Horizonte Minerals secures more funds for Araguaia nickel project in Brazil

A syndicate of five international financial institutions have approved a senior secured project finance facility of up to US$346.2 million for Horizonte Minerals (TSX: HZM; LSE: HZM) to fund the development and construction of the company’s Araguaia ferro-nickel project in Brazil.

The syndicate of lenders is made up of BNP Paribas Securities; ING Capital LLC; Natixis, New York Branch; Societe Generale; and Sweden’s Export Credit Corporation.

The news follows the guarantee on September 13 by two export credit agencies — Denmark’s Export Credit Agency and Finnvera plc, Finland’s Export Credit Agency — for US$146.2 million of the senior secured project facility.

Once in production, Araguaia will produce about 29,000 tonnes of nickel per year for the stainless-steel market.

“With very few nickel projects with these credentials at construction phase we believe today’s news is a pivotal point in Horizonte’s story as we work to become a major nickel producer,” Horizonte’s CEO, Jeremy Martin, said in a press release.

The first tranche will consist of US$146.2 million, to be guaranteed by the export credit agencies, and the second tranche will be US$200 million.

Touring Horizonte Minerals’ Araguaia project in Brazil. Credit: Horizonte Minerals.

“Coupled with the two export credit agencies,  this syndicate of seven provides a US$346.2 million senior debt facility to help finance the construction  of Araguaia,” Martin said. “Credit approval from the full syndicate is the catalyst for finalizing the other components of the overall financing requirement for Araguaia.

According to the company, initial capital costs will be in the range of US$443 million.

The project is located south of the Carajas mining district in northern Brazil’s Para state.

Araguaia will use open pit mining methods, and transport its nickel ore to a central processing plant. The open pits will be shallow, with a maximum depth of 30 metres, which means no blasting will be required

The project will use a rotary kiln electric furnace (RKEF) to produce a high-grade ferronickel product.

After an initial ramp-up period, the plant will reach a capacity of about 900,000 tonnes of dry ore feed a year to produce 52,000 tonnes of ferronickel, in turn containing 14,500 tonnes of nickel per year, according to a feasibility study. The study included an option for future construction of a second process line that would double the mine’s capacity from 14,500 tonnes of nickel a year to as much as 29,000 tonnes per year.  Construction of the second process line would be funded by cash flow.

Proven and probable reserves of 27.3 million tonnes grading 1.69% nickel and 17.15% iron support a mine life of 28 years based on an annual throughput of 900,000 tonnes per year.

Elsewhere in Brazil, Horizonte Minerals owns the Vermelho nickel-cobalt project. The feasibility stage project is forecast to produce 25,000 tonnes of nickel and 1,250 tonnes of cobalt annually for the EV battery market.

At presstime in Toronto, Horizonte Minerals was trading at 15¢ per share in a 52-week trading range of 9.5¢ and 17.5¢. The company has a market cap of about $176 million.