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What are the details?
Horizonte Minerals Plc, (LSE:HZM) (TSX:HZM) the nickel development company focused in Brazil, has reached agreement to indirectly acquire through wholly owned subsidiaries in Brazil the advanced high-grade Glencore Araguaia nickel project in north central Brazil. GAP combined with Horizonte’s 100% owned high-grade Araguaia nickel project creates one of the world’s largest nickel saprolite projects in terms of size and grade, in a premier mining jurisdiction that has a defined path to feasibility.
Highlights
· The combination of GAP and Horizonte’s Araguaia Project will create one of the largest saprolite nickel projects in the world.
· Additional resources with potential to provide ore grading 2% nickel for the first 10 years of mine life.
· Higher nickel grades are expected to improve project economics delivering a shorter capital repayment period and a lower break even nickel price.
· Upfront consideration on closing of US$2M to be satisfied through issue of HZM shares.
· Total acquisition cost US$8M.
· Placing of new shares to raise £1.55M through existing cornerstone shareholders.
Commenting on the acquisition, Horizonte CEO Jeremy Martin said, “This is a game-changing transaction for Horizonte. We have been able to negotiate a unique transaction leveraging the current depressed commodity markets. The combination of the two projects will produce one of the largest undeveloped saprolite nickel resources globally. We are confident that we can generate ore for the first 10 years for the single line Rotary Kiln Electric Furnace (RKEF) plant grading +2% nickel. The effect this is expected to have on the Enlarged Project’s economics is significant; having the potential to be one of the lower cost operations of its kind, with quicker capital repayment, while offering operational flexibility for increased annual production in the future. To integrate GAP we will need to re-optimise the mineral resources and update the mining and economic study before preparation of a feasibility study for the Enlarged Project.
“The consolidation of the Araguaia district is a major achievement for Horizonte. The Enlarged Project is ideally placed in the commodity cycle to be advanced with the aim of commencing production within the next five years when the supply / demand fundamentals for nickel are expected to be more favourable.
“Additionally we are pleased to announce the Company has raised £1.55M through its key cornerstone shareholders which is a strong endorsement for the transaction, the team and the new Enlarged Project. The Company is now well funded with over £3M in cash balances allowing us to advance the planned work on a Tier 1 project. We are now focussed on building the value, communicating the huge inherent value for the Company and advancing the Enlarged Project to Feasibility Study.
“We look forward to updating the market as we advance this exciting new opportunity.”
Project Details
The geological setting of GAP is similar to Horizonte’s Araguaia project. They are both located in Neo-Proterozoic Araguaia Fold Belt, a 1,000km long and 150km wide orogenic zone between the Amazon Craton to the west and the San Francisco Craton to the east. The nickel laterite deposits in both projects are developed on peridotites that form part of mafic-ultramafic complexes representing tectonic remnants of ophiolites emplaced in metasediments that form the western, external zone, of the Araguaia Belt.
The current GAP concessions contain three significant nickel laterite deposits, Serra do Tapa and Pau Preto (together: “SdT”), and Vale dos Sonhos (“VdS”). Exploration work in the original concessions was started by Falconbridge (later Xstrata Nickel) in 2003. By 2008 this work included the completion of over 2,500 diamond drill holes as part of a resource programme. Drilling on the SdT and VdS deposits was completed on 80m x 80m grids and on a 160m x 160m grid on the PP deposit. Small areas of closer spaced drilling were completed to evaluate short-scale variability.
The historical estimate for GAP at a 0.90% nickel cut-off is presented in Table 1 below. This estimate was prepared in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves as published in the GlencoreXstrata Resources & Reserves Report 31 December 2013. The mineral resource estimation for GAP (“historical estimate”) is historic in nature. The key assumptions used to prepare the historical estimate are outlined below. The historical estimate for the SdT and VdS deposits used Ordinary Kriging into 40m x 40m x 2m blocks with Change of Support to 5m x 5m 2m blocks, utilising data from 1,302 diamond drill holes comprising 55,334 metres. The resource estimation for PP was derived by estimation into a 3D model using the nearest neighbour technique, utilising data from 177 diamond drill holes comprising 4,838 metres. Table 1 also
presents the Araguaia mineral resource estimate at a 0.95% nickel cut-off from the Pre-Feasibility Study published by the Company in the technical report entitled, “Prefeasibility Study (PFS) for the Araguaia Nickel Project Pará State, Brazil” dated 25 March, 2014 (the ‘Prefeasibility Study’). Further analysis required on the historical estimate principally includes recalculation using the input parameters used to calculate the mineral resource estimate for Araguaia. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves and the Company is not treating the historical estimate as current mineral resources or mineral reserves. A review by the Company has indicated that the data preparation has been undertaken according to industry best practices and that the historical estimate has provided an appropriate basis for analysis conducted to date.
