Horizonte Minerals Plc (LON:HZM, TSE:HZM) has confirmed that the feasibility study at its Araguaia nickel project in Brazil is on track to be completed by the end of 2017.
The study, which is already underway, is investigating production scenarios for a 14,500 tonnes per annum nickel operation that uses the proven rotary kiln electric furnace technology.
Importantly, Horizonte is fully funded through to the completion of the feasibility study.
“Despite difficult nickel pricing, 2016 was a year of growth for Horizonte and the year ahead will see us transform into a near-term nickel producer, taking advantage of the forecasted rise in the price of the metal,” said chairman David Hall.
Speaking of nickel prices, the net present value of Araguaia based on a long-term price of US$12,000 per tonne is around US$328mln – and that’s after tax.
The likes of Morgan Stanley and Credit Suisse are both fairly bullish on the outlook of the metal. Assuming a consensus mid-term nickel price of US$14,000 per tonne, the post-tax NPV increases to US$581mln, Horizonte said.
Even at today’s relatively low price of US$10,150 tonne, the project would still be sustainable.
In its final results for the year to 31 December 2016, Horizonte posted a pre-tax loss of £1.75mln (2015: £1.54mln).
Following a couple of successful placings which brought in £9mln before expenses, the company had £9.32mln of cash in the bank at the end of the period, compared to £2.74mln at the end of 2015.
Those placings saw JP Morgan come on board to join others such as Henderson and City Financial.
City broker finnCap thinks there is more than 100% upside to Horizonte based on its current valuation and it reiterated its medium term price target of 8p again today.
Shares in Horizonte closed at 3p on Thursday.