Horizonte Minerals PLC (LON:HZM) has unveiled the findings of a successful pre-feasibility study which has confirmed the Vermelho project as “a large, high-grade resource, with a long life and low-cost source of nickel sulphate for the battery industry.”
It is described as a compelling economic and technical study which, according to Horizonte, will support the further development of the Brazilian nickel project.
"I am delighted to deliver the pre-feasibility study for the Vermelho nickel-cobalt project which represents another significant milestone delivered by the company this year," said Jeremy Martin, Horizonte chief executive.
“The study now positions Horizonte as a multi-asset nickel developer with a combined NPV in excess of US$2.5 billion at current nickel prices across the Araguaia and Vermelho projects. The PFS demonstrates that Vermelho can be a significant low-cost supplier of nickel in the form of battery grade nickel-sulphate.”
Martin added: “With the PFS now successfully completed, the priority now is to identify partners, secure funding and advance the project by undertaking a full feasibility study on Vermelho.”
Vermelho PFS in details
The project is envisaged with a 38-year mine life, with total cash flows over that time estimated at some US$7.3bn after tax. The PFS established a base case valuation of US$1.7bn (net present value) and estimated an internal rate of return of 26%.
It is projected that at full production the mine would produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt each year, via a high-pressure acid leaching process.
Cash costs were modelled at US$8,020 per tonne of nickel which puts Vermelho in the bracket of low-cost producers, meanwhile, the initial capex estimate is pitched at US$652mln, including nearly US$100mln budgeted for contingencies.
The base case economic model is based on a flat nickel price of US$16,400 per tonne over the 38 year mine lifespan.
Positive market for new nickel sources
“The nickel market fundamentals continue to be positive for the short to long term, driven by robust demand from stainless steel growth and anticipated increase in EV penetration rates,” Martin highlighted.
“Physical LME metal inventories continue to be drawn down to levels not seen in the last five years.
“This, combined with a lack of new major projects scheduled to come online in the short term, means that this is an opportune time to develop Vermelho."
He, meanwhile, added: “With a combined contained nickel inventory of over 4 million tonnes and the obvious synergies that come with having two world-class projects within 85 kilometres of each other in a stable and mining friendly jurisdiction, we have further cemented the company as having one of the largest undeveloped nickel portfolios in the world. With financing discussions underway to commence the construction of Araguaia and Vermelho demonstrating significant economic potential, Horizonte is well positioned, owning two high-quality projects at an advanced stage.”