Horizonte Minerals PLC (LON:HZM)(TSE:HZM) has completed test work on samples of limonite ore from the Vermelho nickel-cobalt project in the Carajás mining district of Pará state, northern Brazil.
The company was able to produce a high purity product containing 21.8% cobalt, exceeding the reference grade used for sulphate pricing.
Nickel sulphate was also produced as a solution, ready for purification to final battery grade product.
The results confirm the suitability of the pressure acid leach process and subsequent purification stages for processing Vermelho limonite ore to produce high purity cobalt and nickel sulphate suitable to supply the EV battery markets.
The results will now be integrated into the pre-feasibility study underway on the Vermelho project, along with results from earlier in the year which show that saprolite ore is amenable to treatment by conventional processing by Rotary Kiln Electric Furnace.
"Producing high purity nickel and cobalt sulphate from the Vermelho project of suitable quality and grade for use in EV battery production is a major milestone in the development of the project,” said Horizonte’s Jeremy Martin.
“The Vermelho project is a value driver for the company, it is a high-grade scalable resource, with good infrastructure and has the potential to be fast tracked to development.”
Numis repeats ‘buy, 8p target price
In a note to clients, analysts at ‘house’ broker Numis Securities commented: “We view this as a positive for HZM as it suggests that Vermelho could provide a second leg to the company in addition to the Araguaia ferronickel project that should produce up to 29kt/year where a feasibility study was completed in 2019. This could ultimately elevate HZM to mid tier producer status if both are developed.”
They added: “We value Vermelho at only US$15m and the results of the pre feasibility study could justify a significant upward rerating. The main catalysts for the shares should be securing the project finance package for Araguaia and the publication of the study for Vermelhos.”
Numis reiterated a ‘buy’ rating and an 8p target price on Horizonte Minerals’ shares based on 0.5x NAV (net asset value) for Araguaia with the shares currently only trading at 0.15x.
In late morning trading, shares in Horizonte Minerals were 5.8% higher at 1.82p.
-- Adds broker comment, share price --