RE: AGM10 May 2019 09:34
Section 2:
In a peer group comparison with other Brazilian Nickel producers A. reserve ore grade is the best, and very few next generation projects are as low on the cost curve as A. Regarding V. this is a very exciting resource, comparing V. to Australian peers we eclipse our competitors. V. PFS is due mid year so V. is advancing so that in the second half of the year marketing can begin. Looking at the work plan for V. in 2019, the company have leased site premises (extensive) from the Vale S11D project, which is local to the V1 and V2 deposits. The site is very close to power (11Km), water, roads etc. The test work on high grade FeNi is complete and we are in the final stages of the Nickel and Cobalt Sulphate testing, it has been delayed by four or five weeks but there are no red flags. Vale permit was achieved but is being updated as 12 months of new monitoring data is required.
Then followed discussion by JM and SR about the funding strategy. (Please correct me if I have got any of this wrong). The finance package is at least a 12 month process, and despite a challenging market, there is a real appetite for Nickel and for finance of Nickel. There are seven international tier one banks, (French, European, USA) including Brazilian banks. JM talked of a possible syndicate of circa five as a possibility. Export credit guarantees from equipment exporting national governments would be part of the mix. Positive progress to date, looking at nine to twelve months.
An off-take agreement for FeNi30 is also part of the wider finance package with a specialist brought in to negotiate this side of the finance, looking at more than a single group here.
A royalty deal is also part of the package with the aim to get money up front i.e. this is non-dilutive. This will allow early works to begin and the company are currently looking to appoint a construction manager in anticipation of preliminary work streams.
An equity raise will not happen until the project finance is in place. JM said the down side of the above is that there is not a lot we can announce until the finance and royalty are in place. A royalty will be a signal to the market that there is tangible progress. Timing? End of Q1 Q2 next year for package, and royalty Q3 this year to allow advance of project, e.g. road and bridge building.
JM went on to say that Nickel stands out in the commodity space, A. is a scalable asset with the potential to deliver 50 or 60KT of Ni per year in one trucking distance space. The team is expanding, with the addition of a mining engineer and others as we move into the next stage. HZM has mirrored the rest of the AIM index, there was a big correction at the end of 2018, however in the second half of the year into next year it should be better. Our assets are becoming better as time and the project progresses.
JM gave the example of Largo Resources, vanadium mine in Brazil, last month it posted £500m profit and is worth £1.2bil. Vermelho and Araguaia
Sign In
Follow the stocks
