Horizonte Minerals (AIM: HZM) told investors this morning that it maintains a strong cash position as it advances the Araguaia nickel mine in Brazil into its construction phase.
In a half-year results for the six-month period to 30 June 2020, the nickel development company reported it had £15.6m in the bank following the completion of a US$25 million royalty transaction with Orion Mine Finance in the final quarter of 2019.
The company executed a finance facility of up to US$325 million with five international banks earlier this week which it said would cover a significant portion of the pre-production capex required to complete the Stage 1 construction of its Araguaia ferro-nickel project.
A Feasibility Study conducted at Araguaia in 2018 showed capital costs estimated at US$443 million, including US$65.3 million of contingencies equating to 17.2% of total capex budget.
Horizonte said this was ‘a key milestone’ in the project financing process for Araguaia.
Shares in Horizonte Minerals were trading 1.20% higher at 4.2p on Friday morning.
The company said the project’s financing process is on schedule and has remained unaffected by the major COVID-19 outbreak in Brazil although added that a delay to the process could occur should a further period of 'lock-down' be implemented in the country.
The nickel market is forecast to remain robust, the company highlighted, with an analyst consensus price of $16,133/t at the time Araguaia is forecast to commence production driven by growth in the EV battery sector and steady growth in the stainless-steel market.
HZM’s 2018 Feasibility Study indicated Araguaia as a potentially significant low-cost supplier of nickel in the form of high-grade ferronickel to the stainless-steel industry with an initial 28-year mine life, cash flows post-tax of $1.6bn and Mineral Resources beyond 28 years.
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