REG - Horizonte Minerals - Araguaia Construction Update

Horizonte MineralsAnnouncement

24/04/2023 07:15

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RNS Number : 1367X  Horizonte Minerals PLC  24 April 2023

NEWS
RELEASE

24 April 2023

 

CONSTRUCTION OF THE ARAGUAIA NICKEL PROJECT

REMAINS ON-BUDGET AND ON-SCHEDULE

 

HIGHLIGHTS:

·    Araguaia Nickel Project Line 1 remains on-schedule for production in
Q1 2024 with over 50% of the construction programme completed to date

-      Strong safety performance, no lost time injuries with over two
million hours worked

-      Earthworks are complete and detailed engineering is 95% complete

-      Key long lead items remain on track, with the rotary kiln and
dryer en route to site

-      Pre-stripping activities have commenced on the main Pequizeiro Pit
with ore stockpiling to begin in Q3 2023

·    Araguaia Nickel Project Line 1 remains on-budget with 90% of the
total capital awarded as at 31 March 2023

·    Araguaia Nickel Project line 2 Feasibility Study, which aims to
double nickel production from 14,500 tonnes per annum to 29,000 tonnes per
annum, remains on track for publication in H2 2023

 

Horizonte Minerals Plc (AIM/TSX: HZM) ("Horizonte" or the "Company") reports
that it is continuing to make good progress on the construction of its
100%-owned Araguaia Nickel Project Line 1 ("Araguaia" or "the Project") in
Brazil, which remains on-budget and on-schedule to commence production in Q1
2024.

 

As of 30 March 2023, approximately 50% of the Araguaia Line 1 construction
programme had been completed and approximately 90% of capital expenditure had
been awarded, amounting to approximately US$485 million. Moreover, the
earthworks have been completed, detailed engineering works are at 95%
maturity, and electro-mechanical installations are advancing. The key long
lead items remain on schedule for delivery to site, with the rotary kiln and
dryer in Brazil and currently en route to site. In addition, the grade control
drilling programme has been completed with the data utilised for the short
term mining planning and the commencement of pre-stripping activities on the
main Pequizeiro Pit, with ore stockpiling to begin in Q3 2023.

 

In addition to advancing the Araguaia construction activities, Horizonte is
also making good progress on advancing its growth pipeline. The Araguaia Line
2 Feasibility Study ("FS"), which aims to double nickel production from 14,500
tonnes per annum to 29,000 tonnes per annum and allow Araguaia to not only
produce high-grade low impurity ferronickel but also potentially nickel matte
that can be upgraded to feed directly into the electric vehicle battery
chemistry supply chain, remains on track for publication in H2 2023. Regarding
Horizonte's 100% owned Vermelho project in Brazil, which is expected to
produce 24,000 tonnes of nickel and 1,250 tonnes of cobalt to supply the EV
battery market, work remained centred on the FS and the EIA permitting
process, with the FS due for completion in H1 2024.

 

Jeremy Martin, CEO of Horizonte, commented: "We are pleased to confirm we
remain on-schedule for first metal at Araguaia targeting Q1 2024, most
importantly with a strong safety culture installed across the project. There
is currently a key focus on operational readiness as we build out the
operational team and establish the systems, processes and training required
for the start-up phase.

 

"Alongside the construction progress at Araguaia Line 1, with the award of the
Line 2 Feasibility Study contracts, we are one step closer to delivering on
this low capex project that will double nickel production. Vermelho workflows
remain centred around the Feasibility Study with onsite data collection
progressing well, feeding into the process engineering that is underway with
Wood plc in Perth.

 

"We are pleased by the progress made to date on all workstreams and are
confident in our ability to continue to deliver as we head toward first nickel
in Q1 2024."

 

Management will be hosting a webinar today, 24 April 2023, at 14:00 BST to
discuss Araguaia's construction progress. Investors and analysts are invited
to access the webinar by registering in advance via the following link:
https://www.investormeetcompany.com/horizonte-minerals/register-investor.
Questions may be submitted at any time during the live presentation. A
recording of the webinar will be available on the Company's website shortly
after its conclusion.

 

 

ARAGUAIA LINE 1 CONSTRUCTION: FIRST METAL ON-SCHEDULE FOR Q1 2024

 

1.      Health, Safety & Wellbeing

The lost-time injury frequency rate ("LTIFR") for Araguaia as at March 31 2023
was 0.00 and the total recordable injury frequency rate ("TRIFR") was 0.97
based on a 12-month rolling average, which are calculated per million hours
worked. This compares favourably with a TRIFR of 1.16, as at the end of the
previous quarter. Horizonte has continued to focus its efforts on embedding
the critical risk controls with its growing workforce and reinforcement of its
safety Golden Rules. To complement these activities, the Company continued to
implement tools to increase involvement and participation by our contracting
partners in our safety systems and processes. From project life to date, over
4,100 internal safety audits have been conducted and over 5,100 safety plan
observations have been completed. In the quarter, to coincide with the
projects move to mechanical construction, an extensive focus on working at
heights and associated training and rescue planning was completed. Fire and
emergency services training also occurred.

 

2.      Construction activities

As seen in Figure 1, solid progress has been made on the construction of the
electric arc furnace, the core of the Araguaia RKEF processing facility.
Supplied by Hatch ltd, the 18-metre diameter furnace will operate at a
temperature range of up to 1,550 ºC with a nameplate capacity of 65 MW,
producing up to 14,500 tonnes of nickel per year. As part of the modular build
schedule for the furnace building, the third of five stories is being lifted
into place. The electro-mechanical installation continues to advance on
schedule with the erection of the furnace baseplate and the lower and upper
side walls of the furnace now interlocked with welding near complete.

 

Figure 1: Electric Arc Furnace facility, showing the circular furnace in the
centre of the facility covered to allow internal welding to take place,
surrounded by the blue structural steel work of the building that supports all
of the associated equipment required for furnace operation.

 

Figure 2 shows the erection of the four calciner support columns that will
support the 110m long rotary kiln. Civil and concrete works are complete for
two of the pillars and the remaining two are due for completion by the end of
April. The rotary kiln and dryer, key long lead items, are on route to site
having arrived in Brazil in early April. Upon arrival at site, the rotary kiln
will go through a complex erection process with individual rings welded
together before being lifted and positioned on the support bearings located on
the four elevated columns for final alignment and completion of welding and
final assembly.

 

Figure 2: The four 6m high columns to support the Rotary Kiln, showing the
slip forms in place to cast the top cap sections.

 

 

Civil works for the Dryer area are advancing on-schedule as seen in Figure 3.
Piled foundations for the main dryer support columns are complete while
erection of the two main dryer columns are ready for concrete application.

 

Figure 3: Foundations of the dryer support columns, showing steel form work
ready for the application of concrete.

 

 

As shown in Figure 4, civil foundation works for the homogenisation building
are close to being concluded. Approximately 30% of the building is now
undergoing electromechanical installation with the first structural steel
having been erected for the covered homogenisation building.

 

Figure 4: Steel erection works underway on the homogenisation building.

 

 

As shown in Figure 5, the civil works for the primary and secondary crusher
have been concluded with the erection of the steel structure ongoing.

Figure 5: The primary and secondary crushing area.

 

As shown in Figure 6, the 230kV powerline construction continues to advance on
schedule. To date, 152 pylons have been erected with 213 foundations concluded
out of a total of 260.

 

Figure 6: The 230kV powerline construction.

 

3.      Commencement of pre-stripping activities

In February 2023, Horizonte entered into a five-year mining services agreement
with Fagundes, a leading Brazilian contract mining company. Services include;
pre strip of waste, ore mining, stockpile generation, plant feed and slag
handing. Early pre-stripping activities have begun at site along with the
delivery of mining equipment ahead of initial mineralised ore stockpiling.

 

4.      Environmental activities

In preparation for the transition from construction to operations and ahead of
the upcoming dry season, environmental management in the period has focussed
on managing the impact of fugitive dust from road traffic. Horizonte has
invested over BRL 50M in state and municipal road upgrades - including
widening, capping, safety controls and bridge upgrades. In support of
monitoring the effectiveness of these controls, the Company has recently
installed a suite of continuous air quality monitoring stations. In addition,
the construction of river flow monitoring stations to monitor the Arraias
river has recently commenced. These new stations will complement the existing
monitoring of noise, vibration, vehicle emissions, water, soils and flora and
fauna.

 

At Vermelho an array of FS related environmental activities have progressed
including surface water census, preliminary catchment modelling, topographic
data acquisition and geochemical analysis campaigns. These programmes will
build on the extensive baseline and previous project studies undertaken by
Horizonte and Vale. Also in the period, discussions advanced in regards to
compensatory biodiversity actions, including a visit to the Veredas Municipal
Park, the location at which compensatory planting is expected to be
implemented, and noise monitoring of the geotechnical drilling campaign was
conducted, with satisfactory outcomes.

 

5.      Social activities

In the quarter, Horizonte continued to implement a range of social programmes
at Araguaia to avoid and minimise impacts associated with construction. In
conformance with International Finance Corporation Performance Standard 5, the
Company has been advancing various initiatives in support of the families that
are directly project affected. The construction of the first two houses for
resettled families is well advanced and agronomic support is being provided as
part of the livelihoods restoration and enhancement plan. Also in the period,
the Company conducted a sampling of community water supply systems and engaged
with them on the results of the water quality testing. None of the results
were project impacted, however valuable engagement occurred as the Company
raised awareness on 'safe' water supply, hygiene and health. The programmes
were well received by the community participants.

 

6.      Permitting

Applications have been submitted for the Licença de Operação (Operating
Licence) for mining and processing at Araguaia, as well as for renewal of
existing Licença de Instalação (Installation Licences, i.e. construction
licences). These permitting processes are ongoing.

 

 

ARAGUAIA LINE 2: FEASIBILITY STUDY EXPECTED IN 2H 2023

 

In March 2023, Horizonte awarded the Araguaia Line 2 FS contracts aiming to
double nickel production to 29,000 tpa at Araguaia through the construction of
a duplicate RKEF processing facility ("Line 2"). As part of the FS, an option
will be designed into the flow sheet to allow a portion of the furnace product
from Line 2 to be converted to nickel matte allowing Araguaia not only to
produce high-grade low impurity ferronickel, but also matte that can be
upgraded to feed directly into the electric vehicle battery chemistry supply
chain. Araguaia line 2 is expected to deliver greater production flexibility,
lower capital intensity and increased operating margins. The aim of the FS is
to produce a NI 43-101 Feasibility Report supported by a AACEI Class 3-quality
cost estimate, and project execution plan. The Company continues to target
publication of the study results in 2H 2023.

 

PROJECT FINANCING ACTIVITIES

As announced on 27 February 2023, US$50 million was drawn down from the second
tranche of its senior secured project finance debt facility of US$346 million
(the "Senior Debt Facility"). Subsequently, Horizonte has drawn down from the
third tranche of the Senior Debt Facility an amount in line with the budget
associated with the requirements for the construction of the Araguaia Nickel
Project.

 

All conditions precedent for the second and third tranche of Senior Debt
Facility have been satisfied and funds received. Further tranches of the
Senior Debt Facility will be drawn down as required.

 

To date US$485 million capital expenditure has been awarded which includes the
majority of the key long lead items. The remaining Project capital commitment
is comprised of US$18 million for process related equipment, US$19 million for
overall site construction with the balance being costs that relate to
materials and operational readiness in the lead up to first production.

 

 

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

 Simon Retter (CFO)

 Patrick Chambers (Head of IR)

 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

 Tavistock (Financial PR)                                                   +44 (0) 20 7920 3150

 Emily Moss

 Cath Drummond

 

 

ABOUT HORIZONTE MINERALS

Horizonte Minerals plc (AIM & TSX: HZM) is developing two 100%-owned, Tier
1 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 under construction with first
metal scheduled for early 2024, when fully ramped up with Line 1 and Line 2,
is forecast to produce 29,000 tonnes of nickel per year. Vermelho is at
feasibility study stage and is expected to produce 24,000 tonnes of nickel and
1,250 tonnes of cobalt to supply the EV battery market. Horizonte's combined
production profile of over 60,000 tonnes of nickel per year positions the
Company as a globally significant nickel producer. Horizonte's top three
shareholders are La Mancha Investments S.à r.l., Glencore plc and Orion
Resource Partners LLP.

 

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 form of the Company for the year ended
December 31, 2022, 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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