REG - Horizonte Minerals - Acquisition of Ferronickel Processing Equipment

Horizonte MineralsAnnouncement

09/12/2021 07:00

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RNS Number : 0512V  Horizonte Minerals PLC  09 December 2021

NEWS
RELEASE

09 December 2021

 

Acquisition of Ferronickel Processing Equipment

 

Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) ("Horizonte" or the "Company")
the nickel development company focused in Brazil, is pleased to announce that
its wholly owned subsidiary Araguaia Niquel Metais Ltda. ("ANM") has entered
into an asset purchase agreement ("Agreement") to purchase certain new and
unused ferronickel processing equipment (the "Processing Equipment") from
Companhia Brasileira de Alumínio ("CBA"), a company listed on the B3
(Brazilian Stock Exchange), controlled by Votorantim SA ("Votorantim"), one of
the largest industrial and financial investment holding companies in Latin
America.

 

Highlights:

· The Processing Equipment comprises the key components of a conventional
rotary kiln electric furnace plant ("RKEF"), excluding the furnace, and is
expected to provide meaningful synergies in relation to the development of
Horizonte's 100% owned Araguaia ferronickel project ("Araguaia" or the
"Project")

· The Processing Equipment is designed and manufactured by leading
international vendors with similar capacity and technical specifications to
Araguaia and is already located in Brazil at CBA's Niquelândia Operations

·  The Company is evaluating the use of selected components as spares and
back up as part of the development of the first RKEF line at Araguaia but sees
the key value in utilising some of the large-scale equipment, including the
rotary kiln, to fast-track and lower the cost of development of a second RKEF
line at Araguaia

·   Use of the Processing Equipment will be integrated into a new study on
the development of a second RKEF line at Araguaia

·  The Agreement provides for a low upfront cost of US$600,000 payable in
cash on signing with total potential consideration of up to US$7,000,000, with
the balance payable upon the achievement of future milestones related to the
development and operation of Araguaia

 

Horizonte CEO, Jeremy Martin commented: "The acquisition of the Processing
Equipment is a compelling opportunity for Horizonte to fast-track the
development of a second RKEF line at Araguaia, to reach 28,000 tonnes of
nickel per year, and at a lower development cost.  We expect to be able to
realise significant savings on our planned development costs given the low
cost acquisition of this high quality equipment relative to the original
purchase cost of approximately US$60 million.

 

Today's news follows the announcement of the US$633 million funding package
for the development of the first RKEF line at Araguaia. Fully funding phase
one of the Project is transformational for Horizonte and the ability to
fast-track phase two highlights our ambition to become a globally significant
nickel producer. The execution of construction of the first RKEF line is our
priority, but I believe this is a significant step in realising our vision for
the full potential at Araguaia.

 

With a strong outlook for the nickel price underpinned by growing stainless
steel and EV battery demand driven by the clean energy transition and limited
new supply with comparable credentials to Araguaia, Horizonte is well placed
to capitalise on the significant emerging nickel market deficit."

 

Background

 

The design and manufacture of the Processing Equipment was originally
commissioned by Votorantim in 2006, as part of a proposed ~US$250 million
ferronickel development at Niquelândia in Goiás State, Brazil. The project
was expected to have an initial mine life of 20 years, with a capacity of
approximately 42 ktpa of ferronickel (~10 ktpa of contained nickel) however,
construction was halted due to the fall in nickel prices in 2009.  The
project was placed on care and maintenance during construction and ultimately
never completed.

 

Horizonte and its engineering contractors have undertaken substantial due
diligence on the Processing Equipment and concluded that it is well suited for
use as part of the development of the second line at Araguaia. The Processing
Equipment was manufactured by leading international suppliers and has been
well maintained by CBA since the project was placed on care and maintenance
with very similar technical specifications and design capacity to that being
proposed at Araguaia. The Processing Equipment includes the following key
categories of equipment: substation, crushing, rotary kiln, coal system,
refining, conveyors, electrostatic precipitator, cooling tower and pneumatic
dust collection.

 

Transaction Structure

 

ANM has entered into the Agreement with CBA to acquire 100% of the ferronickel
Processing Equipment. As part of the transaction CBA will continue to perform
care and maintenance activities going forward until it is removed from the
existing site.

 

The total consideration of up to US$7 million payable by ANM will be paid
according to the following schedule:

a)    US$600,000 payable on execution of the Agreement;

b)    US$950,000 upon the removal of 80% of the Processing Equipment from
CBA's Niquelândia operations;

c)    US$950,000 upon reaching 50% completion of Araguaia plant
construction;

d)    US$1,150,000 upon production at Araguaia reaching 90% of nameplate
capacity for a period of 60 days, on average, and with up to 50% of such
amount payable in Horizonte shares, at Horizonte's election; and

e)    US$3,350,000 payable by Horizonte in three equal annual instalments
with the first instalment due within 45 days of the first sale of ferronickel
to a third party. Horizonte may choose to pay the outstanding balance of this
amount at any time of its choosing with up to 50% of the total able to be paid
in Horizonte's shares, at Horizonte's election.

 

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

 Anna Legge (Corporate Communications)

 Peel Hunt LLP (Nominated Adviser & Joint Broker)      +44 (0)20 7418 8900

 Ross Allister

 David McKeown

 BMO (Joint Broker)                                    +44 (0) 20 7236 1010

 Thomas Rider

 Pascal Lussier Duquette

 Andrew Cameron

 

About Horizonte Minerals:

Horizonte Minerals plc (AIM & TSX: HZM) is developing two 100% owned, tier
one projects in Parà 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 construction ready and 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 positions 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.

 

David J. Hall, the Chairman of the Company and a qualified person as defined
in National Instrument 43- 101, has reviewed, approved and verified the
technical and scientific disclosure contained in this announcement. For
additional information, including with respect to the economic parameters on
the Araguaia and the Vermelho projects, and the key assumptions and risks
associated thereto, please refer to the amended technical report entitled
"Feasibility Study for the Araguaia Nickel Project, Federative Republic of
Brazil" dated November 2018 (the "Araguaia Report"), with respect to the
Araguaia project and the amended technical report entitled "Pre-Feasibility
Study for the Vermelho Project, Federative Republic of Brazil" dated 31
October 2019 (the "Vermelho Report"), with respect to the Vermelho project,
each of which are available on the Company's profile on SEDAR at www.sedar.com
(http://www.sedar.com) .

 

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 as described herein, statements with
respect to the potential of the Company's current or future property mineral
projects; the ability of the Company to complete a positive feasibility study
regarding the second RKEF line at Araguaia on time, or at all, the success of
exploration and mining activities; cost and timing of future exploration,
production and development; the costs and timing for delivery of the equipment
to be purchased as described herein, the estimation of mineral resources and
reserves and 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,
the ability of the Company to complete a positive feasibility study regarding
the implementation of a second RKEF line at Araguaia on the timeline
contemplated 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 for of the Company for the year ended
December 31, 2020, the Araguaia Report and the Vermehlo 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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