Horizonte (HZM) Share Price Plunged 56% on the Araguaia Update

The Horizonte Minerals Plc (LON: HZM) share price plunged 55.98% after announcing that it was about to complete the final detailed engineering and construction design for Line 1 of its 100%-owned Araguaia Nickel Project and had encountered significant changes. 

The company noted that the work done, along with a detailed cost review, had revealed that construction costs would have to increase by 35% and that the first production from the line would be in Q3 2024 instead of earlier. Investors reacted negatively to the news, as expected.

The latest update indicates that Horizonte Minerals must now find additional funding for the project, given that it had already secured the amount initially estimated to be enough to fund its construction. It is unclear whether the company’s current financial backers will approve the increased costs. 

The delay in the first production from the Araguaia Nickel mine was also not appreciated by investors, despite the company saying it had made significant progress in moving the project forward. The firm noted that all critical engineering drawings had been issued for construction. 

Horizonte Minerals said it was working with its financial institutions and cornerstone investors to reach a financing solution that would enable it to complete construction. The company started stockpiling ore in Q3 this year and has already installed the rotary dryer with all its shells aligned for final welding. 

The company also noted that construction of the 126km, 230kV transmission line is almost done, with all the pylons erected and 118km of conductor cable installed. 

Jeremy Martin, Horizonte Minerals’ CEO, commented: “We continue to make solid progress with construction at Araguaia Line 1 and are confident that the Project is now significantly de-risked given the near-finalization of detailed engineering and procurement, together with the detailed review of the costs to project completion, ensuring successful delivery. Despite the anticipated higher capital requirement, Araguaia remains a Tier 1 asset that will deliver strong margins over its 28-year mine life once production commences next year. Moreover, the imminent completion of the Feasibility Study on Line 2 will demonstrate Araguaia's capacity to support an annual production of 29,000 tonnes per annum.”

Horizonte Minerals (HZM) share price. 

The Horizonte Minerals (HZM) share price plunged 55.98% to trade at 55.25p, from Friday’s closing price of 125.50p.