Brazil focused Horizonte Minerals said that the preliminary economic assessment study on its wholly owned Araguaia nickel laterite project has exceeded its expectations and it will start work on a pre feasibility study during the fourth quarter of 2012.
There are currently 14 plants operating globally with this tried and tested processing route, which has evolved over the last 80 years with two of the newest operations located in Brazil, Horizonte told investors.
The PEA study estimates the net present value after tax for the RKEF option at USD 693 million at an 8% discount rate and an internal rate of return of 15.4%, with a capital payback of seven years.
The ATL processing option gives NPV of USD 554 million at an 8% discount rate and an IRR of 18.1%. The payback period is six years.
While all three abovementioned processing routes returned solid project economics, Horizonte will not be pursuing the AHL option due to the high technological risk associated with the process.
Mr Jeremy Martin CEO of Horizonte Mineral said that "The results from the PEA have exceeded our expectations and demonstrate that the project has two potential viable process routes that generate robust post tax net present values with solid rates of return. The results firmly demonstrate that Araguaia has the potential to be a significant nickel laterite project globally in terms of size, grade, economics, location, legal fiscal code and infrastructure as befits its Brazilian setting."
The next phase of working leading into the PFS will comprise an infill drill program to convert the key target zones from inferred mineral resources to indicated mineral resources; this is scheduled to start in the current third quarter. The company will also undertake detailed follow up metallurgical work leading to a RKEF pilot plant campaign.
It will award a contract for a Social Environmental Impact Assessment late in the third quarter. The goal of this work is to improve the overall project economics through a combination of increased zones of high grade resource, physical upgrading to allow a higher grade of feed to the plant and looking at the potential for iron credits.
Mr Jeremy Martin said that "If we are successful in delivering these objectives there is likely to be upside on the current post tax NPV figures and improved IRR. We look forward to updating shareholders over the coming months on this as we move into the next phase of Araguaia's development."
The project area south of the Carajás mineral district in northern Brazil has well developed local infrastructure with surfaced road access to the project and then a series of non surfaced roads across the project.
The Carajás mining complex lies 200 kilometers to the north of the project and is the railhead and point of loading for iron ore to be embarked at the deep water port facilities of São Luis.
There are also plans to build a spur line from the new north south railway line located approximately 100 kilometers to the east to the local project town of Conceição. This is due for completion in 2015 and would bring rail access approximately 25 kilometers from the project.
The area, as a whole, is well serviced with power. Electricity would be derived from a major dam and power station at Tucuruí, which is linked into the national grid.
Source - Proactive Investors
(www.steelguru.com)
