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Horizonte pre-feasibility study values Vermelho project at US$1.72B

Horizonte Minerals PLC's pre-feasibility study for its Vermelho nickel-cobalt project in Brazil outlined a posttax net present value, discounted at 8%, of US$1.72 billion, a 26.3% internal rate of return and a 4.2-year payback period.

Initial capital cost was estimated at US$652.2 million, including US$97.7 million for contingencies, with C1 cash cost pegged at US$8,020 per tonne of nickel. Mining at Vermelho is planned via conventional open pit truck and excavator mining methods.

Total after-tax cash flows during the mine life are estimated at US$7.3 billion, assuming a base case nickel price of US$16,400 per tonne.

At full capacity, the project is expected to produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt per annum, according to an Oct. 17 release.

During the 38-year mine life, the project will produce 924,000 tonnes of nickel, 46,610 tonnes of cobalt and 4.5 million tonnes of kieserite as byproduct.

If a long-term Wood Mackenzie nickel price estimate of US$19,800 per tonne is used, the project's NPV will increase to US$2.37 billion, IRR will increase to 31.5%, and the payback period will shrink to 3.6 years.

Net cash flows at the higher price are estimated at US$9.55 billion, using the higher long-term price.

The Vermelho project hosts measured and indicated resources of 145.7 Mt at 1.05% nickel and 0.05% cobalt containing 1.5 Mt of nickel and 77,300 tonnes of cobalt.

Inferred resources stand at 3.1 Mt at 0.96% nickel and 0.04% cobalt containing 29,000 tonnes of nickel and 1,400 tonnes of cobalt.

Horizonte struck a deal in December 2017 with Vale SA to acquire the Vermelho project for US$8 million.