Horizonte Minerals sank further this week after the company detailed additional funding that will be needed to complete the construction of its Araguaia nickel project in Brazil.
The new cost estimate now includes $89 million for pre-production and ramp-up of the nickel mine, general and administration, and working capital required to bring the operation to positive cash flow. It also takes into account $25-$50 million related to transaction costs and a minimum cash contingency.
Horizonte said it will also need a restructuring solution for its existing royalties arrangements. In 2019, the company signed an agreement with Orion Mine Finance for an upfront funding of $25 million to advance the Araguaia project. In return, Orion would receive a 2.25% royalty. Horizonte’s lack of funds drew the concern of shareholders last fall, when it revealed that costs for the Araguaia project has increased by over a third and first production will be delayed. At the time, it had spent $429 million on Araguaia. The companyin May 2022, with the aim of producing up to 29,000 tonnes of nickel a year for the stainless steel market., going from C$2.22 a share in Toronto to trading at C$0.34 within the space of a week.