REG - Horizonte Minerals - Araguaia Nickel Project Construction on Schedule
05/10/2022 09:30
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RNS Number : 7732B Horizonte Minerals PLC 04 October 2022
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018 ("MAR").
For immediate release
04 October 2022
Horizonte Minerals Plc
("Horizonte", the "Company" or the "Group")
Araguaia Nickel Project Construction on Schedule
Horizonte Minerals Plc (AIM: HZM, TSX: HZM) a nickel company developing two
Tier 1 assets in Brazil, is pleased to provide a progress update for its
flagship 100% owned Araguaia Nickel Project ("Araguaia" or the "Project").
Summary of Progress at Araguaia
· Construction is progressing to schedule with overall project
progress of approximately 16% as at 30 September 2022 and Engineering
approximately 71%
· US$375m of capital commitments on budget as of the end of August
2022
· No lost time injuries recorded to date, with over 375,000 hours
worked.
· Project remains on schedule to deliver first nickel in Q1 2024
· Inflationary pressure combined with engineering improvements to
de-risk the operation have resulted in a 12.6% cost increase with total
project capex now forecast at U$537million
Horizonte's CEO, Jeremy Martin said, "We are pleased with the progress that
has already been made at Araguaia, with the Project remaining on schedule to
produce first nickel in Q1 2024. There has been substantial progress in the
four months since we mobilised to site and broke ground in May with the
foundations of the furnace and rotary kiln well advanced and earthworks close
to complete.
The project team is focussed on ensuring that the site is prepared ahead of
the upcoming wet season. Site drainage is well advanced, access roads and
bridges are being upgraded to the standard required for year-round operation
and the mains power to site is close to being energised. This work is all
designed to ensure we are able to maintain a safe working environment, while
sustaining the high productivity levels seen to date and going forward.
We have updated our forecast operating costs and are pleased to report that we
believe Araguaia is and will remain in the lowest cost quartile versus a peer
group who, over the last 24 months, have seen significant operational cost
increases. By using the low-cost hydroelectric power available to Araguaia, we
will ensure that our high grade FeNi product will be a new leading low carbon
emissions product in the market.
I am also pleased to announce that we will be advancing the engineering work
of the 2nd Line at Araguaia with the objective of producing an AACE class 3
capital cost estimate and advancing the design to basic engineering. As part
of this work, we will look at the option of adding a nickel matte converter
into the plant flowsheet providing the optionality to convert a portion of the
FeNi output to nickel matte, a product that has the potential to be sold
directly into the battery metal supply chain. The overall objective of this
engineering work is to potentially fast-track Araguaia towards a ~29,000 tpa
nickel producer.
Unfortunately we are not immune to global inflationary pressures and this
along with engineering improvements designed to de-risk the operation have led
to an increase in our forecast capital expenditures. However, through our
rigorous focus on cost discipline we expect to be able to limit the increase
to 12.6% which is broadly in line with the peak of the Brazilian inflation
cycle earlier this year and we are now taking proactive steps to ensure that
we have adequate access to capital through both equity and to enable first
utilisation under the senior debt facilities, targeted for Q4 2022.
Nickel, a critical metal in the clean energy transition, is showing
significant future demand growth and we hope to remain well positioned to
deliver our product into a robust market. We look forward to announcing
further updates on our development milestones as we advance Araguaia towards
production and Vermelho through Feasibility, ultimately transitioning
Horizonte into a large-scale Tier 1 nickel producer."
Detailed Information
Following the ground breaking at Araguaia in May 2022, good progress has been
achieved, with overall project progress of approximately 16% as at 30
September 2022, and site construction activities moving forward in accordance
with the planned construction schedule.
Early works including the municipal and state road improvements are nearing
completion ahead of the wet season, ensuring safe and secure access to the
site from the nearby township of approximately 46,000 people of Conceição do
Araguaia. The 13.8 kV local power line to support site construction is being
installed and planned to be energised in October. Companhia Paranaense de
Construção S.A. ("Copa") were awarded the Earthworks and Civil engineering
contract, currently approximately 41% and 4% advanced respectively, with work
focused on the furnace and rotary kiln foundations. The bulk earthworks scope
covering all key plant platforms is completed to the stage where concrete
foundations are being installed, with initial focus on the crusher retaining
wall and foundation, and the furnace foundation. Further, 45 piles have been
installed for the kiln foundations to date and work has begun on the water
storage reservoir. Main power line construction awarded to Remo Engineering,
with two work fronts established and tower construction underway. All major
and long-lead-time process plant equipment contracts have been awarded. The
furnace base plate components supplied by Hatch arrived on site on 3(rd)
October, with onsite assembly and erection expected to commence within the
next two weeks, and FLSmidth is also well advanced with manufacturing of the
rotary kiln. Further, the Company has secured all key equipment supply and
technical support services for the balance of the Araguaia process flow sheet
from leading global suppliers. Combined, these contract awards act as a
significant de-risking event for the Project.
Social programmes including SENAI vocational training continue, with 362
community members having already graduated or enrolled to provide a locally
sourced workforce for the construction phase and the ongoing operation of
Araguaia.
As part of working towards the Company's objective of producing 29,000 tpa
nickel at Araguaia an engineering study is planned for Line 2 with the
objective of providing an AACE Class 3 cost estimate and to advance the basic
engineering.
The Horizonte project team have worked diligently to mitigate inflationary
pressures on the Project budget to date which has included extensive efforts
to optimise quantities through lean design and engineering, maximising
competitive tension with Project suppliers and the successful deployment of a
business improvement culture across the organisation, yielding material cost
savings. Together, these efforts have allowed US$375m of capital commitments
to be placed on budget as of the end of August 2022.
However, notwithstanding the strong progress made to date and these cost
mitigation initiatives, the Project continues to face cost pressures driven by
global inflation, a robust construction and mining environment in Brazil and
rising interest rates, amongst others.
With a number of key local service contracts nearing award the Company now
forecasts that the total project capital expenditure is expected to be US$537
million, versus the US$477 million originally budgeted in November 2021.
Whilst the majority of this increase is driven by inflationary pressures the
Company has also opted to invest in additional EPCM and owners team resources
to further de-risk the Project schedule and seek to ensure delivery of first
nickel in Q1 2024, in line with the original plan.
Further Information
Using a nickel price of US$23,000/t, the Araguaia Technical Report (as defined
below) estimated a post-tax NPV8 of US$1.5B and post-tax IRR of 43%. Using the
same nickel price, the Vermelho Technical Report (as defined below) estimated
a post-tax NPV8 of US$3.4B and post-tax IRR of 39%. The feasibility study
economics for Araguaia and the pre-feasibility study economics for Vermelho
are both based on a nickel price of US$23,000/t and presented for information
purposes only to reflect the latest pricing information and are otherwise
based on all the same parameters as those underlying the economic analysis
presented in the Araguaia Technical Report and the Vermelho Technical Report,
respectively, which remain current. The Araguaia Technical Report parameters
do not include the forecast increase in the capital expenditure amount to
US$537 million.
Qualified Person(s)
David Hall acting a consultant to the Company is a qualified person as defined
in National Instrument 43-101, and has reviewed, approved and verified the
technical and scientific disclosure contained in this press release.
For additional information, including with respect to the economic parameters
discussed herein on the Araguaia and the Vermelho projects, and the key
assumptions and risks associated thereto, please refer to the Company's
technical reports entitled Feasibility Study for the Araguaia Nickel Project
Federative Republic of Brazil NI 43-101 Technical Report, dated November 2018
(the "Araguaia Technical Report") and Pre-Feasibility Study for the Vermelho
Nickel-Cobalt Project Federative Republic of Brazil NI 43-101 Technical
Report, dated October 2019 (the "Vermelho Technical Report") available at
www.sedar.com (http://www.sedar.com) . The Araguaia Technical Report remains
current and the economic parameters therein do not include the forecast
increase in capital expenditure at the Project.
Latest images from the Araguaia site
Aerial view of the primary crusher pad and entrance ramp
Preparation of the primary crusher retaining wall
Deep pile foundation activity within the main furnace area
Operating concrete plant with concrete slabs for the reinforced crusher wall
Arrival of Hatch furnace components in Brazil and first deliveries to site
For further information, visit www.horizonteminerals.com
(http://www.horizonteminerals.com/) or contact:
Horizonte Minerals plc info@horizonteminerals.com (mailto:info@horizonteminerals.com)
Jeremy Martin (CEO) +44 (0) 203 356 2901
Peel Hunt LLP (Nominated Adviser & Joint Broker) +44 (0)20 7418 8900
Ross Allister
David McKeown
Georgia Langoulant
BMO (Joint Broker) +44 (0) 20 7236 1010
Thomas Rider
Pascal Lussier Duquette
Andrew Cameron
Tavistock (Financial +44 (0) 20 7920 3150
PR)
Emily Moss
Cath Drummond
About Horizonte Minerals:
Horizonte Minerals plc (AIM & TSX: HZM) is developing two 100%-owned
projects in Pará state, Brazil; the Araguaia Nickel Project and the Vermelho
Nickel-Cobalt Project. Both projects are large scale, high-grade, low-cost,
low-carbon and scalable. Araguaia is in construction. The project is expected
to produce 29,000 tonnes of nickel per year to supply the stainless steel
market. Vermelho is at feasibility study stage and is expected to produce
25,000 tonnes of nickel and 1,250 tonnes of cobalt to supply the EV battery
market. Horizonte's combined near-term production profile of over 50,000
tonnes of nickel per year would position the Company as a globally significant
nickel producer. Horizonte is developing a new nickel district in Brazil that
will benefit from established infrastructure, including hydroelectric power
available in the Carajás Mining District.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact relating to the Company, certain
information contained in this press release constitutes "forward-looking
information" under Canadian securities legislation. Forward-looking
information includes, but is not limited to, the ability of the Company to
complete the acquisition of equipment and commence onsite erection as
described herein; forecasts of total capital expenditure for the Project;
statements with respect to the potential of the Company's current or future
property mineral projects; the success of exploration and mining activities;
cost and timing of future exploration, production and development; the ability
of the Company to achieve its goals in respect of growing its mineral
resources; the realization of mineral resource and reserve estimates and
achieving production in accordance with the Company's potential production
profile or at all. Generally, forward-looking information can be identified by
the use of forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "would", "might" or "will be taken", "occur"
or "be achieved". Forward-looking information is based on the reasonable
assumptions, estimates, analysis and opinions of management made in light of
its experience and its perception of trends, current conditions and expected
developments, as well as other factors that management believes to be relevant
and reasonable in the circumstances at the date that such statements are made,
and are inherently subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity, performance or
achievements of the Company to be materially different from those expressed or
implied by such forward-looking information, including but not limited to
risks related to: the inability of the Company to complete the acquisition of
equipment contemplated herein, on time or at all; exploration and mining
risks, competition from competitors with greater capital; the Company's lack
of experience with respect to development-stage mining operations;
fluctuations in metal prices; uninsured risks; environmental and other
regulatory requirements; exploration, mining and other licences; the Company's
future payment obligations; potential disputes with respect to the Company's
title to, and the area of, its mining concessions; the Company's dependence on
its ability to obtain sufficient financing in the future; the Company's
dependence on its relationships with third parties; the Company's joint
ventures; the potential of currency fluctuations and political or economic
instability in countries in which the Company operates; currency exchange
fluctuations; the Company's ability to manage its growth effectively; the
trading market for the ordinary shares of the Company; uncertainty with
respect to the Company's plans to continue to develop its operations and new
projects; the Company's dependence on key personnel; possible conflicts of
interest of directors and officers of the Company, and various risks
associated with the legal and regulatory framework within which the Company
operates, together with the risks identified and disclosed in the Company's
disclosure record available on the Company's profile on SEDAR at www.sedar.com
(http://www.sedar.com/) , including without limitation, the annual information
form of the Company for the year ended December 31, 2020, the Araguaia Report
and the Vermelho Report. Although management of the Company has attempted to
identify important factors that could cause actual results to differ
materially from those contained in forward-looking information, there may be
other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ materially from
those anticipated in such statements.
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