The Araguaia ferronickel project is targeting production in 2022, while the pre-feasibility study (PFS) results for the Vermelho nickel-cobalt project were published last week.
The Vermelho PFS valued the asset, acquired by Brazilian multinational Vale, at US$1.7bn with an internal rate of return of 26%, based on full-production rates of 25,000 tonnes of nickel and 1,250 tonnes of cobalt annually.
Numis assigned Vermelho a US$410mln value, a 27-fold growth from the previous US$15mln estimate, adding that business partners will be “key” to boosting value.
The broker said Horizonte would benefit from a joint venture partner experienced in high-pressure acid leach extraction, while there is potential for strategic investments from a battery manufacturer – considering the project can feed directly into the battery supply chain, unlike at Araguaia.
Numis reiterated a ‘buy’ recommendation on the stock and moved its target price to 13p from 11p, with the current price sitting at 4p.
“The PFS for Horizonte's Vermelho provides a second value driver with exposure to the higher growth battery technology segment,” the broker's analysts said.