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HORIZONTE MINERALS UPDATE AND FINANCIAL RESULTS FOR THE FIRST QUARTER 2014 AND MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THREE MONTHS ENDED 31 MARCH 2014
Horizonte Minerals Plc, (AIM:HZM) the nickel development company focused in Brazil, announces that it has today published its unaudited financial results for the three month period to 31 March 2014 and the Management Discussion and Analysis for the same period.
Overview
· Completed NI 43-101 compliant Pre-Feasibility Study, as announced on March 25th 2014, proving robust economics of its 100% owned Araguaia Nickel Project in Brazil as a leading high grade nickel development project based on a proven and low risk pyro-metallurgical process using Rotary Kiln Electric Furnace technology (‘RKEF’)
· Post tax NPV₈ of US$519 million and 20% IRR based on 900ktpa single line, 15,000tpa nickel (‘Ni’) in ferronickel (‘Fe-Ni’) product over 25 year life of mine (‘LOM’) (Base Case – preferred route)
· Post tax NPV₈ of US$1,204 billion and 21% IRR based on 2.7Mtpa twin line plant (‘Option’)
· Low cost operation – C1 cash costs of US$4.16/Ib (US$9,166/t) over LOM (first quartile of cost curve)
· Significant free cash flow generation – projected generation of US$1,766 billion post tax over the 25 year LOM
· High Grade – 1.76% Ni average feed grade for the first 10 years of production (Base Case)
· Flexibility to ramp up production – substantial NI 43-101 Resource base consisting of 71.98Mt grading 1.33% Ni (Indicated) and 25.35Mt at 1.21% Ni (Inferred) allows operational flexibility
· Araguaia is ideally located in an established mining district, which offers good road and rail networks with accessible transportation routes to port, access to low cost hydroelectric power and support from regional authorities
The company’s near term focus at Araguaia is to:
· Advance and secure regulatory approval for the Social and Environmental Impact Assessment (‘SEIA’)
· Undertake large scale continuous pilot plant tests on Araguaia ore with the aim of further de-risking the project and optimising the RKEF process flow sheet
· Advance the project into the Feasibility Stage in H2 2014
· Highly positive nickel market fundamentals, with the implementation of the Indonesian nickel ore ban the nickel price has increased c.33% in 2014 from US$13,200/t in January to current levels around US$18,000/t – making it the best performing metal year to date
Commenting Jeremy Martin CEO “With the recent Indonesian ban on untreated ore exports, the current market fundamentals underpinning nickel are exceptionally strong. As such the nickel price has increased by c.33% since the beginning of the year and indeed it is the best performing metal of the year to date. Importantly nickel forecasts also look favourable as a number of market commentators predict higher nickel prices for late 2014 and beyond in order to force demand in line with supply. Notably Macquarie state that the nickel price could reach US$20,000/t by the end of 2014 and BoA Merrill Lynch forecast the nickel price reaching US$25,000/t by early 2015.
“The rise in the nickel price towards the 10 year historic average supports the excellent economics of our Araguaia project as demonstrated by the recently completed Pre-Feasibility Study. Araguaia is one of the few advanced nickel projects suitable to use the proven RKEF process technology to produce ferronickel in the market place today placing it in a strong position. We look forward to continuing to advance Araguaia towards the Feasibility Study stage as we further de-risk and add confidence to the project economics in line with the increasing nickel price, resulting in added value for shareholders.”
