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(Sharecast News) - Nickel company Horizonte Minerals updated the market on the progress of the engineering and construction design for Line 1 of its fully-owned Araguaia Nickel Project on Monday.
The AIM-traded firm said that due to modifications in design and execution resulting from a thorough cost review, capital expenditure was predicted to rise by a minimum of 35% of the present budget.
As a result, the inaugural production was rescheduled for the third quarter of 2024.
Despite the changes, the company said it still had the support of its chief partners, given the substantial progress in the Araguaia Line 1 Project's construction and the anticipated feasibility study for Araguaia Line 2.
Horizonte said it was actively discussing with financial institutions and primary shareholders to devise a funding strategy to finalise construction.
Updates from the construction site were promising, with significant engineering drawings released, ore stockpiling starting in the last quarter, and the rotary dryer set up for final welding.
Additionally, 118 kilometres of the 126-kilometre, 230-kilovolt transmission line was now installed, and the water storage reservoir was nearly completed.
To ensure the project's smooth execution, several enhanced design alterations had been introduced, which, combined with unforeseen challenges from suppliers, had added to the overall cost.
Reta Engenharia was commissioned to evaluate the remaining capital outlay and schedule independently, considering the expanded scope, material and quantity discrepancies, and the extended timeline to initial production.
Horizonte said it expected a comprehensive update by the middle of the fourth quarter after the review.
Moreover, the feasibility study results for Araguaia line 2 were set to be released in the fourth quarter, with the cumulative output from both lines estimated to be 29,000 tonnes annually.
"We continue to make solid progress with construction at Araguaia Line 1 and are confident that the project is now significantly de-risked given the near-finalisation of detailed engineering and procurement, together with the detailed review of the costs to project completion, ensuring successful delivery," said chief executive officer Jeremy Martin.
"Despite the anticipated higher capital requirement, Araguaia remains a tier-1 asset that will deliver strong margins over its 28-year mine life once production commences next year.
"Moreover, the imminent completion of the Feasibility Study on line 2 will demonstrate Araguaia's capacity to support an annual production of 29,000 tonnes per annum."
At 1249 BST, shares in Horizonte Minerals were down 62.55% in London at 47p.
Reporting by Josh White for Sharecast.com.
