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(Sharecast News) - Horizonte Minerals remained upbeat on progress on the construction of the Araguaia Nickel Project in Brazil on Monday, despite some challenges requiring an increase in the project's budget of more than a third.
The AIM-traded firm said it had achieved zero lost time injuries during nearly 5.1 million hours of work, with milestones including the installation of rotary kiln sections on support piers and the completion of the furnace shell, with roof installation in progress.
All critical equipment packages were either on-site or en route.
As of 30 September, the project had stockpiled 138,000 tonnes of ore averaging 1.92% nickel, while commissioning a 126-kilometre, 230-kilovolt power transmission line was underway.
Horizonte said it had invested $429m in the Araguaia project by the end of September but said that as of 2 October, it had faced challenges due to factors arising from detailed engineering work, including increased material quantities, scope changes, higher costs for the main electromechanical erection contract, and extended delivery schedules.
That, the board said, would necessitate additional financing, resulting in an expected 35% increase in the project's overall capital requirement from the current budget of $537m and a delay in first production until the third quarter of 2024.
To address that, Horizonte said it had retained Reta Engenharia to conduct a detailed capital cost and schedule analysis, set to be completed by the middle of the fourth quarter.
An independent technical advisor, nominated by senior lenders, would then review the updated costs.
Despite the challenges, Horizonte Minerals said it was committed to advancing construction and continuing financing discussions with its cornerstone shareholders and lenders.
Additionally, the company said it anticipated publishing the Araguaia Nickel Project line two feasibility study in the middle of the fourth quarter to double nickel production from 14,500 tonnes per annum to 29,000 tonnes per annum.
"Despite the current challenges, I am pleased to report that construction activities at the Araguaia Project continue to progress well, with a strong safety performance to date," said chief executive officer Jeremy Martin.
"Notwithstanding the expected increase in capital, the Araguaia project remains a tier-one nickel project with lower quartile C1 cash costs and a long mine life of 28 years producing a high grade, low impurity FeNi product.
"Discussions with the company's major shareholders and lenders to fund the project to completion are progressing."
Reporting by Josh White for Sharecast.com.
