Horizonte Minerals Plc, (AIM/TSX: HZM) (‘Horizonte’ or ‘the Company’) the nickel development company focused in Brazil, is pleased to publish the results of the Pre-Feasibility Study (‘PFS’ or the ‘Study’) for the 100% owned Vermelho Nickel-Cobalt Project (‘Vermelho, or ‘the Project’) in Brazil’s Pará State.
Highlights:
· The Study confirms Vermelho as a large, high-grade resource, with a long mine life and low-cost source of nickel sulphate for the battery industry;
· The compelling economic and technical results from the study support further development of the project towards a full Feasibility Study;
· A 38-year mine life estimated to generate total cash flows after taxation of US$7.3billion[1];
· An estimated Base Case post-tax Net Present Value1 (‘NPV’) of US$1.7 billion[2] and Internal Rate of Return (‘IRR’) of 26%;
· At full production capacity the Project is expected to produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt per annum utilising the High-Pressure Acid Leach process;
· The base case PFS economics assume a flat nickel price of US$16,400 per tonne (‘/t’) for the 38-year mine life;
· C1 (Brook Hunt) cash cost of US$8,020/t Ni (US$3.64/lb Ni), defines Vermelho as a low-cost producer;
· Initial Capital Cost estimate is US$652 million (AACE class 4), including US$97.7 million of contingencies (equating to approximately 18% of capital); and
· Vermelho is set to deliver significant socio-economic benefits for communities in the Pará state, including over 1,800 direct jobs in the construction phase, and over 600 jobs during operation, as well as additional economic and social development programs.
Today’s guest on the ValueTheMarkets podcast is Jeremy Martin, CEO of Horizonte Minerals (LSE:HZM). The company owns two Tier-1 advanced nickel projects called Araguaia and Vermelho, just 85 kilometres apart from one another in the Pará State, Brazil.
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Horizonte CEO, Jeremy Martin, commented;
“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. The Study now positions Horizonte as a multi-asset nickel developer with a combined NPV in excess of US$2.5 billion at current nickel prices across the Araguaia and Vermelho projects.
The PFS demonstrates that Vermelho can be a significant low-cost supplier of nickel in the form of battery grade nickel-sulphate. Over the 38-year mine life using the Base Case nickel price of $16,400, the operation is expected to generate cash flows after taxation of US$7.3 billion, an IRR of over 26%, and sits on the lower half of the global cost curve. If we apply the long-term Wood Mackenzie nickel price of US$19,800, the project IRR increases to 31% and the NPV to approximately $2.3 billion.
Importantly, the Vermelho project will also produce battery grade cobalt sulphate, another key component for the electric vehicle (‘EV’) battery industry with 60% of global supply currently sourced from a single country. The consumer driven EV market is trending towards both sustainability and ethically sourced materials, including nickel and cobalt, and we see both of the Company’s projects in Brazil as being attractive to end users who are focused on traceable, ethically sourced materials.
With the PFS now successfully completed, the priority now is to identify partners, secure funding and advance the project by undertaking a full feasibility study on Vermelho. We will look to the replicate the success achieved by the Coral Bay Nickel Corporation where the company is currently producing around 20,000 tonnes per year of nickel utilising a twin line HPAL plant. This was a low capex plant which has been operating successfully for the last 15 years.
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. 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 nickel market fundamentals continue to be positive for the short to long term, driven by robust demand from stainless steel growth and anticipated increase in EV penetration rates. Physical LME metal inventories continue to be drawn down to levels not seen in the last five years. This, combined with a lack of new major projects scheduled to come online in the short term, means that this is an opportune time to develop Vermelho.”
