Horizonte reveals positive PFS results for Araguaia
Source - SMW
Horizonte Minerals has announced positive economic results from its new pre-feasibility study on its 100%-owned Araguaia project in Brazil.
This includes both the Araguaia nickel project area ('HZMA') and the Glencore Araguaia project area.
- Robust economics based on a 28 year life of mine ('LOM') producing ~14,500 tonnes per annum ('TPA') nickel in ferronickel from a single line Rotary Kiln Electric Furnace Plant ('RKEF')
- Post tax NPV8 of US$581 million at a nickel price of US$14,000/t and an NPV8 of US$328 million at US$12,000/t Ni
- Post tax IRR of 26.4% at US$14,000/t and 19.3% at US$12,000/t Ni
- Project is expected to generate US$1.3 billion in free cash flow over LOM at US$12,000/t Ni
- High grade ore with average nickel grade of 1.96% for the first 10 years of production
- Project on the lower range of the global cost curve with C1 cash costs of US$3.15/Ib Ni (US$6,948/t Ni)
- 43-101 Proven and Probable Mineral Reserve Estimate of 24.6 Mt grading 1.77% Ni
Chief executive Jeremy Martin said: "We are pleased with the positive results from the PFS delivering a post-tax NPV of U$328M and IRR of 19.3% based on a long term nickel price of U$12,000/t.
"If we use the bank's consensus mid-term nickel price of US$14,000/t, the NPV increases to US$581M with an IRR of 26.4% showing the significant gearing that is available with any future increase in nickel prices. Importantly the PFS demonstrates that the Project is cash flow positive at today's nickel prices which puts Araguaia within a limited group of global assets that are considered viable in the current low price nickel environment.
"Our low-cost acquisition of the adjacent nickel project from Glencore was a game-changer for Horizonte. The value is demonstrated in this new PFS which now has an overall grade for the first 10 years of mining averaging 1.96% nickel and the LOM grade over 28 years averaging 1.77% nickel which places the Project firmly in the upper quartile of the global grade curve for this type of deposit.
"The Project is expected to generate US$1.3 billion in free cash flow over the LOM with the planned operation producing around 14,500 tonnes per year of nickel in ferronickel at a grade of 30% utilising the proven RKEF process.
"The next major milestone in the development of Araguaia is the Feasibility Study which we anticipate starting in 2017. In parallel with this we will be looking at the development funding options available as well as offtake partners. We believe that the timeline for the development of Araguaia is well aligned with the market's expectation of an increase in nickel price over the mid-term.
"Future demand looks robust with predicted growth running between 2% and 4% this year and demand is anticipated to outpace supply, ensuring that Araguaia is a compelling project to generate value for shareholders.
"This, combined with strong economic fundamentals, confirms that Araguaia is well positioned to be one of the next major nickel projects to be developed and we look forward to providing updates as we advance the Project through Feasibility."