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Horizonte Minerals (AIM, TSX: HZM) said construction costs for its Araguaia nickel mine in northern Brazil have increased by 12.6% to $537 million, up from the previous $477 million estimate, due mostly to inflationary pressure.
Horizonte started building the Araguaia nickel mine, which it acquired from Glencore in 2015, in May and it remains on schedule.
“The company has also opted to invest in additional EPCM [engineering, procurement and construction management] and resources to further de-risk the project schedule and seek to ensure delivery of first nickel in 1Q24, in line with the original plan,” it said in the operational update.
Horizonte noted that higher interest rates across the globe, as central banks seek to control inflation, also influenced its capex plans.
The company, which once considered the nickel project to be fully-funded, raised £70.5 million ($80m) this week through an equity fundraise.
“Following significant institutional demand in the bookbuild from existing and new investors, the board decided to upsize the lacing, increasing the gross proceeds from approximately £61.7mn to £70.5mn”, the company said.
Construction of the Araguaia nickel mine, which would take about two years, includes an open pit and a processing plant, which will produce ferronickel over an estimated 28-year period.
The operation in Brazil’s Pará state is expected to initially generate 14,500 tonnes of nickel a year, mostly destined to supply the stainless steel market. Output is expected to jump up to 29,000 tonnes of the battery metal a year after a second production line comes online in 2027.
Araguaia is considered a key project to diversify the country’s mining sector, which is centred on iron ore.
