London-based nickel development company Horizonte Minerals is seeking a full financing solution for its Araguaia nickel project in Brazil, which has seen its capex surge 87%, Kallanish reports.

The firm, listed in London and Toronto, said in a statement it is “actively engaging” existing and new potential investors to secure the finance needed to complete the project. Interim chief executive Karim Nasr says the company will seek to develop a solution “in the coming weeks, but with no guarantee of success.”  

The Araguaia project in the northern Pará state was purchased from Glencore in 2015, when it was described as one of the world’s largest nickel saprolite projects in terms of size and grade. The Swiss trading and mining giant is one the three largest shareholders of Horizonte, alongside La Mancha Investments and Orion Mine Finance.

According to Horizonte’s latest market update on Monday, preliminary results of a review of the project’s cost-to-complete estimate and schedule indicate total capex increased to $1 billion. While the previous capex stood at $537m, Horizonte had already spent $479m up to the end of 2023.

The review was carried out by G Mining Services (GMS), a specialised mining construction and engineering firm that is currently constructing a gold project in the same state. The firm believes Horizonte will need $454m in fresh funds to commission Araguaia and deliver first metal. The funding is planned to be secured by June, to enable re-mobilisation in Q3 2024 and first production in Q1 2026.

Based on GMS calculations, Horizonte will take another 18 months to complete the construction that started in 2022. The company will use a smaller, in-house workforce to benefit from a simplified management structure. However, specialist contractors and OEMs will continue to be critical to project execution.

The fate of the project, planned to produce 29,000 tonnes/year of nickel in two lines, is tied to the interim’s management ability to convince investors of its feasibility. This is now trickier than ever, given the downturn in the nickel market and the increased number of mines being put into care and maintenance. Yet, bullish investors are still betting the long-term growth of electric vehicles will boost demand for nickel and other battery materials, making the metal an essential asset in their investment portfolio.

At the time of writing, Horizonte’s shares at the London Stock Exchange had fallen 60.71% to 3.34 pence sterling.