Horizonte intends to raise $633 million to fully fund Araguaia nickel project into production
(Kitco News) - Horizonte (TSX: HZM) announced today that it has entered into certain investment and subscription agreements as part of a comprehensive funding package of US$633 million which is expected to complete the funding required for the construction of its Araguaia nickel project in Brazil.
According to the company’s statement, the proposed funding package comprises of approximately US$197 million equity fundraise; US$65 million convertible loan notes issue; US$25 million cost overrun debt facility; as well as US$346.2 million proposed senior debt facility.
The company added it also intends to raise up to US$8 million (approximately £6 million) by way of an open offer to holders of existing ordinary shares.
Horizonte is developing its 100% owned Araguaia nickel project as Brazil’s next major ferronickel mine. Araguaia is a Tier 1 mining project with a high-grade scalable resource, located south of the Carajás Mining District in the Pará State, north Brazil.
The company indicated that the initial 28 year mine life of the project generates free cash flows after taxation of US$1.6 billion, returning an IRR of over 20% on an initial capital cost of $US443 million, with predicted sufficient Mineral Resources to extend the mine life well beyond the 28 year period or to increase capacity.
The Stage 2 expansion gives a 26-year mine life, generating cash flows after taxation of US$2.6 billion, with an estimated NPV of US$741 million and an IRR of 23.8% - using the base case nickel price forecast of $14,000/t.
However, the company noted that based on the recent nickel price of $16,000, the project NPV on the Stage 2 Expansion Case is approximately $1 billion with an IRR of 30% generating free cash flow of US$3.5 billion.
Horizonte Minerals is a leading nickel company that is developing two, tier one projects in Pará State, Brazil. The Araguaia ferronickel project and the Vermelho nickel-cobalt project are both high grade, lowest cost quartile, long mine life projects.