Horizonte Minerals plc anticipates at least a 35% increase in overall capital expenditure and a delay to first production at its Araguaia nickel project in northeast Brazil.
FINANCING
The company said it was making “good progress” on the final detailed engineering and construction design for Line 1 but a review of costs for the design and execution had led to the changes from the current budget.
“Given the progress made to date with construction, the value of the Araguaia Line 1 project and the upcoming delivery of the feasibility study on Araguaia Line 2, the company continues to have strong support from its major partners.
“The company is working on a plan with its various financial institutions together with the cornerstone shareholders for a financing solution to complete construction.”
Progress includes all key engineering drawings issued for construction and the start in Q3 of ore stockpiling activities.
Construction is “well advanced” of the water storage reservoir and of the 126km transmission line with all pylons erected and 118km of conductor cable installed.
“To de-risk the operation, the final detailed engineering work has added additional scope items linked to the major equipment packages, made several enhanced design changes from the original engineering study (including changes to the water abstraction pipeline design and water storage reservoir), and has identified the requirement for additional civil works and quantities.
“Additionally, changes have been required with selected suppliers who have not been able to deliver to the project timeframe, which has added further cost pressures.”
The company has also undertaken a detailed review of the ramp up and operational costs with a completed revision expected by mid-Q4 2023.
Results from the feasibility study on Araguaia Line 2 remain on track to be published in Q4 2023, with the combined production of Lines 1 and 2 expected to be 29,000 tonnes per year.
SUPPORT
Chief executive officer Jeremy Martin added that the project was “significantly de-risked”.
“Despite the anticipated higher capital requirement, Araguaia remains a Tier 1 asset that will deliver strong margins over its 28-year mine life once production commences next year.
“Moreover, the imminent completion of the feasibility study on Line 2 will demonstrate Araguaia’s capacity to support an annual production of 29,000 tonnes per annum.
“We appreciate the strong support provided by both local stakeholders and cornerstone shareholders, as we work towards a financing solution to complete construction.”