(Alliance News) - Horizonte Minerals PLC on Thursday unveiled a pre-feasibility study for a Brazilian project, which it described as a "significant" milestone.
Horizonte's study covers the Vermelho nickel-cobalt project in Brazil's Para state, of which it owns 100%.
The study confirms Vermelho as a "large, high-grade resource", Horizonte said, with a long life-of-mine. It can be a low-cost source of nickel sulphate for the battery industry, the company added.
The life-of-mine is 38 years, generating total post-tax cash flow of USD7.3 billion. Vermelho has an estimated post-tax net present value of USD1.7 billion and an internal rate of return of 26%.
At full capacity, Vermelho is expected to produce 25,000 tonnes of nickel and 1,250 tonnes of cobalt a year. The initial capital cost for getting the project producing is USD652 million.
"I am delighted to deliver the pre-feasibility study for the Vermelho nickel-cobalt project which represents another significant milestone delivered by the company this year," said Horizonte Chief Executive Jeremy Martin.
"The study now positions Horizonte as a multi-asset nickel developer with a combined net present value in excess of USD2.5 billion at current nickel prices across the Araguaia and Vermelho projects."
"The pre-feasibility study demonstrates Vermelho can be a significant low-cost supplier of nickel in the form of battery grade nickel-sulphate," Martin added.
The priority at Vermelho, Martin said, is to now find project partners and financing, and also start working on a full feasibility study.
The nickel market remains strong in both the short and medium-terms, he continued, driven by "robust" demand for stainless steel and the growing electric vehicle market.
"With a combined contained nickel inventory of over 4 million tonnes and the obvious synergies that come with having two world-class projects within 85 kilometres of each other in a stable and mining friendly jurisdiction, we have further cemented the Company as having one of the largest undeveloped nickel portfolios in the world," said Martin.
"With financing discussions underway to commence the construction of Araguaia and Vermelho demonstrating significant economic potential, Horizonte is well positioned, owning two high-quality projects at an advanced stage."
The Araguaia nickel project is south of the Carajas mining district, also in Para state.
Shares were 2.3% higher on Thursday at a price of 4.40 pence each.
By George Collard; georgecollard@alliancenews.com
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Horizonte Minerals (HZM)