Horizonte Minerals plc Final Results

Horizonte Minerals plc Final Results

Horizonte, the AIM and TSX quoted exploration and development company focused in Brazil, announces its results for the year ended 31 December 2011.

 

Overview

  • Araguaia nickel project developing into a significant nickel laterite asset in terms of tonnage and grade compared to global peer group
  • Consolidated land position around Araguaia via acquisition through all share transactions of the Vila Oito and Floresta projects from TSX listed Lara Exploration Ltd
  • Published NI 43-101 maiden Inferred Resource of 76.6Mt at 1.35% nickel in March 2011
  • Completed a resource drilling programme of 13,204 metres in 539 holes with 7 drill rigs active on the project
  • 2,587 metre scout drill programme completed at the Falcao gold project with positive results - AngloGold has confirmed US$1.6 million budget for further exploration in 2012
  • Successful oversubscribed placing of £8.25 million in February 2011 enabled fast track programme at Araguaia
  • Cash position at year end 2011 of £5.9 million - well funded for Araguaia development work in 2012
  • Successful secondary listing on Toronto Stock Exchange in June 2011
  • Board strengthened by appointment as Non-Executive Directors of William Fisher in June 2011 and Owen Bavinton in January 2012

 

Post Balance Sheet Events  

  • In January 2012 published a new NI 43-101 Mineral Resource Estimate comprising; Indicated Resource of 39.3Mt grading 1.39% nickel and an Inferred Resource of 60.9Mt averaging 1.22% nickel at a 0.95% cut-off

 

Chairman's Statement

This has been a period of exceptional progress for Horizonte.  During the past year we have delivered on our key milestones within budget and on schedule, seeing us advance our flagship Araguaia nickel project ('Araguaia') to a stage that places it in the upper quartile of developing global nickel projects in terms of size and grade.  We also have an active gold portfolio in northern Brazil which we are successfully developing with our JV partner AngloGold Ashanti Limited, giving us a secondary commodity focus and adding further value to the Company with minimum capital risk exposure.  These developments, coupled with the support from major shareholders, Teck Resources and Anglo Pacific Group, give us the foundations from which to drive the growth of the Company in 2012 as we continue to develop Araguaia through to feasibility stage and generate significant value for shareholders.

In March 2011 we announced a maiden Inferred Resource Estimate at Araguaia of 76.6 million tonnes ('Mt') grading 1.35% nickel ('Ni') and 0.06% Cobalt ('Co').  This initial resource was hugely encouraging and clearly showed the potential for the project to be further explored and developed to become a major nickel asset.  Due to a successful placing of £8.25 million in February 2011, which was oversubscribed by new and existing institutional investors, we were able to increase our drilling budget at Araguaia. To this end, we increased our drilling programme from 8,000 metres to 13,204 metres and fast-tracked drilling by utilising seven drill rigs on site.

Over the period we also expanded our land position surrounding Araguaia in the Carajás district to consolidate further zones into the project.  The acquisition of the Vila Oito and Floresta projects from Lara Exploration Ltd was completed in July 2011 and the licences transferred in February 2012.

As a result of this expanded drill programme and further land consolidation, in January 2012 we were delighted to announce a new Mineral Resource Estimate at Araguaia which met with management's targets. An Indicated Resource of 39.3 million tonnes grading 1.39% nickel and an Inferred Resource of 60.9 million tonnes averaging 1.22% nickel using 0.95% nickel cut-off was calculated.  Notably, we have converted 39% of the resource to the Indicated category and demonstrated the existence of higher grade zones which are vital for early mine life economics, as shown by the current Indicated Resource of 24.2Mt grading 1.6% using a 1.2% cut-off.

This revised resource, I believe, places Araguaia firmly on the map as one of the more significant nickel laterite assets in terms of tonnage and grade in the global marketplace.

In parallel with the expanded drilling and new NI 43-101 Mineral Resource Estimate we are also conducting various metallurgical testing, community development and environmental base line studies which are an integral part of the development process of advancing an asset towards the feasibility stage with a view to production.

The definition of the process route is fundamental to producing the Preliminary Economic Assessment ('PEA') study which is expected to be concluded in Q2 2012.

Araguaia, on a number of levels, has several critical location advantages.  Firstly, being based in Brazil, the project is in a rapidly-growing economy that is one of the more preferable countries in terms of favourable and workable mining codes. Secondly, our project is located near the Carajás mineral district, a region with an established mining industry and significant mineral endowment and development.  The third critical location advantage, and one that cannot be emphasised enough, is the infrastructure of the region. Excellent road and rail networks and economical electrical power are readily available - highly important for large scale mining projects.

So when considering the growing importance of this project it is not only the tonnage and grade that has to be considered but also the location and infrastructure, which adds significant value to the asset. Araguaia is a truly quality asset for Horizonte and one that we look forward to progressing up the development curve, accruing significant value for shareholders.

Of course, there are concerns regarding metal consumption and prices within an uncertain world economic climate.  Mining and metals are long-term industries.  Even if metal consumption were to remain flat, it is the critical lack of supply of new quality projects that will likely maintain metal prices at reasonable levels.  The global stainless steel production is forecast to reach new highs in 2012 (Macquarie Research, November 2011) with a steady increase in following years.  This should see nickel prices at levels capable of sustaining a large nickel project such as Araguaia.  When economies and markets recover, as no doubt they will, Horizonte will be well placed with the ownership of a quality nickel asset in a stable and well served country and in a region with excellent infrastructure that enables rapid development of the project.

In addition to Araguaia, Horizonte has a developing gold project with a major mining partner AngloGold.  The Falcao gold project ('Falcao') has progressed through the year and seen the completion of the initial 2,587 metre scout drill programme that has tested the large defined gold-in-soil anomaly.  Broad zones of low grade/ near surface gold mineralisation were defined in a number of drill holes including, 15.76 metres grading 1.65 g/t Au.

These results led to the drilling of an additional five holes to further define the style and controls on the gold mineralisation. The soil grid was also expanded to cover areas where the gold anomaly was identified as open.  Final results from this recent drilling programme are expected in Q1 2012 and will be used along with detailed database information to determine the 2012 follow up drilling programme.  In this vein, I am delighted to report that AngloGold has confirmed a 2012 exploration budget for Falcao of US$1.6 million.

In terms of corporate initiatives, another major development in 2011 was Horizonte listing on the main board of the Toronto Stock Exchange (TSX-HZM). This secondary listing was designed to create greater capital market exposure for the Company in North America where nickel laterites and Brazil are well understood. One such example of this appreciation is underpinned by the Onca Puma transaction in 2005 which saw mining major Vale acquiring the project (87Mt at 1.7% nickel) from Canico Resources at a price of US$0.23 per in-situ pound of nickel. The Onca Puma project, which is now in production, is in close proximity to Araguaia, where Horizonte's resources are valued at less than US$0.03 per pound.  I believe this again highlights the potential upside in value of Araguaia as we advance it up the development curve.

We have also further strengthened the Board during the period, firstly with the appointment of Bill Fisher, who has extensive experience with companies on the TSX and was on the Board of Aurelian when it was sold to Kinross for $1.2 billion.  I am also delighted to welcome Owen Bavinton to our Board as a Non-Executive Director. Owen was until recently Group Head of Exploration at Anglo American and has vast experience in developing major base metal projects. His familiarity with Brazil, having been involved in the development of Barro Alto nickel laterite project, will be most beneficial to us as we progress our flagship Araguaia Project.

Horizonte's investment case is clearly evident; with our target resource at Araguaia now in hand, we believe we have a world-class nickel laterite asset with a clear path to feasibility.  The results of the PEA are expected shortly, which again will be a significant milestone for the Company in proving the economic potential of the Araguaia project. This in turn with expected newsflow on our gold portfolio throughout 2012, supportive mining majors, strong treasury and an excellent management team with many leading industry figures, places us in a strong position to generate value for our shareholders during another exciting year for the growth of your Company.

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