Last checked at 
LONDON (Alliance News) - Horizonte Minerals PLC Tuesday said it prefers a single-line 15,000 tonnes of nickel per year base case for its Araguaia development in Brazil, following a Pre-Feasibility Study at the site.
The exploration and development company, which focuses on projects in Brazil, said the pre-feasibility study showed two options for the development of the site.
The first and preferred option has a post-tax USD519 million net present value at an annual discount rate of 8% and 20% internal rate of return based on a 900,000 tonnes of ore per year single-line rotary kiln-electric furnace process plant, leading to 15,000 tonnes per year of nickel product.
This option is for a 25-year life-of-mine and is expected to have cash costs of USD9,166 per tonne over the full life, leading to a projected generation of USD1,766 billion post tax over its life.
The base case also shows a pre-production capital figure of USD582 million with 1.76% nickel as the average feed grade for the first 10 years of production.
The company added that its substantial resource base of 71.98 million tonnes graded at 1.33% nickel in the indicated category and 25.35 million tonnes at 1.21% nickel in the inferred category allow it the flexibility to add a second process line to increase overall nickel production.
The second option which the company has is to create a post tax USD1,204 billion net present value larger site at an annual discount rate of 8% and 21% internal rate of return, based on 2.7 million tonnes per year of ore through a twin-line RKEF process plant.
Horizonte said the first option had been chosen as it maximises financial returns, minimises both technical risks and capital exposure, and is more in line with current market trends towards low capital expenditure, high return sites.
"In terms of the nickel market, the recent ban on direct shipping nickel ore from Indonesia has seen the commodity in the spotlight since the beginning of 2014 and has already had a significant impact on the nickel price," Chief Executive Jeremy Martin said in a statement.
"There is anticipation of tightening on the supply side resulting in increased nickel prices in the mid to longer-term, at the time when we anticipate Araguaia being brought into production," Martin added.
The next phase for the site will be to proceed towards a full Feasibility Study, which is expected to include infill drilling to define a Measured Resource, additional metallurgical test work, trial mining, completion of its Social and Environmental Impact Assessment and detailed engineering, logistics and infrastructure studies.
Horizonte Minerals shares were up 9.1% to 7.50 pence, putting it in the top three AIM movers in early trading Tuesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
