Horizonte Minerals Plc plans to start working on a $15 million final feasibility study to win investor backing for its Brazilian nickel project.
The company today reported results of an initial assessment of the Araguaia site in the Carajas region that are “a green light” to build, Chief Executive Officer Jeremy Martin said in an interview. It plans to award contracts for the final study in the fourth quarter, with first production targeted for 2017.
The company plans to produce about 15,000 metric tons of nickel a year at a cost of about $9,000 a ton, compared with a forecast market price of $20,000 a ton at the end of 2014, Martin said. The cost estimates assume London-based Horizonte will develop the $519 million project alone, he said.
“This is a key milestone for the company as it advances its Araguaia project,” Investec Plc said in a note to investors. “We note also the changing landscape in the nickel market as the Indonesian mineral exports ban is set to cut significant nickel in pig iron production in China, helping to better balance the market.”
Nickel, used mainly in steel production, last week entered a bull market on speculation Russian supplies will be disrupted by sanctions over its annexation of Crimea at a time when some shipments are already banned in Indonesia. The worst performer among industrial metals on the London Metal Exchange last year, nickel is this year’s biggest gainer, advancing by 17 percent.
Teck Resources Ltd., owner of 43 percent of Horizonte, has an option to acquire the rest of the company at the final or bankable feasibility stage, Martin said. Anglo Pacific Group Plc, with 9.2 percent, has an option to buy 1.5 percent of the company’s production for $12.5 million within four months.
The pre-feasibility study outlines a larger option as long as Horizonte builds the mine with a partner. That raises costs to $1.2 billion and output to 40,000 tons a year, Martin said.
Shares in Horizonte were unchanged at 2:34 p.m in London.