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AIM HZM 126.35 GBX
TSX HZM 2.09 CAD
Developing the next major nickel project in Brazil
16/05/2022 Download .pdf version

Horizonte Minerals Plc
(“Horizonte” or the “Company”)

Q1 Financial Results for the three months ended 31 March 2022

Horizonte Minerals Plc (AIM: HZM, TSX: HZM), the nickel company focused in Brazil announces it has today published its unaudited financial results for the three month period to 31 March 2022 and the Management Discussion and Analysis for the same period. Both of the aforementioned documents have been posted on the Company’s website www.horizonteminerals.com and are also available on SEDAR at www.sedar.com.

Highlights for the period:

  • Closing of US$633 million funding package for construction of Araguaia nickel project;
  • Awarded a number of key construction contracts including furnace, EPCM, and earthworks;
  • Further additions to the project execution team;
  • Approved start of construction in late January 2022 with earthworks contractor mobilised to site in May to maximise productivity during the dry season;
  • Project development work is running in line with the project execution schedule with a significant ramp up in activity expected over the coming months as we move into the dry season;
  • Company to adopt reporting currency to USD (previously GBP) ahead of first revenue in 2024;
  • Strong balance sheet with cash and cash equivalents US$252m at 31 March 2022.

Financial Update

The Company concluded the funding package of US$633 million in December 2021. The net proceeds of the fundraising will be used towards the construction of the Araguaia project as well as for general working capital purposes. The equity fundraise (US$197million of the US$633 million) was finalised and funds were received in December 2021. The debt elements of the funding package include Convertible Loan Notes (US$65 million), a Cost Overrun Facility of US$25 million, and a Senior Debt Facility of US$346.2 million were closed during March 22. First draw is expected on from the senior debt facility in late Q3 22.

The Company has changed its presentation currency from Pounds Sterling to US Dollars effective 1 January 2022. The presentation currency has been revised as the financing package concluded by the Group to construct the Araguaia project is denominated in US Dollars and future revenues will also be in US Dollars. The Board, therefore, believes that US Dollar financial reporting provides a more relevant presentation of the group’s financial position, funding and treasury functions, financial performance, and cash flows.

For further information, visit www.horizonteminerals.com or contact:

Horizonte Minerals plc
Jeremy Martin (CEO)
Simon Retter (CFO)

info@horizonteminerals.com
+44 (0) 203 356 2901

Peel Hunt LLP (Nominated Adviser & Joint Broker)
Ross Allister
David McKeown

+44 (0)20 7418 8900

BMO (Joint Broker)
Thomas Rider
Pascal Lussier Duquette
Andrew Cameron

+44 (0) 20 7236 1010

Tavistock (Financial PR)
Jos Simson
Cath Drummond

+44 (0) 20 7920 3150

ABOUT HORIZONTE MINERALS
Horizonte Minerals plc (AIM & TSX: HZM) is developing two 100%-owned, Tier 1 projects in Parà state, Brazil – the Araguaia Nickel Project and the Vermelho Nickel-Cobalt Project. Both projects are large scale, high-grade, low-cost, low-carbon and scalable. Araguaia is fully funded and in construction. The project will produce 29,000 tonnes of nickel per year to supply the stainless steel market. Vermelho is at feasibility study stage and will produce 25,000 tonnes of nickel and 1,250 tonnes of cobalt to supply the EV battery market. Horizonte’s combined near-term production profile of over 50,000 tonnes of nickel per year positions the Company as a globally significant nickel producer. Horizonte is developing a new nickel district in Brazil that will benefit from established infrastructure, including hydroelectric power available in the Carajás Mining District.

Horizonte Minerals Plc

Restated Unaudited Condensed Consolidated Interim Financial Statements for the three months ended 31 March 2022

Restated Condensed Consolidated Statement of Comprehensive Income

3 months ended

31 March

2022

2021 Restated

Unaudited

Unaudited

Notes

US$

US$

Administrative expenses

(2,380,986)

(1,131,952)

Change in fair value of special warrant liability

-

(417,863)

Gain/(loss) on foreign exchange

7,073,006

254,556

Loss before interest and tax

4,692,020

(1,295,259)

Net finance (costs)/income

5

(173,134)

(69,580)

Loss before taxation

4,518,886

(1,364,839)

Taxation

-

-

Loss for the year

4,518,886

(1,364,839)

Other comprehensive income Items that may be reclassified subsequently to profit or loss

Currency translation differences on translating foreign operations

17,973,334

(5,431,573)

Other comprehensive income for the period, net of tax

17,973,334

(5,431,573)

Total comprehensive income for the period

22,492,220

(6,796,412)

attributable to equity holders of the Company

Earnings per share attributable to the equity holders of the Company

Basic & Diluted earnings per share (pence per share)

14

0.119

(0.090)

Restated Condensed Consolidated Statement of Financial Position

31 March

2022

31 December

2021 Restated

Unaudited

Audited

Notes

US$

US$

Assets

Non-current assets

Intangible assets

6

10,011,946

8,309,485

Property, plant & equipment

7

123,230,028

70,594,090

Right of use assets

426,295

380,482

133,668,269

79,284,057

Current assets

Trade and other receivables

18,283,570

13,796,628

Derivative financial asset

10 b

9,540,000

4,950,000

Cash and cash equivalents

251,760,931

210,492,280

279,584,501

229,238,908

Total assets

413,252,770

308,522,965

Equity and liabilities

Equity attributable to owners of the parent

Issued capital

8

52,215,236

52,215,236

Share premium

8

245,388,102

247,847,561

Other reserves

(7,758,849)

(25,732,183)

Accumulated losses

(40,558,760)

(45,077,646)

Total equity

249,285,729

229,252,968

Liabilities

Non-current liabilities

Contingent consideration

9

6,847,422

6,734,132

Royalty Finance

10 a

77,127,949

44,496,504

Deferred consideration

9

4,568,669

4,526,425

Convertible loan notes liability

11

58,955,500

-

Lease liabilities

358,424

321,717

Trade payables

774,236

608,976

148,632,200

56,687,754

Current liabilities

Trade and other payables

14,314,743

21,574,365

Deferred consideration

9

950,792

949,113

Lease liabilities

69,306

58,765

15,334,841

22,582,243

Total liabilities

163,967,040

79,269,997

Total equity and liabilities

413,252,770

308,522,965

Restated Condensed Statement of Changes in Shareholders’ Equity

Attributable to the owners of the parent

Share

capital

US$

Share

premium

US$

Accumulated

losses

US$

Other

reserves

US$

Total

US$

As at 1 January 2021 Restated

20,666,053

65,355,677

(33,304,178)

(23,519,096)

29,198,456

Comprehensive income

Loss for the period

-

-

(1,364,839)

-

(1,368,839)

Other comprehensive income

Currency translation differences

-

-

-

(5,431,573)

(5,431,573)

Total comprehensive income

-

-

(1,364,839)

(5,431,573)

(6,796,412)

Transactions with owners

Issue of ordinary shares

2,281,637

14,830,639

-

-

17,112,276

Issue costs

-

(1,037,822)

-

-

(1,037,822)

Total transactions with owners

2,281,637

13,792,817

-

-

16,074,454

As at 31 March 2021 Restated (unaudited)

22,947,690

79,148,494

(34,669,017)

(28,950,669)

38,476,498

Attributable to the owners of the parent

Share

capital

US$

Share

premium

US$

Accumulated

losses

US$

Other

reserves

US$

Total

US$

As at 1 January 2022 Restated

52,215,236

247,847,561

(45,077,646)

(25,732,183)

229,252,968

Comprehensive income

Loss for the period

-

-

4,518,886

-

4,518,886

Other comprehensive income

Currency translation differences

-

-

-

17,973,334

17,973,334

Total comprehensive income

-

-

4,518,886

17,973,334

22,492,220

Transactions with owners

Issue of ordinary shares

-

-

-

-

-

Issue costs

-

(2,459,459)

-

-

(2,459,459)

Total transactions with owners

-

(2,459,459)

-

-

(2,459,459)

As at 31 March 2022 (unaudited)

52,215,236

245,388,102

(40,558,760)

(7,758,849)

249,285,729


Restated Condensed Consolidated Statement of Cash Flows

3 months ended

31 March

2022

2021

Restated

Unaudited

Unaudited

US$

US$

Cash flows from operating activities

Loss before taxation

4,518,886

(1,364,839)

Net finance costs/(income)

5

173,134

69,580

Change in fair value of special warrant liability

-

417,863

Exchange differences

(7,073,006)

(254,556)

Operating loss before changes in working capital

(2,380,986)

(1,131,952)

Decrease/(increase) in trade and other receivables

(1,291,962)

(99,794)

(Decrease)/increase in trade and other payables

(7,094,361)

(69,794)

Net cash outflow from operating activities

(10,767,309)

(1,301,540)

Cash flows from investing activities

Purchase of intangible assets

6

(217,347)

(36,281)

Purchase of property, plant and equipment

7

(36,106,248)

(1,510,343)

Interest received

5

623,058

39,054

Net cash used in investing activities

(35,700,537)

(1,507,570)

Cash flows from financing activities

Net proceeds from issue of ordinary shares

-

16,074,454

Issue costs

(2,459,459)

-

Proceeds from issue of convertible loan notes

61,262,500

-

Issue costs

(2,347,041)

-

Proceeds from royalty finance arrangement

25,000,000

-

Issue costs

(847,939)

-

Net proceeds from issue of share warrants

-

8,448,140

Net cash from financing activities

80,608,061

24,522,594

Net decrease in cash and cash equivalents

34,140,215

21,713,484

Cash and cash equivalents at beginning of period

210,492,280

14,925,021

Exchange gain/(loss) on cash and cash equivalents

7,128,436

(312,237)

Cash and cash equivalents at end of the period

251,760,931

36,326,268

Restated Notes to the Financial Statements

1. General information

The principal activity of the Company and its subsidiaries (together ‘the Group’) is the exploration and development of precious and base metals. There is no seasonality or cyclicality of the Group’s operations.

The Company’s shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM) and on the Toronto Stock Exchange (TSX). The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is Rex House, 4-12 Regent Street, London SW1Y 4RG.

2. Basis of preparation

The financial statements for the year ended 31 December 2021 were prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs).

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 January 2021. There was no impact or changes in accounting policies from the transition and the Group will also continue to comply with IFRS and their interpretations issued by the IASB.

The condensed consolidated interim financial statements for the three month reporting period ended 31 March 2022 have been prepared in accordance with IAS 34 as issued by the IASB and the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'.

The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2021, and any public announcements made by the Group during the interim reporting period.

The financial information for the year ended 31 December 2021 contained in these interim financial statements does not constitute the company's statutory accounts for that period. Statutory accounts for the year ended 31 December 2021 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The auditor’s report drew attention to a material uncertainty related to the Group’s ability to continue as a going concern (refer to the going concern note below), however the auditor’s opinion was not modified in respect of this matter.

Change in presentation currency

Horizonte Minerals Plc has decided to change its presentation currency from Pounds Sterling to US Dollars effective 1 January 2022.

The presentation currency has been revised as the financing package concluded by the Group to construct the Araguaia project is denominated in US Dollars and future revenues will also be in US Dollars. The board therefore believes that US Dollar financial reporting provides more relevant presentation of the group’s financial position, funding and treasury functions, financial performance and its cash flows.

A change in presentation currency represents a change in an accounting policy in terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requiring the restatement of comparative information. IAS 34 does not require additional retrospective disclosure of the statement of financial position. In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, the following methodology was followed in restating historical financial information from Pounds Sterling to US Dollar:

  • Assets and liabilities were translated at the relevant closing exchange rate at the end of the reporting period. Items of income and expenditure and cash flows were translated at average rates of exchange for the period;
  • The foreign currency translation reserve was reset to nil as at 1 January 2006, the date on which the group adopted IFRS. Share capital and premium and other reserves, as appropriate, were translated at the historic rates prevailing at the dates of underlying transactions; and
  • The effects of translating the group’s financial results and financial position into US Dollar were recognised in the foreign currency translation reserve.

The exchange rates used were as follows:

GBP/USD

31 December 2021

31 March 2021

Closing rate

1.3477

1.3797

Average rate

1.3774

1.3791

USD/BRL

Closing rate

5.5710

5.6973

Average rate

5.3810

5.4801

Going concern

The condensed consolidated interim financial statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues, the Directors consider that the Group has sufficient funds to undertake its operating activities for a period of at least the next 12 months including any additional expenditure required in relation to its current exploration projects. The Group has cash reserves which are considered sufficient by the Directors to fund the Group’s committed expenditure both operationally and on its exploration project for the foreseeable future.

The Group concluded a comprehensive funding package of US$633 million in December 2021. The net proceeds of the fundraising will be used towards the construction of the Araguaia project as well as for general working capital purposes. In addition the company has also concluded a US$25million royalty on the Vermelho Project, the net proceeds from the sale of this royalty will be used to advance a feasibility study and permitting work streams on the Vermelho project. The equity fundraise (US$197million of the US$633 million) was finalized and funds received in December 2021. The debt elements of the funding package include Convertible Loan Notes (US$65 million), a Cost Overrun Facility (US$25 million) and a Senior Debt Facility (US$346.2 million).

Funds from the convertible loan notes and the royalty was received in March 2022. The first drawdown under the Senior Debt Facility is expected to occur in September 2022 following the satisfaction of certain conditions precedent customary to a financing of this nature. As the senior debt is conditional, there is no guarantee that the conditions of this element of the debt package will be satisfied.

The funds held at the year-end along with those to be raised post year end means the Group has cash reserves which are considered sufficient by the Directors to execute the construction of the Araguaia Project and fund its general working capital requirements for the foreseeable future. The drawdown of the Senior Debt Facility is conditional upon the expenditure of a certain level of equity amongst other conditions precedent, by which time the company is expected to have made significant financial commitments. There exists a risk that the Senior Debt Facility is not able to be drawn due to unforeseen circumstances or noncompliance with any conditions precedent which may or may not be within the control of the Group. Should the Senior Debt not be drawn then the Group might require alternative sources of funding to meet its commitments.

These events are outside of the Group’s control, and as such, a material uncertainty exists which may cast significant doubt about the Group’s continued ability to operate as a going concern and its ability to realise its assets and discharge its liabilities in the normal course of business.

If additional projects are identified and the Vermelho project advances, additional funding may be required.

These factors indicate the existence of a material uncertainty which may cast significant doubt over the Group and the Company’s ability to continue as a going concern and therefore they may be unable to realise its assets and discharge their liabilities in the normal course of business. The financial statements do not include any adjustments that would result if the Group were unable to continue as a going concern.

Assessment of the impact of COVID-19

During the period of these financial statements there has been an ongoing significant global pandemic which has had significant knock-on effects for the majority of the world’s population, by way of the measure’s governments are taking to tackle the issue. This represents a risk to the Group’s operations by restricting travel, the potential to detriment the health and wellbeing of its employees, as well as the effects that this might have on the ability of the Group to finance and advance its operations in the timeframes envisaged. The Group has taken steps to try and ensure the safety of its employees and operate under the current circumstances and feels the outlook for its operations remains positive, however risk remain should the pandemic worsen or changes its impact on the Group. The assessment of the possible impact on the going concern position of the Group is set out in the going concern note above. In addition, because of the long-term nature of the Group’s nickel projects and their strong project economics management do not consider that COVID has given rise to any impairment indicators. The Group has not received any government assistance.

The uncertainty as to the future impact of the Covid-19 pandemic has been considered as part of the Group’s adoption of the going concern basis. In response to the easing of Covid-19 restrictions, employees are working from the Group’s offices in London and Brazil and will continue to adhere to government guidelines. International travel has resumed and site work for the two projects has been resumed.

To date, the Group has not been materially adversely affected by the COVID-19 pandemic. However, the ongoing nature and uncertainty of the pandemic in many countries including the measures and restrictions put in place (travel bans and quarantining in particular) continue to have the ability to impact the Group’s business continuity, workforce, supply-chain, business development and, consequently, future revenues.

In addition, any infections occurring on the Group’s premises could result in the Group’s operations being suspended, which may have an adverse impact on the Group’s operations as well as adverse implications on the Group’s future cash flows, profitability and financial condition. Supply chain disruptions resulting from the COVID-19 pandemic and measures implemented by governmental authorities around the world to limit the transmission of the virus (such as travel bans and quarantining) may, in addition to the general level of economic uncertainty caused by the COVID-19 pandemic, also adversely impact the Group’s operations, financial position and prospects.

As a result of considerations noted above, the Directors consider the impact of COVID-19 could delay the drawdown of the senior debt facility.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group’s medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group’s 2021 Annual Report and Financial Statements, a copy of which is available on the Group’s website: www.horizonteminerals.com and on Sedar: www.sedar.com . In addition to the key risks, the key financial risks are liquidity risk, foreign exchange risk, credit risk, price risk and interest rate risk.

Use of estimates and judgements

The preparation of condensed consolidated interim financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 4 of the Group’s 2021 Annual Report and Financial Statements. The nature and amounts of such estimates and judgements have not changed significantly during the interim period.

3. Significant accounting policies

The same accounting policies, presentation and methods of computation have been followed in these condensed consolidated interim financial statements as were applied in the preparation of the Group’s audited Financial Statements for the year ended 31 December 2021 except for the new accounting policy applied for the convertible loan notes which is detailed below.

Capitalisation of borrowing costs

Borrowing costs are expensed except where they relate to the financing of construction or development of qualifying assets. Borrowing costs directly related to financing of qualifying assets in the course of construction are capitalised to the carrying value of the Araguaia mine development property. Where funds have been borrowed specifically to the finance the Project, the amount capitalised represents the actual borrowing costs incurred net of all interest income earned on the temporary re-investment of these borrowings prior to utilisation. Borrowing costs capitalised include:

  • Interest charge on the Araguaia royalty finance
  • Adjustments to the carrying value of the Araguaia royalty finance
  • Unwinding of discount on contingent consideration payable for Araguaia
  • Unwinding of discount on the convertible loan notes

All other borrowing costs are recognized as part of interest expense in the year which they are incurred.


Derivative financial instrument

Derivatives are initially measured at fair value, and changes therein are recognised in profit or loss. All directly attributable transaction costs are recognised in profit or loss as incurred.

Foreign currency translation

(a) Functional and presentation currency

Items included in the Financial Statements of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the UK and Isle of Man entities is Pounds Sterling and the functional currency of the Brazilian entities is Brazilian Real. The functional currency of the project financing subsidiary incorporated in the Netherlands is US Dollars. The Consolidated Financial Statements as at 31 December 2021 were presented in Pounds Sterling, rounded to the nearest pound, which is the Company’s functional and Group’s presentation currency. As disclosed in note 2 Basis of Preparation, for the financial year commencing 1 January 2022 and future financial years the Group’s presentation currency will be US Dollars, rounded to the nearest dollar.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

(c) Group companies

The results and financial position of all the Group’s entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  1. assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
  2. each component of profit or loss is translated at average exchange rates during the accounting period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
  3. all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and retranslated at the end of each reporting period.

The major exchange rates used for the revaluation of the statement of financial position at 31 March 2022 were £1:US$1.32 (31 December 2021: £1:US$1.35), Brazilian Real (R$):US$0.21 (31 December 2021: R$:US$0.18).

Foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional currencies are not US Dollars.

During the first quarter of 2022, the Brazilian Real strengthened by approximately 15% from R$5.57 to R$4.74 against the US Dollar since 31 December 2021 (31 March 2021: weakened approximately by 10% from R$5.20 at 31 December 2020 to R$5.70). Currency translation differences for the three month period of £18 million gain (2021:$5.4 million loss) included in the consolidated statement of comprehensive income arose on the translation of property plant and equipment, intangible assets and cash and cash equivalents denominated in Brazilian Real and Pounds Sterling.

The foreign exchange gain for the three month period of $7million included in the statement of comprehensive income relates to the translation differences of foreign currency cash and cash equivalents balances and intercompany balances denominated in currencies other than the functional currency of the entity.

Impact of accounting standards to be applied in future periods

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective for periods beginning subsequent to 31 December 2022 that the Group has decided not to adopt early. The Group does not believe these standards and interpretations will have a material impact on the financial statements once adopted.

4 Segmental reporting

The Group operates principally in the UK and Brazil, with operations managed on a project-by-project basis within each geographical area. Activities in the UK are mainly administrative in nature whilst the activities in Brazil relate to exploration and evaluation work. The separate subsidiary responsible for the project finance for the Araguaia Project is domiciled in the Netherlands. The operations of this entity are reported separately and so it is recognised as a new segment. The reports used by the chief operating decision-maker are based on these geographical segments.

2022

UK

Brazil

Netherlands

Total

3 months

ended

31 March 2022

US$

3 months

ended

31 March 2022

US$

3 months

ended

31 March 2022

US$

3 months

ended

31 March 2022

US$

Administrative expenses

(1,690,374)

(669,948)

(20,664)

(2,380,986)

Profit/(Loss) on foreign exchange

2,643,316

923,140

3,506,550

7,073,006

Loss before interest and tax per reportable segment

952,942

253,192

3,485,886

4,692,020

Net finance costs

(88,376)

(84,758)

-

(173,134)

Loss before taxation

864,566

168,434

3,485,886

4,518,886

Depreciation charges

-

10,659

-

10,659

Additions to non-current assets

-

36,323,595

-

36,323,595

Capitalisation of borrowing costs

-

3,324,182

-

3,324,182

Foreign exchange movements to non-current assets

-

14,708,194

-

14,708,194

Reportable segment assets

190,640,993

212,840,544

9,771,229

413,252,766

Reportable segment liabilities

72,890,851

13,938,634

77,137,551

163,967,036

2021

UK

Brazil

Netherlands

Total

3 months

ended

31 March 2021

US$

3 months

ended

31 March 2021

US$

3 months

ended

31 March 2021

US$

3 months

ended

31 March 2021

US$

Administrative expenses

(955,877)

(174,883)

(1,192)

(1,131,952)

Change in fair value of special warrant liability

(417,863)

-

-

(417,863)

Profit/(Loss) on foreign exchange

180,483

-

74,073

254,556

Loss before interest and tax per reportable segment

(1,193,257)

(174,883)

72,881

(1,295,259)

Net finance costs

(69,580)

-

-

(69,580)

Loss before taxation

(1,262,837)

(174,883)

72,881

(1,364,839)

Depreciation charges

-

3,968

-

3,968

Additions to non-current assets

-

1,546,624

-

1,546,624

Capitalisation of borrowing costs

-

1,994,712

-

1,994,712

Foreign exchange movements to non-current assets

-

(4,649,178)

-

(4,649,178)

Reportable segment assets

23,230,890

56,884,693

8,422,281

88,537,864

Reportable segment liabilities

17,619,777

334,033

32,107,556

50,061,366

5 Finance income and costs

3 months

ended

31 March 2022

3 months

ended

31 March 2021

US$

US$

Finance income

– Interest income on cash and short-term deposits

623,056

39,054

Finance costs

– Interest on land purchases

(33,736)

-

– Contingent and deferred consideration: unwinding of discount

(188,887)

(135,964)

– Contingent and deferred consideration: Fair value adjustment

31,676

-

– Convertible loan note: unwinding of discount

(40,041)

-

– Amortisation of Royalty Finance

(1,263,625)

(1,082,762)

– Royalty finance carrying value adjustment

(2,625,759)

(884,620)

Total finance costs pre-capitalisation

(3,497,316)

(2,064,292)

Finance costs capitalised to the Araguaia mine development project

3,324,182

1,994,712

Net finance costs

(173,134)

(69,850)

6 Intangible assets

Intangible assets comprise exploration and evaluation costs and goodwill. Exploration and evaluation costs comprise internally generated and acquired assets.

Exploration and

Goodwill

Exploration licences

evaluation costs

Software

Total

US$

US$

US$

US$

US$

Cost

At 1 January 2021

215,979

6,831,692

1,442,670

-

8,490,341

Additions

-

103,461

209,246

92,515

405,222

Amortisation for the year

-

-

-

(2,509)

(2,509)

Exchange rate movements

(14,844)

(480,024)

(88,701)

-

(583,569)

Net book amount at 31 December 2021

201,135

6,455,129

1,563,215

90,006

8,309,485

Additions

-

57,770

159,577

-

217,347

Amortisation for the year

-

-

-

(5,455)

(5,455)

Exchange rate movements

36,128

1,195,153

243,143

16,145

1,490,569

Net book amount at 31 March 2022

237,263

7,708,052

1,965,935

100,696

10,011,946

Impairment assessments for exploration and evaluation assets are carried out either on a project-by-project basis or by geographical area.

7 Property, plant and equipment

Mine Development Property

Vehicles and other field equipment

Office equipment

Land acquisition

Total

US$

US$

US$

US$

US$

Cost

At 1 January 2021

41,909,101

105,074

78,287

119,090

42,211,552

Additions

13,328,811

759,475

69,980

10,199,425

24,357,691

Transfers

-

648

(648)

-

-

Disposals

-

-

(1,385)

-

(1,385)

Capitalised interest

7,073,241

-

-

-

7,073,241

Exchange rate movements

(2,893,576)

(7,206)

(5,368)

(8,185)

(2,914,335)

At 31 December 2021

59,417,577

857,991

140,866

10,310,330

70,726,764

Additions

36,057,698

-

46,474

2,076

36,106,248

Transfers

861,137

(895,707)

34,570

-

-

Capitalised interest

3,324,182

-

-

-

3,324,182

Disposals

-

-

(1,593)

-

(1,593)

Exchange rate movements

11,212,831

153,903

25,268

1,849,422

13,241,424

At 31 March 2022

110,873,425

116,187

245,585

12,161,828

123,397,025

Accumulated depreciation

At 1 January 2021

-

78,036

42,719

-

120,755

Charge for the year

-

7,526

12,840

-

20,366

Transfer

-

222

(222)

-

-

Disposals

-

-

(168)

-

(168)

Exchange rate movements

-

(5,350)

(2,929)

-

(8,279)

At 31 December 2021

-

80,434

52,240

-

132,674

Charge for the period

-

2,191

8.467

-

10,658

Disposals

-

-

(133)

-

(133)

Exchange rate movements

-

14,428

9,370

-

23,798

At 31 March 2022

-

97,053

69,944

-

166,997

-

Net book amount as at 31 March 2022

110,873,425

19,134

175,641

12,161,828

123,230,028

Net book amount as at 31 December 2021

59,417,577

777,557

88,626

10,310,330

70,594,090

In December 2018, a Canadian NI 43-101 compliant Feasibility Study (“FS’) was published by the Company regarding the enlarged Araguaia Project which included the Vale dos Sonhos deposit acquired from Glencore.

The financial results and conclusions of the FS clearly indicate the economic viability of the Araguaia Project with an NPV of $401M using a nickel price of $14,000/t Ni. Nothing material had changed with the economics of the FS between the publication date and the date of this report and the Directors undertook an assessment of impairment for the 2021 audited financial statements through evaluating the results of the FS along with recent market information relating to capital markets and nickel prices and judged that there are no impairment indicators with regards to the Araguaia Project. Since then, no impairment indicators have been identified.

8 Share Capital and Share Premium

Issued and fully paid

Number of shares

Ordinary shares

US$

Share premium

US$

Total

US$

At 1 January 2022

3,802,365,590

52,215,236

247,847,561

300,062,797

Issue of equity

-

-

-

-

Issue costs from December 2021 equity issue

-

-

(2,459,459)

(2,459,459)

At 31 March 2022

3,802,365,590

52,215,236

245,388,102

297,603,338

9 Contingent and Deferred Consideration

Contingent Consideration payable to Xstrata Brasil Mineração Ltda.

The contingent consideration payable to Xstrata Brasil Mineração Ltda for the acquisition of the Araguaia project has a carrying value of $2,347,450 at 31 March 2022 (31 December 2021: $2,308,612). It comprises US$5,000,000 consideration in cash as at the date of first commercial production from the 'Vale dos Sonhos' resource areas within the Enlarged Project area. The key assumptions underlying the treatment of the contingent consideration the US$5,000,000 and a discount factor of 7.0% along with the estimated date of first commercial production.

During 2020 the Araguaia project entered the development phase and as a result borrowing costs including unwinding of discount on contingent consideration for qualifying assets have been capitalised to the mine development asset. The borrowing costs capitalised for the three months to 31 March 2022 is $38,838 (31 March 2021: $66,385).

Contingent Consideration payable to Vale Metais Basicos S.A.

The contingent consideration payable to Vale Metais Basicos S.A. for the acquisition of the Vermelho project has a carrying value of $4,499,972 at 31 March 2022 (31 December 2021: $4,425,522). It comprises US$6,000,000 consideration in cash as at the date of first commercial production from the Vermelho project and was recognised for the first time in December 2019, following the publication of a PFS on the project. The key assumptions underlying the treatment of the contingent consideration of US$6,000,000 is a discount factor of 7.0% along with the estimated date of first commercial production.

As at 31 March 2022, there was a finance expense of $74,450 (31 March 2021: $69,580) recognised in finance costs within the Statement of Comprehensive Income in respect of this contingent consideration arrangement, as the discount applied to the contingent consideration at the date of acquisition was unwound. The finance costs in respect of this contingent consideration are expensed as the Vermelho project has not entered the construction phase.

Deferred Consideration payable to Companhia Brasileira de Alumínio

The deferred consideration payable to Companhia Brasileira de Aluminio has a carrying value of $5,519,461 at 31 March 2022 (31 December 2021: $5,475,538). It comprises US$7,000,000 consideration in cash for ferronickel processing equipment which payable on the completion of certain milestones in the Araguaia project and was recognised for the first time in December 2021. The milestones are as follows:

  1. US$600,000 payable on execution of the Agreement, this was paid on 9 December 2021;
  2. US$950,000 upon the removal of 80% of the Processing Equipment from CBA’s Niquelândia operations;
  3. US$950,000 upon reaching 50% completion of Araguaia plant construction;
  4. d) US$1,150,000 upon production at Araguaia reaching 90% of nameplate capacity for a period of 60 days, on average, and with up to 50% of such amount payable in Horizonte shares, at Horizonte’s election; and
  5. e) US$3,350,000 payable by Horizonte in three equal annual instalments with the first instalment due within 45 days of the first sale of ferronickel to a third party. Horizonte may choose to pay the outstanding balance of this amount at any time of its choosing with up to 50% of the total able to be paid in Horizonte’s shares, at Horizonte’s election.

The key assumptions underlying the treatment of the deferred consideration is a discount factor of 7.0% and the estimated timing of the milestones as outlined previously.

As at 31 March 2022, there was a finance expense of $75,600 (31 March 2021: $nil) recognised in finance costs within the Statement of Comprehensive Income in respect of this deferred consideration arrangement, as the discount applied to the deferred consideration at the date of acquisition was unwound.

Companhia Brasileira de Aluminio

(in respect of Araguaia project)

Xstrata Brasil Mineração Ltda (in respect of Araguaia project)

Vale Metais Basicos S.A. (in respect of Vermelho project)

Total

US$

US$

US$

US$

At 1 January 2021

Initial recognition

5,450,087

3,946,090

4,136,002

13,532,179

Unwinding of discount

19,256

276,226

289,520

585,002

Change in estimate

-

(1,913,705)

-

(1,913,705)

Change in carrying value and foreign exchange

6,195

-

(1)

6,194

At 31 December 2021

5,475,538

2,308,611

4,425,521

12,209,670

Unwinding of discount

75,600

38,838

74,450

188,887

Change in carrying value and foreign exchange

(31,677)

-

2

(31,676)

At 31 March 2022

5,519,461

2,347,449

4,499,973

12,366,883

10 a) Royalty Financing liability

10 a.1) Araguaia royalty financing liability

On 29 August 2019 the Group entered into a royalty funding arrangement with Orion Mine Finance (“OMF") securing a gross upfront payment of $25,000,000 before fees in exchange for a royalty, the rate being in a range from 2.25% to 3.00% and determined by the date of funding and commencement of major construction. At the current period end the rate has been estimated to be 2.95%. The royalty is paid over the first 426k tonnes of nickel produced from the Araguaia Ferronickel project. The royalty is linked to production and therefore does not become payable until the project is constructed and commences commercial production, more detail is contained within the audited financial statements for the year ended 31 December 2021.

The Royalty liability has initially been recognised using the amortised cost basis with an effective interest rate of 14.5%. When circumstances arise that lead to payments due under the agreement being revised, the group adjusts the carrying amount of the financial liability to reflect the revised estimated cash flows. This is achieved by recalculating the present value of estimated cash flows using the original effective interest rate of 14.5%. Any adjustment to the carrying value is recognised in the income statement.

The carrying value of the royalty reflects assumptions on expected long term nickel price, update headline royalty rate as well as the timing of payments related to expected date of commencement of production and hence payment to be made under the royalty agreement. The assumption influencing the increase in the carrying value of the royalty since year end is the long term nickel price which has increased from $16,945 t/Ni to $17,756 t/Ni. The royalty rate has remained at 2.95%.

Management have sensitised the carrying value of the royalty liability by a change in the royalty rate to 3% (maximum royalty rate in the agreement) and it would be $819,864 higher/lower and for a $1,000/t Ni increase/decrease in future nickel price the carrying value would change by $2,808,916.

10 a.2) Vermelho royalty financing liability

On 23 November 2021 the Group entered into a royalty funding arrangement with Orion Mine Finance (“OMF") securing a gross upfront payment of $25,000,000 before fees in exchange for a royalty, at a rate of 2.1%. The royalty rate will increase to 2.25% if substantial construction of the Vermelho Project has not commenced within 5 years of the closing date, 30 March 2022. The royalty will be paid over the life of mine of Vermelho. The Royalty agreement has certain provisions to revise the headline royalty rate should there be change in the mine schedule and production profile prior to construction or if the resource covered in the Vermelho Feasibility Study is depleted. The royalty is linked to production and therefore does not become payable until the project is constructed and commences commercial production. The agreement contains certain embedded derivatives which as per IFRS9 have been separately valued and included in the fair value of the financial instrument in note 10 b). The royalty funds were received on 30 March 2022.

The Royalty liability has initially been recognised using the amortised cost basis with an effective interest rate of 19.34%. When circumstances arise that lead to payments due under the agreement being revised, the group adjusts the carrying amount of the financial liability to reflect the revised estimated cash flows. This is achieved by recalculating the present value of estimated cash flows using the original effective interest rate of 19.34%. Any adjustment to the carrying value is recognised in the income statement.

The carrying value of the royalty reflects assumptions on expected long term nickel and cobalt prices, headline royalty rate as well as the timing of payments related to expected date of commencement of production and hence payment to be made under the royalty agreement. The assumption influencing the initial valuation of the carrying value of the Vermelho royalty is the long term nickel price of $17,756 t/Ni, the long term cobalt price of $53,355t/Co and the royalty rate of 2.1%.

Management have sensitised the carrying value of the royalty liability by a change in the royalty rate to 2.25% and it would be $2,053,999 higher/lower and for a $1,000/t Ni increase/decrease in future nickel price and future cobalt price the carrying value would change by $1,459,331.

Araguaia Royalty valuation

Vermelho Royalty valuation

Total

US$

US$

US$

Net book amount at 1 January 2021

30,131,755

-

30,131,755

Unwinding of discount

4,637,057

-

4,637,057

Change in carrying value

9,727,692

-

9,727,692

Effects of foreign exchange

-

-

-

Net book amount at 31 December 2021

44,496,504

-

44,496,504

Initial recognition

-

25,000,000

25,000,000

Embedded derivative – initial valuation

-

4,590,000

4,590,000

Transaction costs

-

(847,939)

(847,939)

Unwinding of discount

1,249,391

14,233

1,263,624

Change in carrying value

2,626,069

(309)

2,625,760

Effects of foreign exchange

-

-

-

Net book amount at 31 March 2022

48,371,964

28,755,985

77,127,949


10 b) Derivative financial assets

10 b.1) Araguaia derivative financial assets

The aforementioned Araguaia royalty agreement includes several options embedded within the agreement as follows:

  • If there is a change of control of the Group and the start of major construction works (as defined by the expenditure of in excess of $30m above the expenditure envisaged by the royalty funding) is delayed beyond a certain pre agreed timeframe the following options exist:
    • Call Option – which grants Horizonte the option to buy back between 50 – 100% of the royalty at a valuation that meets certain minimum economic returns for OMF;
    • Make Whole Option – which grants Horizonte the option to make payment as if the project had started commercial production and the royalty payment were due; and
    • Put Option – should Horizonte not elect for either of the above options, this put option grants OMF the right to sell between 50 – 100% of the Royalty back to Horizonte at a valuation that meets certain minimum economic returns for OMF.
  • Buy Back Option - At any time from the date of commercial production, provided that neither the Call Option, Make Whole Option or the Put Option have been actioned, Horizonte has the right to buy back up to 50% of the Royalty at a valuation that meets certain minimum economic returns for OMF.

The directors have undertaken a review of the fair value of all of the embedded derivatives and are of the opinion that the Call Option, Make Whole Option and Put Option currently have immaterial values as the probability of both a change of control and project delay are currently considered to be remote. There is considered to be a higher probability that the Group could in the future exercise the Buy Back Option and therefore has undertaken a fair value exercise on this option.

The initial recognition of the Buy Back Option has been recognised as an asset on the balance sheet with any changes to the fair value of the derivative recognised in the income statement. It been fair valued using a Monte Carlo simulation which runs a high number of scenarios in order to derive an estimated valuation. The Monte Carlo simulation was performed at the 31 December 2021 year end.

The assumptions for the valuation of the Buy Back Option (per the Monte Carlo simulation) are the future nickel price ($16,941/t Ni), the start date of commercial production (May 2023), the prevailing royalty rate (2.95%), the inflation rate (1.76%) and volatility of nickel prices (22.1%).

Sensitivity analysis

The valuation of the Buyback option is most sensitive to estimates for nickel price and nickel price volatility.

An increase in the estimated future nickel price by $1,000 would give rise to a $1,338,000 increase in the value of the option.

The nickel price volatilities based on both 5- and 10-year historic prices are in close proximity and this is the period in which management consider that the option would be exercised. Therefore, management have concluded that currently no reasonably possible alternative assumption for this estimate would give rise to a material impact on the valuation.

10 b.2) Vermelho derivative financial assets

Horizonte has the right to buy back 50% of the royalty on the first four anniversaries of closing (or on any direct or indirect change of control in respect of Vermelho up until the fourth anniversary of closing).

After the 4th anniversary, Horizonte has the right to buy back 50% of the royalty on any direct or indirect change of control in respect of Vermelho at a valuation that meets certain minimum economic returns for OMF.

The initial recognition of the Buy Back Option has been recognised as an asset on the balance sheet with any changes to the fair value of the derivative recognised in the income statement. It been fair valued using a Monte Carlo simulation which runs a high number of scenarios in order to derive an estimated valuation. The Monte Carlo simulation was performed at the agreement date of 23 November 2021.

The assumptions for the valuation of the Buy Back Option (per the Monte Carlo simulation) are the future nickel price ($16,602/t Ni), the future cobalt price ($45,387/t Co), the production profile from 2027 to 2065 , the expected royalty rate (2.1%), the inflation rate (1.76%), volatility of nickel prices (22.3%) and volatility of cobalt prices (28.0%).

Araguaia Royalty

Vermelho Royalty

Total

US$

US$

US$

Value as at 1 January 2021

2,400,000

-

2,400,000

Change in fair value

2,550,000

-

2,550,000

Value as at 31 December 2021

4,950,000

-

4,950,000

Initial recognition

-

4,590,000

4,590,000

Value as at 31 March 2022

4,950,000

4,590,000

9,540,000

11 Convertible loan notes liability

On 29 March 2022 the Company issued convertible loan notes to the value of $65 million at an interest rate of 11.75% with interest accruing quarterly in arrears. The convertible loan notes were issued at a discount of 5.75%. The maturity date of the instruments is 15 October 2032.

The convertible loan notes are unsecured and the noteholders will be repaid as follows:

  • Interest shall be capitalised until the Araguaia Project Completion date, estimated to be 31 December 2025 (subject to various technical operating tests being passed)
  • After Project Completion Date, interest shall be paid quarterly only if there is available cash (after the company meets its senior debt and other senior obligations)
  • After Project Completion Date, principal repayments (including accrued capitalized interest) shall be paid quarterly subject to available cash for distribution. In addition a cash sweep of 85% of excess cash will apply on each interest payment date
  • Any amount outstanding on the CLN on the maturity date 15 October 2032, Horizonte is obliged to settle in full on the maturity date.

At any time until the Maturity Date, the Noteholder may, at its option, convert the notes, partially or wholly, into an amount of ordinary shares up to the total amount outstanding under the Convertible Note divided by the Conversion Price. The Conversion Price is 125% of the Subscription Price of 0.07 pence converted to US$ at a rate of 1.3493. The Conversion Price is therefore $0.11806.

The convertible loan is a hybrid financial instrument, whereby a debt host liability component and an embedded derivative liability component was determined at initial recognition. As the convertible loan notes was issued close to the quarter end date, the fair value of the financial instrument approximates the cash received.

After the fifth anniversary of the closing date, Horizonte shall have a one-time right to redeem the Convertible Notes, in whole, at 105% of the par value plus accrued and unpaid interest in cash if:

  1. The thirty-business day VWAP of Horizonte shares exceeds 200% of the Conversion Price and the average daily liquidity of the Company’s shares (across all relevant exchanges) exceeds US$2.5 million per trading day over the prior 30 trading days; or
  2. There is a change of control.

Management have assessed the likelihood of the above events occurring is highly improbable and thus the value of the redemption right is immaterial and was thus not considered in the valuation of the instrument.

Convertible loan notes liability

US$

Initial recognition

65,000,000

Discount on issue

(3,737,500)

Transaction costs

(2,347,041)

Unwinding of discount

40,041

Value as at 31 March 2022

58,955,500

12 Fair value

Carrying Amount versus Fair Value
The following table compares the carrying amounts versus the fair values of the group’s financial assets and financial liabilities as at 31 March 2022.

The group considers that the carrying amount of the following financial assets and financial liabilities are
a reasonable approximation of their fair value:

  • Trade receivables
  • Trade payables
  • Cash and cash equivalents

As at 31 March 2022

As at 31 December 2021

Carrying amount

Fair Value

Carrying amount

Fair Value

US$

US$

US$

US$

Financial Assets

Derivative financial assets

9,540,000

9,540,000

4,950,000

4,950,000

Total Assets

9,540,000

9,540,000

4,950,000

4,950,000

Financial Liabilities

Contingent consideration

6,847,422

6,847,422

6,734,135

6,734,135

Deferred consideration

5,519,461

5,519,461

5,475,538

5,475,538

Royalty Finance

77,127,948

77,127,948

44,496,504

44,496,504

Convertible Loan Note liability

58,955,500

58,955,500

-

-

Total Liabilities

148,450,331

148,450,331

56,706,177

56,706,177

Fair value Hierarchy
The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.
The fair value hierarchy has the following levels:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2- inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly, (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3- inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The derivative financial asset have been deemed to be a level three fair value. Information related to the valuation method and sensitivities analysis for the derivative financial asset are included in note 10 b.

13 Dividends

No dividend has been declared or paid by the Company during the three months ended 31 March 2022 (2021: nil).

14 Earnings per share

The calculation of the basic earnings per share of 0.119 cents for the three months ended 31 March 2022 (31 March 2021 loss per share: 0.09 cents) is based on the gain attributable to the equity holders of the Company of $4,518,886 for the three month period 31 March 2022 (31 March 2021: $1,364,839 loss) divided by the weighted average number of shares in issue during the period of 3,802,365,390 (weighted average number of shares for the three months ended 31 March 2021: 1,516,272,610).

Details of share options that could potentially dilute earnings per share in future periods are disclosed in the notes to the Group’s Annual Report and Financial Statements for the year ended 31 December 2021 and in note 15 below.

15 Issue of Share Options

The Directors have discretion to grant options to the Group employees to subscribe for Ordinary shares up to a maximum of 10% of the Company’s issued share capital. One third of options are exercisable at each six months anniversary from the date of grant, such that all options are exercisable 18 months after the date of grant and all lapse on the tenth anniversary of the date of grant or the holder ceasing to be an employee of the Group. Should holders cease employment then the options remain valid for a period of 3 months after cessation of employment, following which they will lapse. Neither the Company not the Group has any legal or constructive obligation to settle or repurchase the options in cash.

There was no movement in share options during the three months ended 31 March 2022.

Number of options

Weighted average exercise price

£

Outstanding at 1 January 2022

114,300,000

0.0425

Outstanding at 31 March 2022

114,300,000

0.0425

Exercisable at 31 March 2022

114,300,000

0.0425

16 Ultimate controlling party

The Directors believe there to be no ultimate controlling party.

17 Related party transactions

The nature of related party transactions of the Group has not changed from those described in the Group’s Annual Report and Financial Statements for the year ended 31 December 2021. There were no significant related party transactions during the three month period ended 31 March 2022.

18 Commitments

As at the date of these financial statements the Group is in the process of concluding equipment purchase and service contracts which are key to the commencement of the Araguaia project construction.

19 Events after the reporting period

None.

20 Approval of interim financial statements

These Condensed Consolidated Interim Financial Statements have been approved for issue by the Board of Directors on 16 May 2022.

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 securities legislation. Forward-looking information includes, but is not limited to, the ability of the Company to complete the acquisition of equipment as described herein, statements with respect to the potential of the Company's current or future property mineral projects; the ability of the Company to complete a positive feasibility study regarding the second RKEF line at Araguaia on time, or at all, the success of exploration and mining activities; cost and timing of future exploration, production and development; the costs and timing for delivery of the equipment to be purchased as described herein, the estimation of mineral resources and reserves and the ability of the Company to achieve its goals in respect of growing its mineral resources; the realization of mineral resource and reserve estimates and achieving production in accordance with the Company’s potential production profile or at all. 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 inability of the Company to complete the acquisition of equipment contemplated herein, on time or at all, the ability of the Company to complete a positive feasibility study regarding the implementation of a second RKEF line at Araguaia on the timeline contemplated or at all, 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, together with the risks identified and disclosed in the Company’s disclosure record available on the Company’s profile on SEDAR at www.sedar.com, including without limitation, the annual information for of the Company for the year ended December 31, 2021, the Araguaia Report and the Vermelho Report. 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.