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(Alliance News) - Shares in Horizonte Minerals PLC on Monday plunged as it announced that it has not been able to secure the funds needed to complete the Araguaia nickel project in Brazil.
Horizonte Minerals is a nickel development company focused on projects in Para State, Brazil. Its shares were down 77% at 0.55 pence each.
"Horizonte must now consider alternative options for the company's subsidiaries in the interest of its secured creditors, which may include raising financing at the subsidiary level, a sale of the project whilst in care and maintenance, the liquidation of the assets of the project, or other options available under Brazilian laws. The company does not believe that any of these options are likely to recover any value for the company's shareholders," it warned.
Last month, Horizonte said it was holding talks to restructure its debt in conjunction with seeking a fully funded solution and is actively engaging existing and new potential investors.
It said it continued to provide information to senior lenders, and existing and new potential investors including the full financing amount, and said it expected to require extra funding around mid-April to implement such a full funding solution.
Horizonte said the outcome was unlikely lead to a positive outcome for existing shareholders, noteholders and creditors of the company. It also warned that if it becomes apparent that an interim and/or a fully funded solution is unlikely to be found, the company will have to look at all potential options which could include putting the group's projects in care and maintenance, liquidation of assets, and or starting formal administration procedures in the UK.
In December, Horizonte secured a USD20 million package to provide liquidity, while it worked towards a full funding solution.
The funding package is provided by Orion Mine Finance Fund III (F) Ltd, Glencore International AG and La Mancha Investments Sarl.
The funding comprises a USD15 million senior secured loan facility, and the release of USD5 million by OMF Fund III (Cr) Ltd. The latter "will allow for critical construction streams to advance" at Horizonte's flagship Araguaia nickel project, and be used for general working capital purposes.
The extra USD5 million is currently secured at Horizonte's second wholly-owned project in Brazil, Vermelho. Once the funding package closes, USD11 million will remain segregated for development there.
In March, Horizonte announced that senior lenders had agreed to extend waivers, including deferral of interest from the interim funding package announced on December 27, until March 29. It since been extended to the end of April.
By Sabrina Penty, Alliance News reporter
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