Horizonte Minerals offered $25 million package by Orion Mine Finance
Brazil-focused nickel company, , announced on Thursday that it had signed a royalty agreement with investment firm, Orion Mine Finance, who will provide $25 million in funds for the advancement of its Araguaia nickel Project.
The company is advancing the Araguaia Project as Brazil's next ferro-nickel mine, and separately, developing its Vermelho nickel cobalt project focused to the electric vehicle battery market.
Jeremy Martin, Chief Executive of Horizonte, commented, "We are extremely pleased to secure this royalty agreement with Orion, which enables us to build out our owner's team, advance engineering and early works packages as we proceed to the start of full construction at Araguaia.”
Specifically, Orion will offer an upfront cash payment of $25 million in exchange for a 2.25% royalty on the Araguaia Project.
The royalty will only apply to the first 426,429 tonnes of contained nickel within the final product produced and sold, equivalent to the nickel production estimated over the life of mine for Araguaia in the first stage feasibility study, the company explained.
Shares in Horizonte Minerals skyrocketed as much as 107% following this morning's news.
“This royalty financing is non-dilutive for shareholders, and has been pre-designed to be compatible with the project funding package,” Mr Martin reassured his shareholders.
He also highlighted the state of the nickel market, labelling the commodity as “an outstanding performer” reflected through its current state of trading at almost 50% higher than at the start of 2019.
He acknowledged the rise as a boost to profits, stating: “At current nickel prices of US$15,500/t, the Araguaia Feasibility Study Stage 1 returns an NPV of more than US$580 million.”
Horizonte considers Orion as a more than appropriate partner due to its “strong track record” in financing successful mining contracts.
As a result, Mr Martin recognised the investment firm as a quintessential component to serve the project’s interests, adding:
“Orion is one of the largest mining finance groups in the marketplace with approximately $5.1 billion under management. We look forward to working with their team as the Araguaia project advances through to construction."
Philip Clegg, Portfolio Manager at Orion Resource Partners commented, "Orion is delighted to become a major investor in Araguaia, one of the leading nickel development projects globally. We look forward to supporting Horizonte as it enters the next phase of development of its world-class portfolio of nickel assets."
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