Horizonte to raise $11.2M to fund Brazil's next major nickel mine

Shareholders in Brazil-focused Horizonte Minerals (TSX, LON:HZM) have approved plans to raise £9 million (US$11.2M) to fund the preparation of a definitive feasibility study (DFS) for the company's wholly-owned Araguaia nickel project.

“Activity is currently underway on the next phase of the permitting to obtain the Installation Licence, as well as a number of the work streams that will link into the feasibility study,” chief executive officer Jeremy Martin said in a statement.

Analysts expect a long-term shortage of nickel to become evident from 2021, with an about 475,000 tonnes-deficit.

It is expected that the admission of 374,000,000 of the placing shares under the placing agreement will become effective at 8.00 a.m. Wednesday.

According to the company, the Araguaia project, located in north-central Brazil, is one of the world’s largest nickel projects.

Initial exploration work suggests the area may share similarities to Vale’s (NYSE:VALE) dos Sonhos, host to a high-grade nickel resource.

So far this year, Horizonte has been granted 20,000 hectares of new exploration around the deposit, which hosts a proven and probable mineral reserve of almost 25 million tonnes grading 1.77% nickel.

That is considered enough to support mining activities for 28 years, with projected free cash generation of $1.95bn, based on a pre-feasibility study that assumes mining cash cost of around $6,500 per tonne, an average selling price of $14,000 per tonne, and an initial capital spend of $354 million.

Horizonte Minerals to raise $11.2M to fund Brazil's next major nickel mine

Project overview. (Courtesy of Horizonte Minerals)

Analysts expect a long-term shortage of nickel to become evident from 2021, with an about 475,000 tonnes-deficit that will keep the metal’s market fairly balanced through to 2030. New production will be required to come on line during this period, they say.

Araguaia is expected to begin production by 2019.