LONDON (Alliance News) - Horizonte Minerals PLC shares rose on Monday after the company published the pre-feasibility study results for the Araguaia nickel project in Brazil that has delivered a net present value of USD581.0 million.
Horizonte shares were up 13% to 2.35 pence per share on Monday morning.
The miner updated the study to include both its own Araguaia project and a nearby project owned by mining giant Glencore PLC, which are being developed together under a previously signed deal.
The combined project, according to the study results, will produce 14,500 tonnes of nickel ferronickel over a 28-year mine life using a single-line rotary kiln electric furnace plant.
Based on a nickel price of USD14,500 per tonne, the project has been given a post-tax net present value of USD581.0 million, which would drop to USD328.0 million based on a nickel price of USD12,000 per tonne.
At that lower price assumption, the internal rate of return stands at 19.3% and at the higher price it rises to 26.4%.
The project is expected to deliver USD1.30 billion of free cashflow over the 28-year life of mine at the lower price of USD12,000 per tonne of nickel.
The first ten years of production will focus on higher grade material at an average grade of 1.96% and C1 cash costs will be "on the lower range of the global cost curve" at USD6,948 per tonne of nickel produced.
"The next major milestone in the development of Araguaia is the feasibility study which we anticipate starting in 2017. In parallel with this we will be looking at the development funding options available as well as offtake partners," said Jeremy Martin, chief executive of Horizonte.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Horizonte Minerals (HZM)
Glencore (GLEN)