A prefeasibility study shows that Horizonte Minerals can expect a large payout if it continues on with mine development at Vermelho.
According to the PFS, the Vermelho mine is financially feasible, with after-tax cash flow estimated at US$7.3 billion over the course of a 38 year life.
Horizonte Minerals expects the project — at full capacity — to produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt each year.
The initial capital cost estimate is currently US$652 million, which includes contingencies of US$97.7 million. The study also forecasts a post-tax net present value of US$1.7 billion and an internal rate of return of 26 percent.
“With the PFS now successfully completed, the priority now is to identify partners, secure funding and advance the project by undertaking a full feasibility study on Vermelho,” said Horizonte Minerals CEO Jeremy Martin in a statement on Thursday (October 17).
The company plans on using high-pressure acid leaching (HPAL) to process the nickel at Vermelho, and is looking to other companies’ success with the process.
“We will look to replicate the success achieved by the Coral Bay Nickel Corporation where the company is currently producing around 20,000 tonnes per year of nickel utilising a twin line HPAL plant. This was a low capex plant which has been operating successfully for the last 15 years,” Martin added.
In addition to the Vermelho project, Horizonte Minerals is developing the Araguaia nickel project, likewise located in Brazil. Araguaia is expected to produce 14,500 tonnes of nickel per year. Horizonte Minerals published the results of a feasibility study for Araguaia back in October 2018.
The news about Vermelho comes at the heels of nickel’s recent price upturn, with the metal recovering following its short downturn. Nickel has had a scorching hot year for the most part, with investors speculating on an increase in demand as electric vehicles gain popularity while supply dwindles.
Worldwide stockpiles of the metal remain at a multi-year low. Supply of nickel is essentially guaranteed to fall in 2020, when Indonesia’s nickel ore export ban is planned to roll out.
On Wednesday (October 16) at market close, nickel was trading on the London Metal Exchange at US$17,030 per tonne, and cobalt was US$35,000 per tonne. Horizonte Minerals’ share price closed at C$0.07 in Toronto on Thursday.
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Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.