Horizonte says Brazil nickel project will demand higher capex

Horizonte Minerals said it increased the capex projection for its Araguaia nickel project in Brazil’s Pará state and postponed the estimated start of production. 

The changes come after completing the final detailed engineering and construction design for Line 1 of the project.

“This work, along with a comprehensive cost review, has resulted in changes to the design and execution scope, which are expected to increase the overall capital expenditure requirement by at least 35% (of current capex budget) and delay first production to Q3-2024,” the company said in a statement.

Horizonte had expected production to start in the first quarter of 2024.

The company did not provide a revised capex figure, saying the new estimate is likely to be announced in 4Q23 as Reta Engenharia is undertaking an independent capex and schedule review.

“We continue to make solid progress with construction at Araguaia Line 1 and are confident that the project is now significantly de-risked given the near-finalization of detailed engineering and procurement, together with the detailed review of the costs to project completion, ensuring successful delivery," said CEO Jeremy Martin in the statement.

"Despite the anticipated higher capital requirement, Araguaia remains a Tier 1 asset that will deliver strong margins over its 28-year mine life once production commences next year. Moreover, the imminent completion of the feasibility study on Line 2 will demonstrate Araguaia's capacity to support an annual production of 29,000 tonnes per annum," he added.

Araguaia is among the largest nickel projects under development in Brazil. Construction began early last year.

Horizonte’s top three shareholders are La Mancha Investments, Glencore and Orion Resource Partners.