Horizonte Minerals Plc: Interim Results for the Six Months Ended 30 June 2019
Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (‘Horizonte’ or the ‘Company’) the nickel development company focused in Brazil, announces its unaudited financial results for the six months ended 30 June 2019 and the Management Discussion and Analysis for the same period.
Both of the above have been posted on the Company’s website at www.horizonteminerals.com and are also available on SEDAR at www.sedar.com.
The first six months of 2019 have seen continued progress on both the Araguaia Ferronickel (“Araguaia”) and Vermelho Nickel-Cobalt (“Vermelho”) projects, with both advancing in line with our planned strategy of creating a platform for the development of two world class projects and optionality to deliver ferronickel product to the stainless steel market and nickel sulphate and cobalt to the rapidly growing electric vehicle battery market.
Araguaia FeNi project
Following on from the publication of the Araguaia FS in October 2018 we began 2019 with a further positive milestone, being the award of the construction licence for the development of Araguaia. The award of the Construction Licence, Licença de Instalação (“LI”), was granted by SEMAS, the Brazilian Pará State Environmental Agency. The granting of the LI allows Horizonte to construct the Araguaia rotary kiln electric furnace (“RKEF”) processing plant and associated infrastructure and represents a major de-risking step for the Araguaia project.
Subject to funding, Araguaia is now in a position to commence construction with the necessary environmental permits approved, including water abstraction permits issued in April 2018 together with the newly issued LI.
The award of the LI was delivered on time and on budget with the Horizonte team working closely with SEMAS, other State agencies and the local communities. Consistent with our objective to provide long-term sustainable value for our shareholders, employees and communities, we developed integrated solutions focused on environmental protection, water efficiency and socio-economic development.
The first half of 2019 also saw the award of the Energy Decree which guarantees Horizonte access to the national grid with the required electrical energy demand for the commercial ferronickel operation at Araguaia. This is another important milestone as we move towards the implementation phase. The availability of energy for mining projects is a risk in many countries, and this Energy Decree guarantees the Company has access to the national grid for the full-scale Stage 1 commercial operation with nameplate capacity of 14,500 tonnes of nickel per year.
Ongoing discussions continue with various parties regarding the project financing of Araguaia and we are pleased with the continued level of interest we have received from a range of commercial banks and industry specialists regarding debt and potential offtake and other non-equity sources of finance. The remainder of 2019 will be spent continuing those discussions and given the recent increase in nickel price we are optimistic that a full finance package can be secured. We look forward to updating the market with progress on the financing in due course.
Vermelho Ni Co project
The focus on Vermelho since the start of the year has been to advance the various work streams that feed into the Pre-Feasibility Study (“PFS”).
Positive metallurgical test work undertaken on Vermelho saprolite samples returned an average ferronickel grade of 31.8% nickel, which was of high quality, being low in trace elements and meeting the commercial requirement of stainless-steel manufacturers. This is a critical element for the success of the project as it demonstrates the suitability of the conventional Rotary Kiln Electric Furnace (“RKEF”) for processing Vermelho saprolite ore, thereby enabling the Vermelho resource to provide high grade feed material for the RKEF plant at Araguaia.
Additional metallurgical test work on samples of limonite ore produced high purity Cobalt Sulphate product containing 21.8% cobalt, exceeding the reference grade used for sulphate pricing. Nickel sulphate was also produced as a solution ready for purification to final EV battery grade product. These results confirm the suitability of the Pressure Acid Leach (‘PAL’) Process and subsequent purification stages for processing Vermelho limonite ore to produce high purity cobalt and nickel sulphate suitable to supply the ever increasingly important EV battery markets.
The production of high purity nickel and cobalt sulphate from the Vermelho project of suitable quality and grade for use in EV battery production is a key step in moving the project forward. The Vermelho project is an additional significant value driver for the Company. It is a high-grade scalable resource, with good infrastructure and has the potential to be fast tracked to development.
The successful completion of this sulphate test work confirms that the PAL process flow sheet is suitable to treat the Vermelho ore and when combined with the earlier successful RKEF test work demonstrates that alternate process routes exist for the project. This gives Horizonte considerable flexibility, which combined with one of the largest undeveloped nickel resources globally, makes the Vermelho-Araguaia nickel district a truly exciting development opportunity.
Solid progress has been made on the PFS for Vermelho and I am pleased to confirm that it is nearing completion with the anticipation that the results of the study will be announced later this quarter.
As Horizonte has advanced both of its 100% owned projects, nickel has continued to be the best performing metal on LME this year and stands at around US$15,500/t Ni at the date of this report. The long-term consensus pricing for Nickel remains around $16,400/t Ni which shows some further upside to the current price environment. There remains a significant concern amongst many market commentators and end users of nickel regarding the future availability of supply, especially with the anticipated widespread adoption of Electric Vehicles and the impact this is likely to have on already constrained nickel supplies. Wood Mackenzie forecast a long-term incentive price of $21,400/t Ni, which represents the price environment which would incentivise enough production to come online to satisfy expected future demand.
It is worth reiterating that our FS for Araguaia was undertaken at a conservative base case price assumption of $14,000 /t Ni which demonstrated the robust nature of the project and its ability to work at lower nickel prices. The backdrop of rising prices positions your company very well with Araguaia’s expansion case estimated to have an NPV of $1.1billion and an NPV of 30% using $16,000/t Ni.
I would like to thank all of our stakeholders, including shareholders, advisers, consultants and particularly our team in both the UK and Brazil for their continued hard work at what is set to be an exciting time for Horizonte. We look forward to updating the market on progress on both of our world class projects in the near future.Full Report
Source: Horizonte Minerals plc