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Horizonte’s Araguaia project could deliver US$1.9bn in free cash

Since acquiring additional ground from Glencore last year, Horizonte's Araguaia project has got bigger and better

Examining drill core at Araguaia

The combination of two large nickel projects into one looks like it could pay off handsomely for Horizonte Minerals Plc (LON:HZM), which has just released the results of a pre-feasibility study for Araguaia in Brazil.

Previously this had been two projects lying within a few kilometres of each other, but held by very different companies. Horizonte, backed by North American major Teck, held the southern section, while Glencore (LON:GLEN) held the north.

But a deal struck in September of last year saw the two projects combined under the Horizonte umbrella.

Immediately the company began an economic analysis of potential development scenarios for the enlarged project, the results of which are available now.

The plan is to produce 14,500 tonnes per year of nickel in ferronickel over a 28 year mine life, with pre-production capex set at a relatively modest US$354 mln.

The figure is comparatively low because Horizonte is using a tried and tested rotary kiln technology to process its ore, as opposed to some of the more expensive, and less reliable leaching technologies that have been tried elsewhere. 

It means the company will be able to produce nickel at good margin even at today’s low nickel prices.

Breakeven for Araguaia is a nickel price of just under US$9,500. The current price is US$10.460 per tonne.

Assuming a long-term nickel price of US$14,000, the project will generate US$1.94bn in free cash.


Quick facts: Horizonte Minerals PLC

Price: 8.82 GBX

Market: AIM
Market Cap: £127.84 m

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Horizonte Minerals updates investors on upcoming milestones, calls nickel...

Horizonte Minerals Plc (LON:HZM) CEO Jeremy Martin tells Proactive Investors the company is gearing up for new milestones, including its economic assessment at the end of the year regarding its Araguaia nickel project in Brazil's Pará State. Martin also alludes to Horizonte's continued...

on 11/26/2018

2 min read