TSX- and Aim-listed Horizonte Minerals reports that the Araguaia nickel project, in Brazil, is steadily moving towards construction, with the company having completed the value engineering phase.

This phase included improvements made to the plant design and flow sheet to optimise the project’s operational performance.

The company is in the process of preparing key environmental and social programmes in preparation for the construction phase, while the financing for the project is also progressing.

Meanwhile, with the nickel price trading at $16 300/t against the Araguaia’s base case modelling at $14 000/t, it bodes well for the project economics.

The project funding package for Araguaia involves multiple components that are being negotiated simultaneously.

Horizonte is engaging with a number of prospective investors, and recently negotiated a non-binding term sheet with a major cornerstone equity investor; reached an advanced stage with offtake agreements; received initial approval for a financing facility of up to R$200-million, or $32-million, from Banco da Amazônia; and is advancing workstreams with a syndicate of five international banks for the principal project finance package.

In parallel, Horizonte has spent the past eight months undertaking a phase of value engineering to upgrade the feasibility study completed in 2018 and optimise certain aspects of the project to a level where it is implementation ready.

This work has included development of a detailed project execution and operational readiness plan, as part of the value engineering phase.

These workstreams have further de-risked the project and gave clear visibility on how the company can deliver a successful, tier-one nickel project.

Owing to the ongoing impacts of Covid-19 and related lockdowns on financial markets, the company anticipates completing the full project financing package during the first half of next year, thereafter starting construction.

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.