Horizonte Minerals PLC (LON:HZM) has told investors that the feasibility study at its Araguaia nickel project in Brazil is now at an “advanced stage” after making “significant progress” since the turn of the year.
A number of the principal work streams are over 50% complete for a 14,500 tonnes per annum (tpa) ferro-nickel operation with a 28-year life on mine, Horizonte said.
Study out later this year, all being well
The study is on track to be delivered in the final quarter of 2017 into the start of 2018.
Following the £9mln fundraise in December, the AIM-quoted firm has plenty of cash in the bank; £5.6mln as of the end of June, which is more than enough to cover the feasibility study.
Earlier this year, Horizonte completed a 30-hole pre-excavation drill programme which “confirmed the high-grade of the Araguaia ore”, while a trial excavation programme is also close to completion.
The results of both of these programmes will be into the feasibility study.
Horizonte’s sustainability team also made positive strides in the first half of the year, and it will shortly apply for an installation licence which, once it is awarded, will allow mine construction to get underway.
Nickel prices on the rise
Prices have already started to move higher, Horizonte said, with the market moving into a deficit – i.e. not enough supply to meet demand – after five years of oversupply.
Nickel is primarily used in stainless steel production but there is a growing need for it in the electric vehicle space, where the metal is used in the batteries that power the cars.
‘Araguaia will attract the attention of nickel producers’
“As we move into the second half of 2017, Horizonte is well positioned to take full advantage of the positive sentiment in the nickel market as the Araguaia feasibility moves into the final phase,” said chairman David Hall.
“The value of Araguaia, comprising high grade and resource size will only increase as it is further de-risked.
“A Tier 1 asset such as this will no doubt attract the attention of nickel producers for whom the development pipeline is bare.”
Still at pre-revenue stage
Given that Horizonte is still in the pre-revenue stage, it recorded a loss before tax of £935,000 for the six months ended 30 June, a wider loss from the £579,000 it posted for the same period last year.
It was mainly down to higher administrative costs.
As mentioned above, the company had cash balances of £5.6mln at the end of the period, which means it is fully funded to complete the feasibility study with a bit left over.
Shares gained 5.1% to trade at 2.68p shortly before close on Friday.
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