Brazil nickel project developer Horizonte Minerals requests bankruptcy protection

London-listed exploration company Horizonte Minerals, which has the US$1bn Araguaia nickel project in Brazil, requested the equivalent of bankruptcy protection after it failed to arrange fresh funds to advance the project.

"After a period of discussions with secured creditors, and existing and new potential investors on alternative scenarios with a view to a potential restructuring solution to attempt to achieve the best possible recovery for the company’s creditors while minimizing potential liabilities, the board has now regrettably concluded that Horizonte should be placed into administration in order to seek to preserve the value of the business for creditors and other stakeholders," the company said in a statement last week.

The company added that it decided to appoint Geoff Rowley and Chad Griffin of FRP Advisory as administrators.

"Following consultation with the company’s Brazilian legal counsel, the injunction (Brazilian Precautionary Measure) granted to the company’s Brazilian subsidiary Araguaia Níquel Metais Ltda which was previously expected to end on 15 May 2024 will now end on 24 May 2024. The injunction provides a 60-day stay period against the enforcement of debt and certain security held by senior lenders and creditors, in order to negotiate and work on a restructuring plan to be approved by its creditors," said Horizonte Minerals.

The firm recently put the Araguaia project on care and maintenance and said it was considering options, including its sale.

"The project had some problems with incorrect calculations at the start of the works. This affected the progress of the project in an important way, mainly because it happened at a time when the price of nickel fell significantly, practically closing the doors to new financing," a person with knowledge of the project told BNamericas, on condition of anonymity.

"Despite the nickel market having gone through difficulties in relation to price, I would say that the problem in this project is more associated with the design of the project and mistakes in certain calculations than structural problems in the nickel sector," added the source.

The problems with the project emerged earlier this year when Horizonte announced it had raised the capex to US$1bn from US$537mn after previously alerting investors that the amount was under review due to underestimated costs for civil works, electromechanical assembly and delays in deliveries of materials, among other factors.

Horizonte's top three shareholders are La Mancha Investments, with a 23.09% stake, Glencore with 17.74% and Orion Resource Partners with 10.49%.