LONDON (Alliance News) - Nickel development company Horizonte Minerals PLC said on Monday it is on track on acquire a construction licence for the Araguaia ferronickel project in Brazil, following the publication of its feasibility study.
On development, the project is expected to produce an average of 14,500 tonnes of nickel contained within 52,000 tonnes of ferronickel per annum, with an initial 28-year mine life, expected to generate post-tax cash flows of USD1.6 billion.
Araguaia has a Measured & Indicated resource of 119.3 million tonnes, and an Inferred resource of 12.9 million tonnes.
The case study economics assumes a flat nickel price of USD14,000 per tonne for the entire mine life, and using the consensus mid-term nickel price of USD16,8000 per tonne, post-tax net present value comes up to USD740 million with an internal rate of return of 28.1%
Araguaia's capital cost estimate stands at USD443 million, which including USD65.3 million in contingencies equal to 17% of the total capital expenditure budget.
Looking forward, a process plant has been designed to allow for a stage two expansion with the addition of a second process line in the future once the first is fully commissioned, allowing for capacity to double the nickel output.
A preliminary economic assessment is underway for the expansion, and is expected to be published in late 2018.
In addition, the Horizonte has obtained the preliminary environmental licence and water permit for full-scale operations at Araguaia and is set to obtain its construction licence for the first quarter of 2019.
"The completion of the FS has taken longer to complete than originally forecast. The schedule change was to ensure that the quality of the engineering and other deliverables were to a high standard, and to include the option, within the design, to add a second line that would double the capacity to 29,000 tonnes per year of nickel," said Chief Executive Officer Jeremy Martin.
"With the completion of the FS the priority now is to secure project funding and to advance the early works packages. The project is unleveraged and is in a strong position with no agreed offtake, royalty or nickel streams, giving maximum value and flexibility going into the financing process," Martin added.
Shares in Horizonte Minerals were down 12% at 3.25 pence on Monday.
Horizonte Minerals (HZM)