Aim- and TSX-listed Horizonte Minerals has executed a mandate to arrange a senior project finance facility of up to $325-million to fund the construction and development of its Araguaia ferronickel project, in Brazil.
A syndicate of five international financial institutions, including BNP Paribas, ING Capital, Mizuho Bank, Natixis New York Branch and Société Générale will act as the mandated lead arrangers.
The debt facility would cover a significant portion of the preproduction capital required to complete the Stage 1 construction for Araguaia, CEO Jeremy Martin said on Wednesday.
The company requires $443-million for the initial phase of the project, which has an after-tax net present value of $401-million and an internal rate of return of 20.1% with cash costs equivalent to $3.08/lb of contained nickel.
“We are targeting completion of the project financing package for the project by the end of 2020, provided that restrictions related to the Covid-19 pandemic do not cause further delays. We aim to start construction in early 2021,” he affirmed.
The feasibility study for the Araguaia project describes an initial production phase where about 900 000 t/y of ore is treated in a rotary kiln electric furnace (RKEF) to produce about 14 500 t/y of nickel contained in 52 000 t/y of ferronickel. The study includes an option to double production to 29 000 t/y of contained nickel by the addition of a second RKEF in the third year of the project.
Araguaia will be the first of Horizonte’s projects to move to the construction phase, with the other being the Vermelho nickel/cobalt project, also in Brazil.
Shares in Horizonte rose 22% in London following the news.