JOHANNESBURG (miningweekly.com) – Nickel is currently one of the “best performing” metals and demand for new nickel resources is expected to grow over the next decade.

This places Horizonte Minerals' Vermelho nickel/cobalt project, in Brazil, in a great position, CEO Jeremy Martin told Mining Weekly Online on Thursday.

The Vermelho project is a high-grade scalable resource, located in the Carajás mining district in the Pará State, in north-east Brazil.

The results of a prefeasibility study (PFS), released on Thursday, demonstrate that the project has the potential to be a significant low-cost supplier of nickel in the form of battery-grade nickel-sulphate.

“Over the 38-year mine life, using the base nickel price of $16 400/t, the operation is expected to generate cash flows after taxation of $7.3-billion, an internal rate of return (IRR) of over 26%, and sits on the lower half of the global cost curve.

"If we apply the long-term Wood Mackenzie nickel price of $19 800/t, the project's IRR increases to 31% and the net present value to about $2.3-billion,” said Martin.

He also stated that the initial capital cost to develop the mine would be about $650-million, while the net direct cash cost for year one to ten was about $7 300/t.

The Vermelho project is a nickel laterite which can be processed through the ferronickel route; however, the company elected to go down the high-pressure acid leach route for this project.

“That allows us to produce high-purity nickel and cobalt sulphate which is directly applicable to the electric vehicle battery market. We ran test work earlier in the year to demonstrate that we can produce high-purity nickel and cobalt sulphate and we were successful in doing that. That was at the grade range which was amenable and able to go straight into the battery market,” he explained.

With 60% of global cobalt supply coming from the Democratic Republic of Congo, Martin highlighted the importance of diversifying supply through ethical sourcing and supply traceability as a key area of interest for the company.

He added that the downstream battery producers would be keen to ensure their input materials were ethically sourced and that there was no child labour in that supply chain.

“This is a key area that we will be able to stand on; that it is ethically sourced cobalt and that it will be traceable though the source to the end product.”

Further, the company also owns the Araguaia ferronickel project which is located south of the Carajás mining district.

Araguaia is set to be a major economic driver as it is a long-life operation. Martin stated that it would be a significant employer and a major tax driver for the state.

“Vermelho has the same characteristics. It will actually be a larger employer with over 600 direct jobs during the operational phase. It will be a long-life operation for 38 years and a major socioeconomic driver for the region.

“Both of these projects are viewed positively not only by the regional government but also the local government in terms of support and permitting, as well as what they have the ability to achieve.”

The company is looking to advance Vermelho and potentially bring in a strategic partner to fund the development phase, said Martin.

“We will be doing more detailed engineering and also advancing the permits process. We are effectively looking at 12 months for that and then we will [start] a feasibility study that will take about six to eight months to complete.”