Horizonte Minerals PLC

Araguaia nickel project

Introduction

The Araguaia Nickel Project is an advanced nickel laterite exploration / evaluation project located in the Araguaia Fold Belt in the northern state of Para in Brazil, which is a significant new nickel province serviced by good infrastructure. The project is the amalgamation of adjacent grassroots discoveries by Horizonte, Teck Resources and Lara Exploration Limited / Falconbridge Limited(Xstrata). 

In January 2011 Horizonte relased a NI 43-101 compliant Mineral Resource Estimate incorporating a Indicated Mineral Resource of 39.3 million tonnes grading 1.39% nickel and 0.061% cobalt and an Inferred Mineral Resource of 60.9 million tonnes grading 1.22% nickel and 0.058% cobalt, at a 0.95% nickel cut-off.

In August 2011 a NI 42-101 compliant Preliminary Economic Assessment was released with respect to Araguaia. Following this, the Company is advancing the project into the Prefeasibility Stage, with additional work including further drilling and metallurgical evaluations.

Several significant nickel laterite deposits occur within this region of Brazil including Xstrata’s Serra do Tapa/Vale dos Sonhos deposits (Inferred Minerals Resource of 73Mt grading 1.50% nickel – 2006) that are also located within the Araguaia Fold Belt 80km to the north of the project area (Figure 1). Furthermore there are a number of nickel laterite mines in production in Brazil, notably Anglo American’s Barro Alto and Vale’s Onça Puma operations.

Figure1: Location and regional setting

What are Nickel Laterites?

Nickel laterites are the residual products of the chemical weathering of peridotites with a primary nickel content of 0.2% to 0.4% in tropical and sub-tropical climatic zones.  The laterisation processes concentrate by factors of 3 – 30 times the nickel and cobalt contents of the parent rock.

Project History

The Araguaia Nickel Project as it is today is the result of parallel exploration programmes undertaken in adjacent areas:

• Teck Resources Araguaia Project – work between 2006 and 2008 resulting in the grassroots discovery of four contiguous zones of laterite mineralisation.
• Horizonte Minerals Lontra Project – work between 2007 and 2008 resulting in the grassroots discovery of the Lontra laterite mineralisation to the NW of the Teck Resources discoveries.
• Lara Exploration Limited – work between 2006 and 2008 in JV’s with Falconbridge Limited and later Teck Resources resulted in the discovery of nickel laterite mineralisation at Vila Oito West between the Teck and Lontra discoveries and at Floresta to the north of the other discoveries.

In August 2010 in an agreement with Teck Resources, Horizonte Minerals acquired 100% of the licences previously explored in the Teck Resources Araguaia Project.

In July 2011 in an agreement with Lara Exploration Limited, Horizonte Minerals acquired 100% of the licences containing the Vila Oito West and Floresta nickel laterites.  The consolidated holdings and laterite targets are shown in Figure 2.



Figure 2: Principal Project Target Areas

Mineral Resources

In January 2012 Horizonte announced a new NI 43-101 compliant Mineral Resource Estimate incorporating a Indicated Mineral Resource of 39.3 million tonnes grading 1.39% nickel and 0.061% cobalt and an Inferred Mineral Resource of 60.9 million tonnes grading 1.22% nickel and 0.058% cobalt, at a 0.95% nickel cut-off. 

A technical report “Geology and Minerals Resources of the Araguaia Nickel Project, Brazil, NI 43-101 Technical Report” by Marc-Antoine Audet, Jason Che Osmond, Bruce Pilcher and Alison Allen dated February 23, 2012 is filed on SEDAR (www.sedar.com) in support of this estimate. Further information in respect of the Mineral Resources on the Araguaia Nickel Project including, assumptions, parameters and methods used to estimate such mineral resources is included in the Technical Report.

Mineral Resource Estimate (January 2012) at 0.95% nickel cut-off by Geological Facies

NI 43-101 technical report .pdf

Metallurgical Testwork

A number of different process options have been investigated, with the focus going forwards being to further evaluate  pyrometallurgical processing options Both Anglo American’s Barro Alto and Vale’s Onça Puma operations in Brazil use pyrometallurgical processing to treat ore.

Xstrata Process Support (XPS), Sudbury, Canada was commissioned in H2 2011 to undertake pyrometallurgical testwork. This included the determination of the thermal characteristics and batch smelting and demonstrated that commercial grades of ferronickel could be produced from blends considered representative of the combined Pequizeiro and Baião deposits. The Araguaia ores have a high SiO₂/MgO ratio, in a similar range to that found in the BHP Billiton Cerro Matoso ferronickel operation. The XPS study also developed a Metsim model of a potential reduction/smelting process for the Araguaia ore and found that the energy requirements will be similar to published data for other laterite smelting operations.

Wardell-Armstrong International (WAI) was commissioned in H2 2011 to undertake hydrometallurgical testwork on fractions of the same samples provided to XPS. This work comprised both Bottle Roll Leach (BRL) tests and Atmospheric Agitated Tank Leach (ATL) tests. Both sets of tests were undertaken on different test conditions. The tests successfully demonstrated that the ore is readily leachable in sulphuric acid solutions and it was possible to obtain 80-90% nickel and 80-95% cobalt recoveries with moderate acid consumptions. The ATL and BRL tests showed that the mean acid consumption was around 650 kg/t to reach a nickel recovery of 80% from the blend ore sample. Normalized acid consumption was found to be 52 kg acid per kg of nickel extracted for nickel recoveries of 80 to 90%.

MineSense, Vancouver, Canada  were commissioned in April 2012 to undertake preliminary testwork to establish the upgrading potential of mineralised samples selected from the Pequizeiro target based on the measurement of the variability of the nickel and iron grades as measured by a XRF analyser. The range of nickel and iron grades in the samples was established and estimations of the upgrading effect of rejection of lower grade material were made. A small degree of upgrading was shown to be possible however the analysis of the results by Horizonte Minerals concluded that an upgrading process would not improve the economics of an operation.

In October 2012 two blends of Araguaia laterite were submitted to the laboratories of F.L. Smidth in Bethleham, Pennsylvania, USA for rotary kiln evaluation testing. The overall results of the study show that Araguaia ore is suitable for rotary kiln calcination and partial reduction prior smelting in an electric furnace. A range of suggested kiln operating conditions was indicated. The testwork comprised 1) physical analysis of the blends including moisture content, bulk density, angle of repose, wet and dry particle size distribution and particle degradation in tumble testing; 2) Chemical analysis and ore thermal analysis; 3) Ore reduction and sintering tests including small scale briquetting tests. The determined properties of the two Araguaia blends show that the material is amenable to high temperature kiln processing.  The dry particle size distribution data and the results of the tumble testing were found to be generally comparable to those of a number of laterite ores currently handled in commercial Rotary Kiln-Electric Furnace operations. The sintering tests established the range of kiln operating temperatures.  In the ore reduction tests, the degree of iron reduction was considered normal, and while a somewhat lower degree of nickel reduction was obtained, this result does not materially affect overall Rotary Kiln-Electric Furnace performance.

On going Metallurgical testwork

In December 2012 some additional testwork was initiated directed at pyrometallurgical processing of the Araguaia ore. The work includes the measurement of the Araguaia slag melting point at Kingston Process Metallurgy Inc, Kingston, Ontario, Canada, ore agglomeration behaviour testwork at Feeco, Green Bay, Winsconsin, USA, and a detailed mineralogy study at SGS Lakefield, Ontario, Canada of one of the ore blends tested at F.L. Smidth.

While a Rotary Kiln Electric Furnace (RKEF) process is the preferred route established by the Preliminary Economic Analysis (PEA) reported in August 2012 (see below) it was deemed appropriate to continue investigating Atmospheric Tank Leaching (ATL) as an alternative process. To that end a testwork programme to optimise the operating conditions for ATL was initiated at SGS Lakefield in October 2012. The scope of this programme comprises optimisation of the leach conditions with respect to nickel, iron and magnesium recoveries and acid consumption and the generation of the required engineering design parameters by employing a continuous, bench-scale test set-up. The operating conditions established in the earlier batch leaching testwork undertaken at WAI are the starting point for the optimisation testwork. Specific objectives of the programme include 1) determining comminution parameters to reach a target feed size, 2) obtaining leach times and acid consumptions for optimum metal recoveries under controlled acid strength conditions, 3) analysing process flowsheet alternatives, 4) estimating the rheological characteristics of the slurry. This work is schedules to be completed and reported in Q2 2013.

Preliminary Economic Assessment (PEA)

In August 2012 the Company announced the results of its NI 43-101-compliant PEA of the Araguaia Project. These included a post tax Net Present Value (‘NPV’) of US$693 million at an 8% discount rate and Internal Rate of Return (‘IRR’) of 15.4% based on an ore throughput of 1.75 million tonnes per annum of mineralised material treated through a 90 MW RKEF process plant using US$8.60/lb long term nickel price. Assessment of the ATL processing option gave a post tax NPV of US$554 million at an 8% discount rate and an IRR of 18.1%. Capital payback is estimated as being 7 years for RKEF and 6 years for ATL. RKEF is the preferred processing route, favoured due to availability of hydro electrical energy in the Araguaia region combined with the presence of three operating RKEF pyrometallurgical operations in Brazil.

NI 43-101 Preliminary Economic Assessment

Environmental Baseline Study:

An environmental baseline study was commenced in Q3 2011. The study is designed to address project specific environmental, social and permitting issues. These include a social reconnaissance study to provide perspective on social factors that can influence social risk and the information on project stakeholders required to develop a stakeholder engagement plan.

Prefeasibility Study and Planned Wor

Phase 3 Exploration/Evaluation Drilling

The third phase mineral resource drilling (HQ3) programme commenced in September 2012. The programme was designed to complete infill drilling on 100 metres x 100 metres grids on the Jacutinga, Vila Oito, Vila Oito East, Vila Oito West and Pequizeiro West targets. The total meterage planned is approximatley 7000 metres. To the end of February 2013, 5500 metres had been completed in 166 holes. The programme is scheduled to be completed in April 2013. (See Projects/Maps).

Prefeasibility Study

The selection process for the Prefeasibilty consulting groups is current in the final stages and the contract should be awarded imminently.