/PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY
OR INDIRECTLY, IN THE UNITED
STATES OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION,
RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL./
LONDON, Sept. 28, 2015 /CNW/ - Horizonte Minerals Plc,
(AIM: HZM, TSX: HZM) ('Horizonte', 'HZM' or 'the Company') the
nickel development company focused in Brazil, is pleased to announce that it has
reached agreement to indirectly acquire through wholly owned
subsidiaries in Brazil the
advanced high-grade Glencore Araguaia nickel project ('GAP')
in north central Brazil (the
'Proposed Transaction'). GAP combined with Horizonte's
100% owned high-grade Araguaia nickel project ('Araguaia' or
'Araguaia Project') creates one of the world's largest
nickel saprolite projects in terms of size and grade, in a premier
mining jurisdiction that has a defined path to
feasibility.
Highlights
- The combination of GAP and Horizonte's Araguaia Project will
create one of the largest saprolite nickel projects in the world
(the "Enlarged Project").
- Additional resources with potential to provide ore grading 2%
nickel for the first 10 years of mine life.
- Higher nickel grades are expected to improve project economics
delivering a shorter capital repayment period and a lower break
even nickel price.
- Upfront consideration on closing of US$2M to be satisfied through issue of HZM
shares.
- Total acquisition cost US$8M.
- Placing of new shares to raise £1.55M through existing
cornerstone shareholders.
Commenting on the acquisition, Horizonte CEO Jeremy Martin said, "This is a game-changing
transaction for Horizonte. We have been able to negotiate a
unique transaction leveraging the current depressed commodity
markets. The combination of the two projects will produce one
of the largest undeveloped saprolite nickel resources globally.
We are confident that we can generate ore for the first
10 years for the single line Rotary Kiln Electric Furnace (RKEF)
plant grading +2% nickel. The effect this is expected to have
on the Enlarged Project's economics is significant; having the
potential to be one of the lower cost operations of its kind, with
quicker capital repayment, while offering operational flexibility
for increased annual production in the future. To integrate
GAP we will need to re-optimise the mineral resources and update
the mining and economic study before preparation of a feasibility
study for the Enlarged Project.
"The consolidation of the Araguaia district is a major
achievement for Horizonte. The Enlarged Project is ideally
placed in the commodity cycle to be advanced with the aim of
commencing production within the next five years when the supply /
demand fundamentals for nickel are expected to be more
favourable.
"Additionally we are pleased to announce the Company has raised
£1.55M through its key cornerstone shareholders which is a strong
endorsement for the transaction, the team and the new Enlarged
Project. The Company is now well funded with over £3M in cash
balances allowing us to advance the planned work on a Tier 1
project. We are now focussed on building the value,
communicating the huge inherent value for the Company and advancing
the Enlarged Project to Feasibility Study.
"We look forward to updating the market as we advance this
exciting new opportunity."
Project Details
The geological setting of GAP is similar to Horizonte's Araguaia
project. They are both located in Neo-Proterozoic Araguaia
Fold Belt, a 1,000km long and 150km wide orogenic zone between the
Amazon Craton to the west and the San Francisco Craton to the
east. The nickel laterite deposits in both projects are
developed on peridotites that form part of mafic-ultramafic
complexes representing tectonic remnants of ophiolites emplaced in
metasediments that form the western, external zone, of the Araguaia
Belt.
The current GAP concessions contain three significant nickel
laterite deposits, Serra do Tapa and Pau
Preto (together: "SdT"), and Vale dos Sonhos
("VdS"). Exploration work in the original concessions
was started by Falconbridge (later
Xstrata Nickel) in 2003. By 2008 this work included the
completion of over 2,500 diamond drill holes as part of a resource
programme. Drilling on the SdT and VdS deposits was completed
on 80m x 80m grids and on a 160m x 160m grid on the PP deposit.
Small areas of closer spaced drilling were completed to
evaluate short-scale variability.
The historical estimate for GAP at a 0.90% nickel cut-off is
presented in Table 1 below. This estimate was prepared in
accordance with the CIM Definition Standards on Mineral Resources
and Mineral Reserves as published in the GlencoreXstrata Resources
& Reserves Report 31 December 2013. The mineral resource
estimation for GAP ("historical estimate") is historic in
nature. The key assumptions used to prepare the historical
estimate are outlined below. The historical estimate for the
SdT and VdS deposits used Ordinary Kriging into 40m x 40m x 2m
blocks with Change of Support to 5m x 5m 2m blocks, utilising data
from 1,302 diamond drill holes comprising 55,334 metres. The
resource estimation for PP was derived by estimation into a 3D
model using the nearest neighbour technique, utilising data from
177 diamond drill holes comprising 4,838 metres. Table 1 also
presents the Araguaia mineral resource estimate at a 0.95% nickel
cut-off from the Pre-Feasibility Study published by the Company in
the technical report entitled, "Prefeasibility Study
(PFS) for the Araguaia Nickel Project Pará State, Brazil" dated 25 March,
2014 (the 'Prefeasibility Study'). Further
analysis required on the historical estimate principally includes
recalculation using the input parameters used to calculate the
mineral resource estimate for Araguaia. A qualified person
has not done sufficient work to classify the historical estimate as
current mineral resources or mineral reserves and the Company is
not treating the historical estimate as current mineral resources
or mineral reserves. A review by the Company has indicated
that the data preparation has been undertaken according to industry
best practices and that the historical estimate has provided an
appropriate basis for analysis conducted to date.
Table 1
|
|
|
|
|
|
Deposits
|
Ni cut-off
grade
|
Measured Mineral
Resources
|
Indicated Mineral
Resources
|
Measured &
Indicated Resources
|
Inferred Mineral
Resources
|
Mt
|
%
Ni
|
Mt
|
%
Ni
|
Mt
|
%
Ni
|
Mt
|
%
Ni
|
GAP historical
estimate *
|
0.90
|
16.1
|
1.44
|
89.0
|
1.31
|
105.1
|
1.33
|
18
|
1.3
|
|
|
|
|
|
|
|
|
|
|
Horizonte Araguaia
Project **
|
0.95
|
|
|
72.0
|
1.33
|
72.0
|
1.33
|
25
|
1.2
|
*Source: GlencoreXstrata - Resources & Reserves Report
31 December 2013.
**Source: Horizonte Araguaia Project Prefeasibility Study dated
25 March 2014.
Transaction Details
Pursuant to a conditional asset purchase agreement ('Asset
Purchase Agreement') between, amongst others, the Company and
Xstrata Brasil Exploraçâo Mineral Ltda ('Xstrata'), a
wholly-owned subsidiary of Glencore Canada Corporation
('Glencore'), the Company has agreed to pay a total
consideration of US$8M to Xstrata,
which holds the title to GAP. The consideration is to be paid
according the following schedule;
- USD 2,000,000 in ordinary shares
in the capital of the Company ("HZM Shares") (the
"Initial Consideration Shares"), split between the SdT and
VdS deposit areas and payable on the relevant closing date for such
deposit area. The closing date is linked to the date on which HZM
is registered as holder of such deposit areas by the National
Department of Mineral Production of Brazil ('DNPM'). HZM anticipates that
such registration will occur in the next five months but the time
in which this is required to occur under the Asset Purchase
Agreement can be extended for a period of up to a year. At the time
of closing HZM will issue the Initial Consideration Shares at a
price per Initial Consideration Share equal to the 5 day volume
weighted average share price on AIM taken on the business day prior
to the relevant closing. Following the Placing described below,
Horizonte will not have sufficient share authorities to issue the
Initial Consideration Shares. Accordingly, the Company intends to
publish a circular convening a general meeting of its shareholders
in order to consider and, if thought fit, approve resolutions to
grant the directors the requisite authorities to issue and allot
the Initial Consideration Shares (the "Resolutions"). The
Proposed Transaction is conditional upon the Resolutions being
passed;
- USD 1,000,000 after the date of
issuance of a joint feasibility study for the Enlarged Project
area, to be satisfied in HZM Shares (at the 5 day volume weighted
average price taken on the tenth business day after the date of
such issuance) or cash, at the election of Horizonte; and
- The remaining consideration will be paid in cash, as at the
date of first commercial production from any of the resource areas
within the Enlarged Project area.
In addition to the passing of the Resolutions, the Proposed
Transaction remains subject to the registration of Horizonte's
wholly owned subsidiaries as the owner of the GAP project by the
DNPM and is also conditional upon other customary conditions to
closing.
The SdT deposit area concessions are subject to on-going
litigation with a Brazilian third party. Glencore has
disputed these claims. The parties have agreed certain
protections including the receipt by HZM from Glencore of certain
indemnities in respect of such litigation.
The Asset Purchase Agreement contains customary warranties
regarding the GAP project and the parties' ability to enter into
the Proposed Transaction and is subject to customary termination
rights.
The Placing
The Company further announces that it has raised £1,550,000
before expenses, by the placing (the "Placing") for cash by
finnCap, acting as agent for the Company, of 155,000,000 HZM Shares
(the "Placing Shares") at 1
pence per Placing Share.
The proceeds of the Placing will be used for general working
capital purposes, to advance Araguaia and to integrate as
appropriate the Enlarged Project. This will involve an
integrated National Instrument 43-101 ("NI 43-101") Mineral
Resource Estimate, optimised mining schedule, updated financial
model and work to advance the feasibility study.
Related Party Transaction
Henderson Global Investors ("Henderson") is subscribing for
45,000,000 Placing Shares in the Placing.
Following admission of the Placing Shares to trading on AIM
('Admission'), Henderson will have an interest in 114,052,667 HZM
Shares representing 17.6% of the Company's enlarged issued share
capital.
The subscription for Placing Shares by Henderson is considered a
related party transaction pursuant to the AIM Rules for Companies
because Henderson is a substantial shareholder in the
Company.
The directors of Horizonte, having consulted with the Company's
nominated adviser, finnCap, consider that the terms of the
subscription for Placing Shares by Henderson are fair and
reasonable insofar as the Company's shareholders are concerned.
Admission
The issue of the Placing Shares is being made from existing
authorities granted to the Directors at the latest annual general
meeting. Accordingly, the Placing is not subject to shareholder
approval.
Application has been made for Admission of the Placing Shares
and it is expected that such admission and dealings in the Placing
Shares will occur on AIM on 2 October
2015. The Placing Shares will rank pari passu with the
existing HZM Shares currently in issue. Following Admission,
there will be 647,427,105 HZM Shares in issue.
The Placing is conditional upon Admission and the placing
agreement between the Company and finnCap becoming unconditional
and not being terminated in accordance with its terms.
TSX
Furthermore the Company has received conditional approval from
the TSX and has relied upon the exemption in Section 602.1 of the
TSX Company Manual to apply AIM Rules to the issuing of both the
Initial Consideration Shares and the Placing Shares.
This press release was prepared under the supervision of David
Hall, the non-executive chairman of the Company and a Qualified
Person within the meaning of NI 43-101.
About Horizonte Minerals:
Horizonte Minerals plc is an
AIM and TSX-listed nickel development company focused in
Brazil, which wholly owns the
advanced Araguaia nickel laterite project located to the south of
the Carajas mineral district of northern Brazil.
The Company is developing Araguaia as the next major nickel mine
in Brazil, with targeted
production by 2019.
The Araguaia Project, which has excellent infrastructure in
place including rail, road, water and power, has a current NI
43-101 compliant Mineral Resource of 71.98Mt grading 1.33% Ni
(Indicated) and 25.4Mtat 1.21% Ni (Inferred) at a 0.95% nickel
cut-off; included in Resources is a Probable Reserve base of 21.2Mt
at 1.66%Ni.
The Prefeasibility Study has been completed which underpins the
robust economics of developing a mine with a targeted 15,000tpa
nickel in ferro-nickel output with a 20% Fe-Ni product over a 25
year mine life utilising the proven pyrometallurgical process of
Rotary Kiln Electric Furnace technology. At these production
rates, the project has a post-tax NPV of US$519m at a discount rate of 8% and an IRR of
20%, with a capital cost of US$582m
which puts this project in the lowest quartile of the cost
curve.
PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN THE UNITED STATES
OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR
DISTRIBUTION WOULD BE UNLAWFUL.
The distribution of this Announcement and the Placing of the
Placing Shares in certain jurisdictions may be restricted by law.
No action has been taken by the Company that would permit an
offering of such shares or possession or distribution of this
Announcement or any other offering or publicity material relating
to such shares in any jurisdiction where action for that purpose is
required. Persons into whose possession this announcement comes are
required by the Company to inform themselves about, and to observe,
such restrictions.
The information in this Announcement shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of, the securities referred to herein in any
jurisdiction in which such offer, solicitation or sale would
require preparation of any prospectus or other offer documentation,
or be unlawful prior to registration, exemption from registration
or qualification under the securities laws of any such
jurisdiction.
No public offer of securities of the Company is being made in
the United Kingdom, the United States, Canada or elsewhere. The information in this
Announcement does not constitute or form a part of any offer or
solicitation to purchase or subscribe for securities in
the United States. The securities
mentioned herein have not been, and will not be, registered under
the United States Securities Act of 1933 (the "Securities Act") nor
the security laws of any state or other jurisdiction of
the United States. The securities
mentioned herein may not be offered or sold in the United States except pursuant to
Regulation S under the Securities Act or another exemption from, or
transaction not subject to, the registration requirements of the
Securities Act. There will be no public offer of securities in
the United States.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING
INFORMATION
Except for statements of historical fact relating to the
Company, certain information contained in this press release
constitutes "forward-looking information" under Canadian and other
securities legislation. Forward-looking information includes, but
is not limited to, statements with respect to the anticipated
closing date of the Proposed Transaction; the potential of the
Company's current or future property mineral projects; the success
of exploration and mining activities; cost and timing of future
exploration, production and development; the estimation of mineral
resources and reserves and the ability of the Company to achieve
its goals in respect of growing its mineral resources; and the
realization of mineral resource and reserve estimates. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved".
Forward-looking information is based on the reasonable assumptions,
estimates, analysis and opinions of management made in light of its
experience and its perception of trends, current conditions and
expected developments, as well as other factors that management
believes to be relevant and reasonable in the circumstances at the
date that such statements are made, and are inherently subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of the Company to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to risks related to: the ability and willingness of
the parties to the Asset Purchase Agreement to meet the closing
conditions set forth therein, the occurrence of any event, change
or other circumstances that could give rise to the termination of
the Asset Purchase Agreement; the risk that any condition to
closing of the Asset Purchase Agreement, including the passing of
the Resolutions, may not be satisfied; exploration and mining
risks, competition from competitors with greater capital; the
Company's lack of experience with respect to development-stage
mining operations; fluctuations in metal prices; uninsured risks;
environmental and other regulatory requirements; exploration,
mining and other licences; the Company's future payment
obligations; potential disputes with respect to the Company's title
to, and the area of, its mining concessions; the Company's
dependence on its ability to obtain sufficient financing in the
future; the Company's dependence on its relationships with third
parties; the Company's joint ventures; the potential of currency
fluctuations and political or economic instability in
countries in which the Company operates; currency exchange
fluctuations; the Company's ability to manage its growth
effectively; the trading market for the ordinary shares of the
Company; uncertainty with respect to the Company's plans to
continue to develop its operations and new projects; the Company's
dependence on key personnel; possible conflicts of interest of
directors and officers of the Company, and various risks associated
with the legal and regulatory framework within which the Company
operates.
Although management of the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements.
For the avoidance of doubt, none of Glencore, Xstrata
or any other member of the Glencore group make any statements,
forward looking or otherwise, in respect of any of the matters set
forth herein. Without limiting the generality of the foregoing, any
historical estimates referred to herein that have been obtained
from Glencore, Xstrata or any other member of the Glencore group
through publicly available information are strictly historical in
nature and provided for information purposes only, and do not
constitute a basis for predicting the future performance or results
of the Enlarged Project and/or the Company respectively. All
forward-looking statements set forth herein have been made solely
by the Company and Glencore, Xstrata and the rest of the Glencore
group hereby disclaim any responsibility for all such forward
looking statements.
SOURCE Horizonte Minerals plc