Horizonte tasks banks to raise $325 million for Araguaia

The Araguaia project will produce ferro-nickel which is used in stainless steel. (Credit: Horizonte Minerals)

Horizonte Minerals (TSX: HZM) announced on Wednesday that it has executed a mandate to arrange a senior secured project finance facility of up to $325 million to fund the construction and development of its flagship Araguaia nickel project in Para state in Brazil.

A syndicate of five international financial institutions, including BNP Paribas, ING Capital LLC, Mizuho Bank, Natixis, and Société Générale will act as the Mandated Lead Arrangers.

Midday Wednesday, Horizonte’s stock was up 16% on the TSE

Araguaia will be the first of Horizonte’s projects to move to the construction phase. A feasibility study describes an initial production phase where about 900,000 t/y of ore is treated in a rotary kiln electric furnace (RKEF) to produce about 14,500 t/y of nickel contained in 52,000 t/y of ferronickel.

“This debt facility will cover a significant portion of the pre-production capex required to complete the Stage 1 construction for Araguaia. We are targeting completion of the project financing package for the Project by the end of 2020,” said Jeremy Martin, Chief Executive of Horizonte.

Martin told Reuters that Horizonte was in advanced discussions with miner and trader Glencore and private equity firm Orion Resources Partners, amongst others, for equity and project financing.

The company was also in talks to supply nickel to stainless steel producers primarily in Europe and North America.

The company aim to start construction in early 2021 and the first stage of the project will cost a total of $440 million.

Horizonte also owns the Vermelho property in Brazil — one of the largest and highest-grade undeveloped laterite nickel-cobalt resources in the world. According to the company, the project will generate $7.3 billion in total cash flow over 38 years.

Midday Wednesday, Horizonte’s stock was up 16% on the TSE. The company has a C$100 million market capitalization.

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