REG - Horizonte Minerals - Corporate Update

Horizonte MineralsAnnouncement

28/03/2024 13:45

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RNS Number : 7634I  Horizonte Minerals PLC  28 March 2024

NEWS
RELEASE

28 March 2024

 

HORIZONTE CORPORATE UPDATE

Horizonte Minerals Plc (AIM/TSX: HZM) ("Horizonte" or the "Company") provides
an update of progress on the refinancing efforts of its 100%-owned Araguaia
Nickel Project ("Araguaia" or the "Project"). Further to the Company update on
19 February 2024 in which Horizonte announced the Cost to Complete ("CTC")
capital expenditures required to complete the construction of Araguaia,
commission the Project, and deliver first metal (together, "Project
Completion"), the Company is providing a further update in relation to the
refinancing amount required to fully fund the Project, progress on discussions
with relevant financial stakeholders and deferral of interest payments.

 

FULL FINANCING UPDATE

 

The CTC estimate of US$454 million announced on 19 February 2024 is the
capital required for Project Completion. As explained in that announcement, a
higher amount would be required to fully fund the Project when including
ramp-up and contingencies.

 

Horizonte estimates the full funding required to complete construction and
bring the operation to positive cashflow is US$567 - 592 million. This
consists of the Project CTC of US$454 million, as announced on 19 February
2024, plus US$89 million of pre-production costs, ramp up costs, general &
administration and working capital required to bring the operation to positive
cash flow, and US$25 - 50 million that relates to transaction costs and a
minimum cash contingency.

 

In addition to these costs, the Company will need to reach a restructuring
solution for the group's existing liabilities which as of 15 March 2024 were
~US$418 million, comprised of US$241 million in senior debt, a US$27 million
cost over-run facility ("COF"), US$68 million to trade creditors and US$82
million of convertible loan notes, and a restructuring solution for its
existing royalties arrangements. Reaching a potential restructuring solution
with existing creditors may increase the full funding requirements.

 

The Company continues to hold discussions to restructure the group's debt in
conjunction with seeking a fully funded solution and is actively engaging
existing and new potential investors. In connection with such discussions, the
Company is continuing to provide information to senior lenders, and existing
and new potential investors (under confidentiality agreements), including the
full financing amount. As previously announced, the Company expects that it
will require additional interim funding around mid-April to implement such
full funding solution.

 

Existing shareholders should note that whilst the Company continues to work
closely with its major shareholders and senior creditors on a full funding
solution, there can be no guarantee that a refinancing and restructuring
solution will complete (including any interim funding). Even if it does, the
conclusion of any such solution is unlikely to lead to a positive outcome for
existing shareholders, noteholders and creditors of the Company. Further, if
it becomes apparent that an interim and/or a fully funded solution is unlikely
to be found, the Company will have to look at all potential options which
could include putting the group's projects in care and maintenance,
liquidation of assets, and or starting formal administration procedures in the
UK in relation to the Company.

 

By way of background and further information, the Company informs that in
November 2023, Araguaia Níquel Metais Ltda ("ANML"), the Company's Brazilian
subsidiary, engaged Moelis & Company Assessoria Ltda in Brazil to act as
financial advisors to ANML in connection with the restructuring of its debt
and the Company has also recently engaged FRP Advisory Trading Limited in the
UK to act as advisors to the Company and its board of directors in connection
with restructuring options and contingency planning.

 

DEFERRAL OF INTEREST PAYMENTS

 

As announced on 1 March 2024, the existing senior lenders agreed to extend
waivers including the deferral of interest originally due 31 December 2023 to
the 29 March 2024 (subject to certain conditions). The Company is in
discussions with senior lenders and has requested that they extend such
waivers until the end of April 2024. Whilst the Company expects that it will
reach an agreement with senior lenders on the request for extension, there can
be no guarantee that senior lenders will consent to further extend the current
waivers.

 

If no extension is agreed, deferred interest originally payable at the end of
December 2023 will become immediately due and payable on 30 March 2024 and
interest payable at the end of Q1 2024 will become due and payable on 1 April
2024. If these amounts remain unpaid after becoming due and payable, the
senior lenders will be entitled to: (a) immediately cancel the undrawn portion
of the senior debt facility; (b) declare all outstanding senior debt amounts
(including interest) immediately due and payable; and/or (c) seek to enforce
the senior lenders' security, which encompasses all or essentially all of the
group's assets.

 

As announced on 14 March 2024, ANML has been granted an injunction (Brazilian
Precautionary Measure) giving it a 60-day stay period against the enforcement
of debt and certain security held by senior lenders and creditors, in order to
negotiate and work on a restructuring plan to be approved by its creditors.

 

As a guarantor of ANML's debt under the senior loan facilities, if claims are
made in relation to the guarantee given by the Company, the Company may also
need to consider applying for protective measures that may be available to it,
or alternatively appoint administrators for the Company in the UK.

 

The disclosures contained in this announcement should not be regarded as an
indication that the Company or its representatives consider the forecasts or
projections contained herein to be a reliable prediction of future events, and
such forecasts and projections should not be relied upon as such.

 

Further updates will be provided in due course.

 

 

For further information, visit www.horizonteminerals.com
(http://www.horizonteminerals.com) or contact:

 

 Horizonte Minerals plc                                info@horizonteminerals.com (mailto:info@horizonteminerals.com)

 Patrick Chambers (Head of IR)                         +44 (0) 203 356 2901

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

 Ross Allister

 David McKeown

 Bhavesh Patel

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

 Thomas Rider

 Pascal Lussier Duquette

 Andrew Cameron

 Barclays (Joint Broker)                               +44 (0)20 7623 2323

 Philip Lindop

 Richard Bassingthwaighte

 

 

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 high-grade, low-cost, with low carbon
emission intensities and are scalable. Araguaia is under construction and when
fully ramped up with both 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 supply nickel to the critical metals 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 any planned acquisition of equipment, 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 ability of the Company to
complete a positive feasibility study regarding the Vermelho Project 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, 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 any planned acquisition of equipment 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, the ability of the Company to complete a positive feasibility study
regarding the Vermelho Project 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, including without limitation, the annual information form of
the Company for the year ended December 31, 2022, and the Araguaia and
Vermelho Technical Reports available on the Company's website
https://horizonteminerals.com/. 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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