Horizonte Minerals plc has estimated an 87% increase in total costs to complete the Araguaia nickel plant in Brazil.
full financing solution (stock photo)
FINANCING
The estimated capital required to complete construction of Araguaia Line 1, commission the project and deliver first metal has been revised to approximately US$454 million.
The estimate at completion is currently $1 billion, nearly double October 2022’s estimated budget of $537m.
Horizonte said it spent a total $479m of the $1bn by the end of 2023.
The current optimised plan assumes a smaller workforce and a revised construction schedule of approximately 18 months with around 4.7m working hours needed to finish Araguaia Line 1.
Remobilisation is planned for Q3 2024 and mechanical completion expected during Q1 2026 with the ramp-up period increased to 18 months.
The figures come from the preliminary results of a review by specialised mining construction and engineering firm G Mining Services (GMS) of the cost-to-complete estimate and schedule.
GMS has also been working with key equipment suppliers including Hatch Ltd and FLSmidth to assess the remaining work.
Given the increase in costs, Horizonte will work with its major shareholders and senior lenders on a full funding solution, targeted for Q2 2024, as well as engaging existing and new potential investors.
The company said that additional interim funding would be required to implement a full funding solution as the cost to complete excludes working capital, capitalised ramp-up costs and financing costs.
Interim chief executive Karim Nasr added that Horizonte had since mid-January completed a significant amount of work to develop a new project execution plan, develop realistic mine and business plans while engaging with all stakeholders.
“While the new cost-to-complete is higher than previously announced by the company, it is now built on solid methodologies, which is a testament to the hard work undertaken to date by the whole Horizonte team.
“The company is now in a position to properly assess its ability to finance and complete the Araguaia nickel project (Line 1) and bring it into production.
“It is important to note that while completing the cost-to-complete estimate is a significant milestone, resuming and completing construction activities at Araguaia are still subject to the successful completion of a full financing solution, which the company will seek to develop in the coming weeks, but with no guarantee of success.
“Further, the CTC estimate is the capital required to complete the construction of Araguaia, commission the project and deliver first metal.
“The final financing amount will be higher and will depend on a variety of factors including discussions with senior lenders, suppliers, cornerstone investors and other third parties.”