine
schedule with an integrated mine to mill strategy to cover ore
blending and homogenisation to ensure uniform ore feed to the RKEF
plant. Snowden have also gone to the market to obtain pricing
and select suitably qualified contract miners to undertake the open
pit mining operations.
Infrastructure and
Process Elsewhere
on the ground, Prime Resources (‘Prime’) have completed the
geotechnical drilling programme over the process plant site to
allow the design of foundations and heavy load structures.
Additionally, Prime have completed the design for the cooling water
dam, slag depository and the water pipeline to serve the RKEF
facility.
The work around the process design and
engineering sections of the FS which are being undertaken by Worley
Parsons Canada Services Ltd. (‘Worley Parsons’) are at an advanced
stage. Recent work has focused on the power line to ensure the best
route into the project is selected and once frozen the capital
costs can be calculated. The team is currently undertaking final
plant layout, capital equipment tenders and flow sheet optimisation
work to ensure that the RKEF plant delivers from an operational and
capital cost perspective.
Financial
Operating (‘OPEX’) and capital cost (‘CAPEX’)
work for the FS is ongoing. The OPEX and CAPEX are being updated
from the Araguaia Pre-Feasibility Study (‘PFS’) announced in Q4
2016. Horizonte remains focused on its objective of becoming a
low-cost nickel producer. Due to the recovery in a broad range of
commodity prices over the past 18 months, the Araguaia project
economics will need to factor in some higher OPEX inputs, such as
thermal coal and oil – both key inputs to the RKEF process. This
theme is common across the entire mining industry. Local
infrastructure, plant layout and design continue to be a focus as
we look to optimise the CAPEX element of the project.
Simultaneously, the nickel price environment has changed
significantly over the period since the PFS from around $9,000/t to
$13,000/t today and the positive effects of this will be factored
into the economic model.
Social & Environmental
Status
The FS Sustainability focus has been on creating
one integrated Social and Environmental Impact Assessment based on
International Finance Corporation (‘IFC’)/ World Bank standards.
IFC studies being undertaken in partnership with Environmental
Resources Management (‘ERM’) consultants include, but are not
limited to: Critical Habitat, Resettlement Action Plan, Air
Dispersion Modelling and Stakeholder Engagement
processes.
Strong integration across all disciplines within
the FS team ensured definition of optimal infrastructure layouts in
terms of combined economic, technical, social and environmental
viabilities. During the last 6 months baseline data collection has
been on-going, including new fauna and flora inventories, air
baseline data, meteorology data, hydrology and hydro geology data
as well as new consultations with individual landowners and key
stakeholder groups.
The Company has made significant progress in
de-risking Araguaia through licence approvals and construction
permit requests. Highlights include:
- Approval by the Federal Mining Agency (‘ANM’) of the Final
Exploration Report for Araguaia and the subsequent submission of
the Economic Mine Plan and Mining Servitude to ANM; and,
- Submission of the Construction Licence (Licença de Instalação)
for the mine, plant and water pipeline to the State Environmental
Agency (‘SEMAS’) as well as water-use permit requests to
SEMAS.
The sustainability team is currently focused on
working to obtain the Araguaia construction licences and will also
advance environmental studies and baseline data for the energy
Transmission Line.
Vermelho Nickel Cobalt Project
Update
The recently acquired project, purchased from
Vale SA, and now 100% owned by the Company, is located in the
Carajás Mining district in northern Brazil and within trucking
distance from Araguaia north. The project was advanced to
full feasibility by Vale with development approved in 2005, with
the objective of becoming Vale’s principal nickel operation.
However, with the US$17 billion acquisition of Inco in 2006 and the
subsequent integration of that company’s nickel division into Vale,
the Vermelho project was placed on hold.
Vale completed a full-scale pilot campaign that
achieved leaching recovery of 96% nickel and 95% cobalt and went on
to produce LME-grade nickel cathode.
Vermelho with a high-grade scalable mineral
resource with over 1Mt contained nickel and 43,000t of cobalt, is
one of the largest nickel–cobalt resources globally. The Vermelho
mineral resource is historic in nature and based on the report
titled Niquel do Vermelho Project - Supplementary Mining and
Resource Work report prepared for CVRD with respect to the Vermelho
nickel project in 2005 by Snowden.
During the course of 2018 Horizonte plans to
undertake the following work on the project:
- Commencing a 43-101 Mineral Resource Estimate looking at the
higher-grade nickel-cobalt portions of the deposit;
- Review the historic metallurgical test work and new work to
test the high grade saprolite parts of the deposit to confirm its
suitability for use in the RKEF flow sheet developed for Araguaia;
and,
- Confirm that the mixed hydroxide product developed by Vale can
be upgraded to produce nickel and cobalt sulphate for potential use
in EV battery products.
Subject to successful results from these initial
work steams and identification of suitable process routes the
Company will release a Preliminary Economic Assessment (’PEA’) in
H2 to demonstrate the potential value of the project.
Nickel and Cobalt Market
Developments
While not obviously evident from the 8% rise in
the average price in 2017, the nickel market noted a record annual
supply deficit, driven by increased demand which outstripped a gain
in supply. This started to feed through into the metal’s market
from June onwards, with the price 55% higher by the end of January
2018, breaching the US$14,000/t mark for the first time since May
2015. Current expectations are for a third year of deficit in
calendar 2018, resulting in further drawdown of above ground
stocks.
Stainless steel demand remains strong,
underpinned by growth in 300-series steel output, up 7% in 2017.
Estimates indicate primary nickel demand in stainless will
increase by almost 9% to more than 1.5Mt. Glencore quote “The
nickel market’s fundamentals are the best we’ve seen since
2006/2007, as evidenced by stock draws, demand rates across all
geographies and physical premiums, which are at 10-year highs.”
Comments out of Davos in January regarding the
US dollar, also played a part in spurring the price of commodities,
including nickel, with Wood Mackenzie recently upping its average
price forecast for the year to US$13,234/t, with a long-term
incentive nickel price of over US$20,000/t.
Meanwhile, the EV story continues to gather
momentum with several more of the traditional carmakers announcing
major investments in the space. A trend that is set to benefit a
suite of metals, including nickel and cobalt.
The story has already had a positive effect on
the cobalt market, with the metal’s 2017 average price more than
double that of a year earlier and showing continued strength so far
in 2018.
This announcement contains inside information
for the purposes of Article 7 of EU Regulation 596/2014.
For further information visit www.horizonteminerals.com or
contact:
Contacts:
Horizonte Minerals plc.Jeremy Martin (CEO) +44 (0)203 356
2901
Numis Securities Limited (Broker)John Prior/James Black/Paul
Gillam+44 (0)207 260 1000
FinnCap Ltd (NOMAD & Joint Broker)Christopher Raggett/ James
Thompson /Anthony Adams / Emily Morris+44 (0) 20 7220 0500
Shard Capital (Joint Broker)Damon Heath / Erik Woolgar+44 (0) 20
7186 9952
Tavistock (Financial PR) Gareth Tredway / Jos Simson /
Barney Hayward +44 (0) 20 7920 3150
About Horizonte Minerals:
Horizonte Minerals plc is an AIM and TSX-listed
nickel development company focused in Brazil, which wholly owns the
advanced Araguaia nickel laterite project located south of Carajás
and the Vermelho nickel-cobalt project located in the Carajás
mineral district of northern Brazil.
The Company is developing Araguaia as the next
major nickel mine in Brazil, with targeted production by
2021. The Project has good infrastructure in place including
rail, road, water and power.
Horizonte has a supportive shareholder structure
including Teck Resources Limited 14.7%, Canaccord Genuity Group
9.6%, Richard Griffiths 8.9%, Lombard Odier Asset Management
(Europe) Limited 8.6%, JP Morgan 8.3%, City Financial 7.6% and
Glencore 5.2%.
CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING INFORMATION
Except for statements of historical fact
relating to the Company, certain information contained in this
press release constitutes “forward-looking information” under
Canadian securities legislation. Forward-looking information
includes, but is not limited to, the ability of the Company to
complete the Acquisition as described herein, statements with
respect to the potential of the Company’s current or future
property mineral projects; the success of exploration and mining
activities; cost and timing of future exploration, production and
development; the estimation of mineral resources and reserves and
the ability of the Company to achieve its goals in respect of
growing its mineral resources; the ability of the Company to
complete the Placing as described herein, and the realization of
mineral resource and reserve estimates. Generally, forward-looking
information can be identified by the use of forward-looking
terminology such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate”, or “believes”,
or variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or
“will be taken”, “occur” or “be achieved”. Forward-looking
information is based on the reasonable assumptions, estimates,
analysis and opinions of management made in light of its experience
and its perception of trends, current conditions and expected
developments, as well as other factors that management believes to
be relevant and reasonable in the circumstances at the date that
such statements are made, and are inherently subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such forward-looking information, including but not
limited to risks related to: the inability of the Company to
complete the Acquisition as described herein, exploration and
mining risks, competition from competitors with greater capital;
the Company’s lack of experience with respect to development-stage
mining operations; fluctuations in metal prices; uninsured risks;
environmental and other regulatory requirements; exploration,
mining and other licences; the Company’s future payment
obligations; potential disputes with respect to the Company’s title
to, and the area of, its mining concessions; the Company’s
dependence on its ability to obtain sufficient financing in the
future; the Company’s dependence on its relationships with third
parties; the Company’s joint ventures; the potential of currency
fluctuations and political or economic instability in
countries in which the Company operates; currency exchange
fluctuations; the Company’s ability to manage its growth
effectively; the trading market for the ordinary shares of the
Company; uncertainty with respect to the Company’s plans to
continue to develop its operations and new projects; the Company’s
dependence on key personnel; possible conflicts of interest of
directors and officers of the Company, the inability of the Company
to complete the Placing on the terms as described herein, and
various risks associated with the legal and regulatory framework
within which the Company operates. Although management of the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements.
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