Name of the Project
Araguaia ferronickel project.

Location
Pará state, Brazil.

Client
Horizonte Minerals.

Project Description
A feasibility study has confirmed Araguaia as a Tier 1 project with a large high-grade scalable resource, long mine life and low-cost source of ferronickel for the stainless steel industry.

The project has two principal mining centres – Araguaia nickel south (ANS) and Araguaia nickel north (ANN). ANS hosts the Pequizeiro, Baiao, Pequizeiro West, Jacutinga, Vila Oito East, Vila Oito West and Vila Oito deposits, while ANN hosts the Vale do Sonhos deposit.

The deposits will be mined by contractors using conventional openpit truck-and-shovel techniques. No blasting will be necessary. Reverse circulation (RC) grade-control drilling will be completed at a 10 m × 10 m spacing well ahead of mining. This, combined with the use of visual control of the limonite and transition boundary, face sampling, stockpile sampling and ore feed sampling, supports a comprehensive mine-to-mill strategy that is designed to maintain consistent feed to the process plant.

Waste will be stored in external dumps near the pits. Ore will be transported to stockpile hubs near each deposit. Sheeting (using ferricrete extracted from the overburden) will be required to support trafficability in and around the mine during the wet season. Depending on plant demand, ore will be hauled from hub stockpiles or directly from the pits to the run-of-mine (RoM) at the rotary kiln electric furnace (RKEF) process facility. Stockpiles on the RoM will be sheeted and classified according to ore type and chemistry for blending.

Araguaia’s feasibility study design allows for future construction of a second RKEF process line, with potential to double Araguaia’s production capacity from 14 500 t/y to 29 000 t/y nickel.

The project will have one RKEF processing line, from ore receipts to shotting of the ferronickel product.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an estimated post-tax net present value, (NPV) at an 8% discount rate, of $401-million and internal rate of return (IRR) of 20.1%.

Value
The project has a capital cost of $443-million, including $65.3-million in contingencies.

Duration
The RKEF plant and project infrastructure will be built over a 31-month period.

The company aims to start production in late 2021 or early 2022.

Latest Developments
Brazilian Pará state environmental agency, Semas, has awarded the Araguaia ferronickel project its final permit needed before construction can get under way.

The construction licence provides the permits required for the RKEF processing plant and associated infrastructure.

Subject to funding, the $443-million development is now construction-ready, having previously received the necessary environmental permits.

Aim- and TSX-listed Horizonte said in October that it would aim to have a funding plan for Araguaia in place by mid-2019.

In December 2018, an assessment of a second-stage expansion of the planned project was completed delivering compelling economic results, with a base case NPV of $741-million and an IRR of 31.8%.

The expansion option is included as an opportunity in the National Instrument 43-101 technical report that Horizonte has filed for the Araguaia project.

This expansion, or Stage 2, will potentially double Araguaia’s production capacity from 14 500 t/y of nickel to 29 000 t/y.

Stage 2 assumes operating at a Stage 1 production rate of 900 000 t/y for three years, after which free cash flows would be reinvested to expand the plant to 1.8-million tonnes a year by the addition of a second line.

“For this scenario, the upfront preproduction capital cost remains unchanged at $443-million and the incremental capital expenditure to build the Stage 2 expansion, is anticipated to be financed out of operational free cash flow. The feasibility design of the RKEF plant and all associated infrastructure was configured to allow for a second RKEF line to be added at a future time. As such, the Stage 2 expansion benefits from the existing utilities and infrastructure expenditure. Significant items, such as the powerline, water pipeline, overall process plant site, utilities, and slag storage facility, already have sufficient capacity built in during the Stage 1 planning to meet the desired production increase,” Horizonte Minerals CEO Jeremy Martin has said.

The results of the Stage 2 study shows that Araguaia’s resources could support the increased capacity over 26 years, with the first ten years averaging 1.81% nickel, which places the project on the upper range of the global grade curve.

Key Contracts and Suppliers
Ausenco Engineering Canada (process plant design).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Horizone Minerals, tel +44 203 356 2901.
Tavistock on behalf of Horizone Minerals, tel +44 207 920 3150 or email horizonte@tavistock.co.uk.