Nickel

Horizonte Minerals Plc, (AIM:HZM)(TSX:HZM) ("Horizonte" or the "Company") the nickel development company focused in Brazil, is pleased to announce that its wholly owned subsidiary Araguaia Niquel Metais Ltda. ("ANM") has entered into an asset purchase agreement ("Agreement") to purchase certain new and unused ferronickel processing equipment (the "Processing Equipment") from Companhia Brasileira de Alumínio ("CBA"), a company listed on the B3 (Brazilian Stock Exchange), controlled by Votorantim SA ("Votorantim"), one of the largest industrial and financial investment holding companies in Latin America

Highlights:

  • The Processing Equipment comprises the key components of a conventional rotary kiln electric furnace plant ("RKEF"), excluding the furnace, and is expected to provide meaningful synergies in relation to the development of Horizonte's 100% owned Araguaia ferronickel project ("Araguaia" or the "Project")
  • The Processing Equipment is designed and manufactured by leading international vendors with similar capacity and technical specifications to Araguaia and is already located in Brazil at CBA's Niquelândia Operations
  • The Company is evaluating the use of selected components as spares and back up as part of the development of the first RKEF line at Araguaia but sees the key value in utilising some of the large-scale equipment, including the rotary kiln, to fast-track and lower the cost of development of a second RKEF line at Araguaia
  • Use of the Processing Equipment will be integrated into a new study on the development of a second RKEF line at Araguaia
  • The Agreement provides for a low upfront cost of US$600,000 payable in cash on signing with total potential consideration of up to US$7,000,000, with the balance payable upon the achievement of future milestones related to the development and operation of Araguaia

Horizonte CEO, Jeremy Martin commented: "The acquisition of the Processing Equipment is a compelling opportunity for Horizonte to fast-track the development of a second RKEF line at Araguaia, to reach 28,000 tonnes of nickel per year, and at a lower development cost. We expect to be able to realise significant savings on our planned development costs given the low cost acquisition of this high quality equipment relative to the original purchase cost of approximately US$60 million.

Today's news follows the announcement of the US$633 million funding package for the development of the first RKEF line at Araguaia. Fully funding phase one of the Project is transformational for Horizonte and the ability to fast-track phase two highlights our ambition to become a globally significant nickel producer. The execution of construction of the first RKEF line is our priority, but I believe this is a significant step in realising our vision for the full potential at Araguaia.

With a strong outlook for the nickel price underpinned by growing stainless steel and EV battery demand driven by the clean energy transition and limited new supply with comparable credentials to Araguaia, Horizonte is well placed to capitalise on the significant emerging nickel market deficit."

Background

The design and manufacture of the Processing Equipment was originally commissioned by Votorantim in 2006, as part of a proposed ~US$250 million ferronickel development at Niquelândia in Goiás State, Brazil. The project was expected to have an initial mine life of 20 years, with a capacity of approximately 42 ktpa of ferronickel (~10 ktpa of contained nickel) however, construction was halted due to the fall in nickel prices in 2009. The project was placed on care and maintenance during construction and ultimately never completed.

Horizonte and its engineering contractors have undertaken substantial due diligence on the Processing Equipment and concluded that it is well suited for use as part of the development of the second line at Araguaia. The Processing Equipment was manufactured by leading international suppliers and has been well maintained by CBA since the project was placed on care and maintenance with very similar technical specifications and design capacity to that being proposed at Araguaia. The Processing Equipment includes the following key categories of equipment: substation, crushing, rotary kiln, coal system, refining, conveyors, electrostatic precipitator, cooling tower and pneumatic dust collection.

Transaction Structure

ANM has entered into the Agreement with CBA to acquire 100% of the ferronickel Processing Equipment. As part of the transaction CBA will continue to perform care and maintenance activities going forward until it is removed from the existing site.

The total consideration of up to US$7 million payable by ANM will be paid according to the following schedule:

  1. US$600,000 payable on execution of the Agreement;
  2. US$950,000 upon the removal of 80% of the Processing Equipment from CBA's Niquelândia operations;
  3. US$950,000 upon reaching 50% completion of Araguaia plant construction;
  4. US$1,150,000 upon production at Araguaia reaching 90% of nameplate capacity for a period of 60 days, on average, and with up to 50% of such amount payable in Horizonte shares, at Horizonte's election; and
  5. US$3,350,000 payable by Horizonte in three equal annual instalments with the first instalment due within 45 days of the first sale of ferronickel to a third party. Horizonte may choose to pay the outstanding balance of this amount at any time of its choosing with up to 50% of the total able to be paid in Horizonte's shares, at Horizonte's election.

For further information, visit www.horizonteminerals.com or contact:

Horizonte Minerals plc

Jeremy Martin (CEO)

Anna Legge (Corporate Communications)

info@horizonteminerals.com

+44 (0) 203 356 2901

Peel Hunt LLP (Nominated Adviser & Joint Broker)

Ross Allister

David McKeown

+44 (0)20 7418 8900

BMO (Joint Broker)

Thomas Rider

Pascal Lussier Duquette

Andrew Cameron

+44 (0) 20 7236 1010

About Horizonte Minerals:

Horizonte Minerals plc (AIM & TSX: HZM) is developing two 100% owned, tier one projects in Parà state, Brazil - the Araguaia Nickel Project and the Vermelho Nickel-Cobalt Project. Both projects are large scale, high-grade, low-cost, low-carbon and scalable. Araguaia is construction ready and is expected to produce 29,000 tonnes of nickel per year to supply the stainless steel market. Vermelho is at feasibility study stage and is expected to produce 25,000 tonnes of nickel and 1,250 tonnes of cobalt to supply the EV battery market. Horizonte's combined near-term production profile of over 50,000 tonnes of nickel per year positions the Company as a globally significant nickel producer. Horizonte is developing a new nickel district in Brazil that will benefit from established infrastructure, including hydroelectric power available in the Carajás Mining District.

David J. Hall, the Chairman of the Company and a qualified person as defined in National Instrument 43- 101, has reviewed, approved and verified the technical and scientific disclosure contained in this announcement. For additional information, including with respect to the economic parameters on the Araguaia and the Vermelho projects, and the key assumptions and risks associated thereto, please refer to the amended technical report entitled "Feasibility Study for the Araguaia Nickel Project, Federative Republic of Brazil" dated November 2018 (the "Araguaia Report"), with respect to the Araguaia project and the amended technical report entitled "Pre-Feasibility Study for the Vermelho Project, Federative Republic of Brazil" dated 31 October 2019 (the "Vermelho Report"), with respect to the Vermelho project, each of which are available on the Company's profile on SEDAR at www.sedar.com.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Except for statements of historical fact relating to the Company, certain information contained in this press release constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, the ability of the Company to complete the acquisition of equipment as described herein, statements with respect to the potential of the Company's current or future property mineral projects; the ability of the Company to complete a positive feasibility study regarding the second RKEF line at Araguaia on time, or at all, the success of exploration and mining activities; cost and timing of future exploration, production and development; the costs and timing for delivery of the equipment to be purchased as described herein, the estimation of mineral resources and reserves and the ability of the Company to achieve its goals in respect of growing its mineral resources; the realization of mineral resource and reserve estimates and achieving production in accordance with the Company's potential production profile or at all. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks related to: the inability of the Company to complete the acquisition of equipment contemplated herein, on time or at all, the ability of the Company to complete a positive feasibility study regarding the implementation of a second RKEF line at Araguaia on the timeline contemplated or at all, exploration and mining risks, competition from competitors with greater capital; the Company's lack of experience with respect to development-stage mining operations; fluctuations in metal prices; uninsured risks; environmental and other regulatory requirements; exploration, mining and other licences; the Company's future payment obligations; potential disputes with respect to the Company's title to, and the area of, its mining concessions; the Company's dependence on its ability to obtain sufficient financing in the future; the Company's dependence on its relationships with third parties; the Company's joint ventures; the potential of currency fluctuations and political or economic instability in countries in which the Company operates; currency exchange fluctuations; the Company's ability to manage its growth effectively; the trading market for the ordinary shares of the Company; uncertainty with respect to the Company's plans to continue to develop its operations and new projects; the Company's dependence on key personnel; possible conflicts of interest of directors and officers of the Company, and various risks associated with the legal and regulatory framework within which the Company operates, together with the risks identified and disclosed in the Company's disclosure record available on the Company's profile on SEDAR at www.sedar.com, including without limitation, the annual information for of the Company for the year ended December 31, 2020, the Araguaia Report and the Vermehlo Report. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: Horizonte Minerals PLC



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