The Araguaia PFS describes a basecase open-pit mining operation producing 15,000 mt/y of nickel contained in ferronickel (Fe-Ni) over a mine life of 25 years. C1 cash costs are estimated at $4.16 /lb of contained nickel. Pre-production capital is estimated at $582 million, with a 4.4-year payback period.

Indicated resources stand at 71.98 million mt grading 1.33% nickel; inferred resources stand at 25.35 million mt grading 1.21% nickel. Processing will be based on established rotary kiln/electric furnace technology.

The Araguaia project is located south of the main Carajas mining district in northern Brazil. The project has good regional infrastructure, including a network of federal highways and roads, with access to low-tariff hydro-electric power. The port city of São Luís will provide facilities for inbound and out-bound logistics.

Mining at Araguaia will be based on open-pit methods across seven pits at an average rate of 3.3 million mt/y to deliver 900,000 mt/y of ore to the plant.

Processing kiln dust will be recycled to the process before the secondary crushing stage in a roll crusher with an 80-mm gap. The ore will then be homogenized, partially dried, and fed to the kiln, along with the addition of metallurgical coal. In the kiln, the ore will be completely dried and calcined to remove chemically combined moisture and partially pre-reduced.

Calcined material will be transferred to a single 50-MW electric furnace for separation of metal and slag. The metal will be conveyed in ladles to the refining stage. The final Fe-Ni product will be granulated with water, screened, dried and stockpiled prior to dispatch to market. The average product grade over the life of project is estimated at 20% nickel in Fe-Ni.

Horizonte is proceeding with a feasibility study of Araguaia that is expected to include infill drilling to define a measured resource, additional metallurgical test work to include large-scale piloting, trial mining, and completion of a Social and Environmental Impact Assessment combined with work to obtain the Mining License Permit. The company will also undertake detailed engineering, logistics and infrastructure studies.

Commenting on the nickel market, Horizonte CEO Jeremy Martin said, “The recent ban on direct shipping nickel ore from Indonesia has seen the commodity in the spotlight since the beginning of 2014 and has already had a significant impact on the nickel market. There is anticipation of tightening on the supply side, resulting in increased nickel prices in the mid- to longer-term, at the time when we anticipate Araguaia will be brought into production.

“The market consensus believes that it will take several years for companies to build process facilities in Indonesia, together with the required supporting infrastructure, meaning the overall cost of production from such plants is not yet known. Horizonte is well positioned to benefit from this, as, with the positive PFS, we are one of the few junior companies developing a significant nickel project with a proven process route.”