Horizonte Minerals (LON:HZM), the AIM quoted exploration and development company working in Brazil and Peru, has agreed a deal with Canadian mining group Teck Resources to buy its advanced Araguaia nickel project located in the Carajás mineral district of northern Brazil. The idea behind the plan is to combine the Araguaia project with Horizonte's Lontra project in a move that the two sides believe has the potential for a 100m tonne resource with grades comparable to other world class projects in Brazil. Shares in Horizonte responded with a rise of 20% to 10.5p early on.

The purchase, which is conditional on shareholder approval, would constitute a reverse takeover under AIM rules. It would also involve a £5.13m cash raise in a share placing priced at 10p in order to fast-track the development of the combined nickel project as well as acquire the remaining 50% interest in the Lontra project not currently held by Horizonte.

Separately, Horizonte has entered into a non-binding memorandum of understanding with one of its major shareholders, Anglo Pacific Group (LON:APF), which would see Horizonte accept US$0.5m in exchange for an option for Anglo Pacific to acquire a net smelter royalty (NSR) on production at Araguaia. The option is contingent on the completion of a positive, industry standard pre-feasibility study at Araguaia. If it takes up the option, Anglo Pacific would pay Horizonte a further US$12.5m and receive NSR at the rate of 1.5% of revenue on production at Araguaia up to 30,000 tonnes per annum, reduced by 0.02% for every 1,000 tonnes per annum above this rate. Above 50,000 tonnes per annum that rate will be 1.1% and fixed at this level.

Jeremy Martin, Horizonte’s chief executive, said: “This is a transformational deal for Horizonte and takes the company to the next level in terms of valuation. The consolidation of the Araguaia and Lontra nickel projects creates the potential for a 100 million tonne resource with grades comparable to other world-class projects in Brazil. The company will be initiating an 8,000 metre resource drilling programme in the next few weeks, with the aim of delivering a JORC-compliant resource by the first quarter of 2011. Horizonte now has two committed major mining partners: AngloGold Ashanti, with a £5.3m exploration alliance to generate and develop new gold targets in Brazil, and Teck, our new strategic 50%…

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