Horizonte releases initial mineral resource estimate for Serra do Tapa

Brazil-focussed nickel development company Horizonte Minerals announced an initial mineral resource estimate for the Serra do Tapa nickel deposit on Tuesday, reporting that the resources in the measured and indicated category were 70.3 million tonnes, grading at 1.22% nickel at a 0.9% nickel cut off.

The AIM-traded firm said its 100%-owned aggregate mineral resource inventory showed a 30% increase in tonnage with the addition of the Serra do Tapa deposit.

It explained that a “significant portion” of high grade saprolite within the deposit was amenable to the rotary kiln electric furnace process route to produce ferro-nickel, potentially providing a further high-grade feed source for the Araguaia project.

The company's said its 100%-owned measured and indicated mineral resources now totalled 280 million tonnes with 3.5 million tonnes of contained nickel and 155 thousand tonnes of contained cobalt.

Horizonte said it now owned “one of the world's largest” inventory of undeveloped nickel and cobalt resources globally, in a mining district with well-developed infrastructure.

“The release of the new NI 43-101 Mineral Resource covering the Serra do Tapa deposit is another exciting development for the company and increases our total aggregate nickel resource base by 30%,” said chief executive Jeremy Martin.

“The resource is high grade and scalable, using a 1.2% nickel cut-off grade it delivers over 41 million tonnes of mineral resource in the measured and indicated category grading 1.4% nickel.

“The company now has 100% ownership of a nickel district, with over 280 million tonnes of resource in the measured and indicated category, in one of the largest mining districts in Brazil - the Carajás district - which has good infrastructure, water, energy and skilled labour.”

Martin said that generated the potential for Horizonte to develop two mining centres within trucking distance of each other - the first in the south at Araguaia, where it was developing a ferronickel operation to produce around 14,500 tonnes of nickel with the first stage plant, expandable to 29,000 tonnes of nickel per year.

The second production centre in the north, at the Vermelho nickel cobalt project, had the capacity to produce 15,000 to 18,000 tonnes per year of nickel and associated cobalt.

“Now we have additional high-grade material from the Serra do Tapa deposit which could serve either operation.

“Work on Araguaia is focussed around advancing the project finance and the recruitment and selection of the project development team as we move towards construction.

“The pre-feasibility study on the Vermelho nickel-cobalt project is at an advanced stage and is currently being finalised.”

The company aimed to announce the pre-feasibility study to the market later in the current quarter, Martin said, in a bid to provide investors with exposure to the fast-growing electric vehicle battery metals market.

“We have seen increases in the nickel price over the last month with LME nickel trading at highs of around $16,000.

“The base case and the second stage expansion case for the Araguaia Feasibility Study use $14,000 nickel; however, based on the recent nickel price of $16,000, the project net present value on the second stage expansion case is approximately $1bn with an internal rate of return of 30%, generating free cash flow of $3.5bn.

“The demand picture for nickel is robust both from the traditional stainless-steel market and the evolving EV battery market.”

Additionally, Martin said the firm was seeing “continued draw down” in global nickel inventories with the LME levels currently at 142,000 tonnes - the lowest levels for the last six years.

“Consensus long term nickel price forecasts are currently around $16,400 - these fundamentals are positive for the development of Araguaia and Vermelho.”