SPOTLIGHT: Araguaia nickel project

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Monday, April 10, 2017

UK miner Horizonte Minerals achieved four major milestones at its Araguaia nickel project in Pará, Brazil last year.

"Firstly, our low-cost acquisition of the adjacent nickel project from Glencore was a game-changer for

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Horizonte enabling the integration of additional resource into our existing Araguaia project," CEO Jeremy Martin said in the company's 2016 annual report. 

"Secondly, in May 2016 Horizonte Minerals successfully obtained the preliminary environmental license for the Araguaia project. A key milestone was achieved with the release of a revised pre-feasibility study on the enlarged Araguaia project in October 2016," he added. "Finally we ended the year with a successful fundraise of 9mn pounds [US$11.2mn] in December to fund the feasibility study, that will define how the enlarged Araguaia project is moved toward production."

 

According to Horizonte, the project is expected to generate US$1.3bn in free cash flow over the life-of-mine with the planned operation producing around 14,500t/y of nickel in ferronickel at a grade of 30% utilizing the Rotary Kiln Electric Furnace (RKEF) process.

PROJECT SPECS

Araguaia is a nickel laterite project located in the Araguaia Fold Belt. The project is the amalgamation of adjacent grassroots discoveries by Horizonte, Teck Resources and Xstrata. 

The project area comprises 17 exploration licenses, all of which are held by Horizonte through its three Brazilian subsidiaries Araguaia Niquel Mineração, Lontra Empreedimentos e Participações and HM do Brasil Mineração.

The project is estimated to require US$345mn and have a life of 28 years.

WHERE IT STANDS

Horizonte has spent about US$100mn to date on Araguaia, considered a tier 1 nickel asset. The project has good regional infrastructure including a network of federal highways and roads, with access to low-tariff hydro-electric power. 

In late-March Horizonte announced it hired Brazil's Geotechreserves to carry out a 1,500m, 25 diamond drill hole program as part of the project's feasibility study, which is scheduled for completion at the end of this year, the company said.

Consultants including Worley Parsons, Snowden Mining and Environmental Resources Management will be responsible for the study, which is fully funded through completion.

"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," Martin said. "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," 

The Araguaia nickel project (CREDIT: Horizonte Minerals)