Export credit agencies provide funds for Horizonte’s Araguaia project

Horizonte Minerals (TSX: HZM; LSE: HZM) has nailed down US$146.2 million from export credit agencies in Denmark and Finland to partly fund construction of its 100%-owned Araguaia ferro-nickel project in Brazil.

The funds guaranteed by Denmark’s Export Credit Agency (EKF) and Finnvera, Finland’s Export Credit Agency, will be the first tranche of a senior debt facility. (The terms were not disclosed.) A second tranche is expected to be provided by a syndicate of international financial institutions, the company says. The second tranche will be about US$179 million.

“The senior debt facility is set to provide a significant portion of the funding required for construction of the project,” Jeremy Martin, Horizonte’s CEO, said in a media brief. “We look forward to announcing credit approval from the balance of senior lenders during the remainder of the third quarter, as well as further financing milestones.”

Martin said the company will begin construction as soon as the entire financing is completed.

 “Securing a US$146 million debt facility from two export credit agencies represents a key milestone for the company as it looks to fund its Araguaia nickel project,” Alexander Pearce, a mining analyst at BMO Capital Markets commented in a research note to clients. “As a reminder, we estimate ~US$470 million in capex for its Araguaia project, of which ~US$325 million is expected to be funded via debt.”

The company estimates initial capex for the nickel laterite mining operation of US$443 million. Nickel ore from shallow open pits (maximum depth of 30 metres) will be sent to a central processing plant. No blasting will be required. The project will use a rotary kiln electric furnace (RKEF) to produce a high-grade ferronickel product.

After an initial ramp-up period, the plant will reach a capacity of about 900,000 tonnes of dry ore feed a year to produce 52,000 tonnes of ferronickel, in turn containing 14,500 tonnes of nickel per year, according to a feasibility study. The study included an option for future construction of a second process line that would double the mine’s capacity from 14,500 tonnes of nickel a year to as much as 29,000 tonnes per year.  Construction of the second process line would be funded by cash flow.

Proven and probable reserves of 27.3 million tonnes grading 1.69% nickel and 17.15% iron support a mine life of 28 years based on an annual throughput of 900,000 tonnes per year.

The mine will produce nickel to supply the stainless steel market.

Horizonte also owns the Vermelho nickel-cobalt project, which is at the feasibility study stage and is expected to produce 25,000 tonnes of nickel and 1,250 tonnes of cobalt a year for the electric vehicle (EV) battery market.

At presstime in Toronto, the company was trading at 15.5¢ per share within a 52-week trading range of 9.5¢ and 17.5¢.

The company has a market cap of about $264 million.