AIM miner, Horizonte Minerals (HZM) is flying high 12.73% to a mid of 7.75p this morning on the back of announcing stand-out Pre-Feasibility results from its c.100Mt resource Araguaia Nickel Project in Brazil confirming the robust economics of developed it as the next major nickel mine in the country.

Production (set for 2017) is targeting a 15,000tpa ferro-nickel plant with a high grade 20% Fe-Ni product over a 25 year mine.

The PFS has demonstrated that at these production rates, the project has a NPV of US$519m and an IRR of 20%, with a capital cost of US$582m which puts Araguaia in the lowest quartile of the cost curve globally.

Araguaia is located in a world class mining region with Anglo Americans Barro Alto mine and Vales On�a Puma Nickel mine as its neighbours and has excellent infrastructure in place including rail, road, water and power.

Next step is the Bankable Feasibility Study which is set to commence in 2014.

Horizonte is well funded and has a strong shareholder structure including Teck Resources Limited 42.5%, Henderson Global Investors 15.1%, Anglo Pacific Group 9.2% and LGA 7.5%. Mining Broker FinnCap has issued a 54p price target (c.620% increase to todays sp of 7.7p) for Horizonte noting "The study concludes that the project has positive economics with an IRR of 20% and a post tax NPV of US$519m.

We have incorporated the results into our model and have raised our target price to 54p.

This is of course considerably above the present price of the stock, but we feel the market may not have fully realised the implications of Horizonte being 42.5% owned by the largest Canadian diversified mining company.

Full research note attached. Further Broker Coverage PEEL HUNT Horizonte Minerals (HZM LN, Not Rated) - Araguaia Nickel Project PFS.

Positive.

Horizonte Minerals announce the results of a pre-feasibility study for the Araguaia project in Brazil.

The study outlines a 900kt per annum Ferro Nickel project with an NPV8% of $519m with a pre-production capex of $582m and an IRR of 20%.

The project shows a long life low cost Nickel operation with a mine life of 25 years and a cash cost of $9,166 per tonne, in the bottom quartile of the cost curve.

The average mine grade for the first 10 years is 1.76% Ni.

Importantly the Break Even Nickel price for the project at an 8% discount rate is $14,000, a low breached in the recent Nickel price doldrums but not considered to be a likely long term Nickel price.

Horizontes strong shareholder base gives the project a higher likelihood of success although at current spot Nickel prices the project is unlikely to capture widespread enthusiasm and will require a recovery in the Nickel market.

The study comes at a good time for Horizonte with a modest recovery in Nickel prices although the long term Nickel prices used in the study are $19,000/t, 19% above todays spot Nickel price.

http://www.investegate.co.uk/bushveld-minerals-ld--bmn-/rns/agreement-to-acquire-zaaiplaats-tin-tailings-dump/201403250701010854D/ INVESTEC Horizonte Minerals (HZM LN) PFS completed on Araguaia project outlining a 15ktpa Ni production over a 25 year mine life for a cash cost of US$4.16/lb (bottom quartile) for a capex of US$582m generating an IRR of 21% and NPV post tax of US$1,204m at US$19,000/t copper and 8% discount rate.

The operation would process 900ktpa of ore at 1.76% Ni.

A larger 2.7mtpa scenario has also been examined that would produce 40ktpa Ni for a capex of US$1.436m at US$4.24/lb cash cost.

The operation would produce ferronickel using standard proven rotary kiln technology.

Source: Thomson Reuters
Investec View: This is a key milestone for the company as it advances its Araguaia project.

The smaller lower capital scenario is clearly more within reach of a junior miner than the larger project.

Furthermore, the company has Teck Resources as a major shareholder 42.5% that should assist with financing such a project on completion of a BFS.

We note also the changing landscape in the nickel market as the Indonesian mineral exports ban is set to cut significant nickel in pig iron production in China helping to better balance the market.
SHORECAP HORIZONTE MINERALS^ (HZM, NR, CNP) - Positive PFS for Araguaia; IRRs of 20-21% at US$19,000/t nickel.

Horizonte released positive results from the Pre-Feasibility Study (PFS) on the Araguaia nickel project in Brazil on time and (we understand) on budget (c�1.6m). Assuming a flat nickel price of US$19,000/t and US$150/t for iron content, after-tax NPV8% and IRR for the base case (0.9Mtpa single-line plant) scenario were US$519m and 20%, respectively; for the larger scale (2.7Mtpa twin-line plant) scenario, US$1.2bn and 21%, respectively.

Importantly, NPV and IRR would still be reasonable (in our opinion) even at current spot levels, e.g.

we understand that at US$16,000/t, they would be cUS$320m and 15% for the base case, and US$700m and c15-16% for the large scale case; the base case all-in breakeven is apparently cUS$13,700/t. In more detail, key operational parameters are as follows: � Base case (0.9Mtpa single-line plant) - 15ktpa Ni in ferronickel (FeNi; 20% Ni content), 25-year life-of-mine (LOM); 1.76% Ni feed grade in Years 1-10; US$582m capex; US$9,166/t (US$4.16/lb) C1 cash costs. � Larger scale case (2.7Mtpa 2-line plant) - 40ktpa (in FeNi; 20% Ni content), 20-year LOM; 1.57% Ni feed grade in Years 1-10; US$1.44bn capex; US$9,380/t (US$4.24/lb) C1 cash costs. Mining will be by open pit.

Araguaias C1 costs compare well and would place the project in the bottom quartile of the cost curve.

Both scenarios make use of well-proven, conventional RKEF (rotary kiln-electric furnace) process technology, to which the amenability of Araguaias ores has been demonstrated in metallurgical testwork.

Importantly, the Araguaia area is effectively located in an established mining district and is thus well-served in terms of infrastructure (e.g.

we understand that there is ample low-cost hydroelectric generation capacity; there are good roads and railway networks in the vicinity). Horizonte is aiming to deliver a Bankable Feasibility Study (BFS) between end 2014 and mid-2015.

If all goes to plan, first production could occur in 2017, with full production reached after 13 months (i.e.

by end 2017 or in 2018).

The company is currently in the "final stages" of completing an Environmental Impact Assessment (EIA).

We understand that there have been no red flags to date and that the company expects to submit this to the authorities in Q3 2014. We understand that Horizonte had c�3m of cash as of end January 2014 (with the PFS completely paid off), whereas the BFS should cost cUS$15m.

Most of this apparent shortfall would be covered by a potential US$12.5m payment should Anglo Pacific choose to exercise its royalty option (simplistically, 1.5% of revenues; we understand Anglo Pacific has a 120-day window in which to exercise this option).

Otherwise, there is the still-untouched �8.0m Equity Financing Facility with Darwin Strategic, although we understand that the company would prefer to utilise other financing sources (which are currently being negotiated). However, since there is no guarantee that Anglo Pacific will exercise its option or that other sources of financing will be forthcoming, we believe that the prudent thing would be to try to raise some equity on the back of the PFS results, assuming the Darwin facility is to remain untouched.

We stress some because we expect the prices of nickel and the companys shares to trend up in coming months (dilution would be higher than necessary if all the cash required were raised now, which would not be in shareholders interests).

Essentially, Horizonte is dependent on higher forecasted nickel prices in the medium-term, with the trick being to persuade investors to stump up while nickel prices are still relatively low (albeit rising). Nonetheless, Horizonte is relatively well-funded compared with most junior peers (whether they be in nickel or not).

This, the clear evidence of support from key strategic shareholder (Teck) at a time of adverse markets, the relatively low-risk mining, processing and environmental characteristics and availability of infrastructure clearly distinguish Horizonte from its peers, in our opinion.

All things considered, we continue to consider Horizonte our favoured name in the much-diminished AIM nickel space. NUMIS Horizonte Minerals - PFS for Araguaia nickel project, Brazil.

Small positive.

Two options considered for development - base case 900ktpa post-tax NPV (8%) $519m and larger scale 2.7Mtpa post-tax NPV (8%) $1.2Bn.

Preferred route is small scale 900ktpa producing 15,000tpa nickel in Fe-Ni product (LOM 25) with capex $582m.

C1 costs $4.16/lb, payback 4.4 years with breakeven Ni price at $13,977/t.

This compares to the larger option which comes with a capex of $1.2bn, C1 cost $4.24/lb, payback 3.9 years with breakeven nickel price of $14,060/lb.

Results look better but still not much room for manoeuvre based on spot nickel price of $16,000/t (Horizonte has used a LOM nickel price of $19,000/t).

Project now progressing to feasibility.
[cid:image002.png@01CECBDD.61F8A860] Felicity Edwards St Brides Media & Finance Ltd 3 St Michaels Alley, London, EC3V 9DS www.stbridesmedia.co.uk Tel: 0207 236 1177 | Mob: 07748843871 | Twitter: @StBrides1