Horizonte Minerals / HZM (LON)

INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021...
Horizonte Minerals Plc, (AIM: HZM; TSX: HZM) (the "Company" or “Horizonte”), the nickel development company focused on developing its ferro-nickel project in Brazil (“Araguaia” or “the Project”), announces it has today published its unaudited financial results for the six month period to 30 June 2021 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

• Project financing of Araguaia nearing completion with credit approval process underway following completion of due diligence by the International Lenders.
• Senior Debt Facility expected to benefit from significant Export Credit Agency Support.
• Cornerstone strategic investor and final offtake agreements well advanced and expected to be finalised shortly after credit approvals.
• Horizonte maintained a strong cash position of £22.2 million following completion of an £18 million equity fundraise in February 2021.
• Financing discussions remain on track. Credit committee approval for the senior debt facility expected in Q3 2021 as previously announced
• Vermelho progressing with Ramboll awarded Environmental and Social Impact Assessment contract.

Events post the Reporting Date

• Significant progress on key project execution preparation activities, including competitive tendering for supply of key processing equipment, electric furnace and project management (EPCM) services.
• Operational Readiness Plan well advanced with all key permits in place for commencement of construction.
• Key environmental and social programmes continuing in preparation for construction phase.
• Mobilisation of Head of Projects to Brazil and appointment of Engineering, Community, Health and Safety Managers continues the build out of the project execution team.
• Publication of 2020 Sustainability Report in accordance with Global Reporting Initiative.

Horizonte Minerals plcUnaudited Amended Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2021...

HORIZONTE SECURES APPROVAL FROM EXPORT CREDIT AGENCIES FOR THE DEVELOPMENT OF THE ARAGUAIA PROJECT
Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (“Horizonte” or the “Company”) the nickel company focused on Brazil is pleased to announce that it has received formal credit and board approval from two export credit agencies (the “ECAs”) for US$146.2 million of the senior secured project finance facility (the “Senior Debt Facility”) to part fund construction and development of its Araguaia ferro-nickel project (“Araguaia” or the “Project”). The ECAs are EKF, Denmark’s Export Credit Agency (“EKF”) and Finnvera plc, Finland’s Export Credit Agency (“Finnvera”).
The Senior Debt Facility comprises two tranches, of which Tranche A of US$146.2 million is to be guaranteed by the ECAs in relation to a number of key equipment and service provider contracts. Tranche B of the Senior Debt Facility is expected to be provided by a syndicate of international financial institutions (the “Senior Lenders”).
The ECA approvals are a key step forward in the project financing process, and Horizonte is now nearing completion of the credit approvals by the Senior Lenders for the balance of the project financing of Araguaia.
Endeavour Financial is acting as financial advisor to the Company and Norton Rose Fulbright LLP has acted as legal counsel to the Company with support from the Freitas Ferraz law firm in Brazil.
Horizonte CEO, Jeremy Martin commented: “The receipt of formal credit and board approvals from two export credit agencies for the guarantee of a large component of the Senior Debt Facility is an outstanding achievement for Horizonte.
The Senior Debt Facility is set to provide a significant portion of the funding required for construction of the Project. We look forward to announcing credit approval from the balance of Senior Lenders during the remainder of the third quarter, as well as further key financing milestones.
We are now reaching the culmination of this complex funding process which will see us secure the initial capex required to develop Araguaia, our 100% owned tier 1 ferro-nickel project. With construction scheduled to commence on completion of funding this is a very exciting time for Horizonte.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European Union (Withdrawal) Act 2018.
For further information, visit www.horizonteminerals.com

HORIZONTE SECURES CREDIT APPROVAL FOR US$346.2 MILLION SENIOR DEBT FACILITY FOR THE DEVELOPMENT OF THE ARAGUAIA PROJECT
Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (“Horizonte” or “the Company”) the nickel company focused in Brazil is pleased to announce that it has received credit approvals from a syndicate of five international financial institutions (the “Senior Lenders”) in addition to the previously announced approval by the two export credit agencies (the “ECAs”) for a senior secured project finance facility (the “Senior Debt Facility”) of up to US$346.2 million to fund the construction and development of its Araguaia ferro-nickel project (“Araguaia” or the “Project”).
The Senior Lenders are BNP Paribas Securities Corp (“BNPP”), ING Capital LLC (“ING”), Natixis, New York Branch (“Natixis”), Société Générale (“SocGen”), and Swedish Export Credit Corporation (“SEK”). The ECAs are EKF, Denmark’s Export Credit Agency (“EKF”) and Finnvera plc, Finland’s Export Credit Agency (“Finnvera”).
The Senior Debt Facility will include two tranches:

• Tranche A of US$146.2 million, to be guaranteed by the ECAs in relation to a number of key equipment and service provider contracts; and
• Tranche B of US$200 million.

The term of the Senior Debt Facility will be ten and a half years for Tranche A, and eight and a half years for Tranche B. The interest rate of the Senior Debt Facility will be at a rate of LIBOR plus 1.80% for Tranche A, and LIBOR plus 4.25 to 4.75% for Tranche B. Closing of the Senior Debt Facility is subject to customary conditions, including the negotiation and settlement of definitive documentation and the entry into a comprehensive intercreditor agreement, among others.
Endeavour Financial is acting as financial advisor to the Company and Norton Rose Fulbright LLP has acted as legal counsel to the Company with support from the Freitas Ferraz law firm in Brazil.
The Senior Lenders and ECAs are being advised by Milbank LLP, Micon International Limited (Independent Engineer), and Arcadis (Independent Environmental, Social, Health & Safety Consultant).
Horizonte CEO, Jeremy Martin commented: “I am delighted to announce the receipt of these final credit approvals from five leading international financial institutions. The Horizonte team and our advisors have worked over the past 18 months to reach this point. Coupled with the two export credit agencies, this syndicate of seven provides a U$346.2 million Senior Debt Facility to help finance the construction of Araguaia. This milestone represents the conclusion of an intensive due diligence process which included site visits by the Senior Lenders and independent experts, and extensive technical, marketing, environmental, social and legal evaluations of the Project.
Credit approval from the full syndicate is the catalyst for finalising the other components of the overall financing requirement for Araguaia. As previously announced, the process with the offtake partner and strategic investor is well advanced, and we look forward to updating the market on its conclusion, alongside financial close of the Senior Debt Facility in the coming months.
The strength of the syndicate we have secured is testament to the robust economics of the Project, our team’s technical ability and our best practice sustainability standards. With very few new nickel projects with these credentials at construction phase we believe today’s news is a pivotal point in Horizonte’s story as we work to become a major nickel producer. This is against a backdrop of strong nickel market fundamentals where we are seeing significant demand in the stainless-steel sector alongside accelerating growth in the EV battery space.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European Union (Withdrawal) Act 2018.

Horizonte Announces Proposed US$633 Million Funding Package to Fully Fund Araguaia into Production


Horizonte (AIM: HZM, TSX: HZM), announces that it has entered into certain investment and subscription agreements as part of a comprehensive funding package of US$633 million which is expected to complete the funding required for the construction of Araguaia. The Proposed Funding Package comprises:
Approximately US$197 Million equity fundraise: The equity fundraise consists of (i) strategic investments of between approximately US$65.0 and US$75.0 million from La Mancha and US$50.0 million from Orion in newly issued Ordinary Shares; and (ii) the placing of approximately US$75 million of newly issued Ordinary Shares by way of the UK Placing and the Canadian Offering. In addition to the Equity Fundraise, the Company has agreed a cornerstone subscription with Glencore of US$7 million in newly issued Ordinary Shares. Details of the Strategic Investments and the Glencore Subscription are set out below; additional details on the Placing will be found in the separate announcements by the Company to be released immediately after this Announcement.
US$65 Million Convertible Loan Notes Issue (“Convertible Notes”): As part of their Strategic Investments, Orion and La Mancha have conditionally agreed to subscribe for US$50 million and US$15 million of Convertible Notes respectively. Further details on the Convertible Notes can be found below.
US$25 Million Cost Overrun Debt Facility (“Proposed Cost Overrun Debt Facility”): Orion is proposing that a member of its group provides the Proposed Cost Overrun Debt Facility to be used, if required, for the construction of Araguaia. The Proposed Cost Overrun Debt Facility is subject amongst other things on definitive documentation and would form part of a total of US$99 million in dedicated cost overrun funding and contingency funding for the Project. Further details on the Proposed Cost Overrun Debt Facility can be found below.
US$346.2 Million Proposed Senior Debt Facility (“Proposed Senior Debt Facility”): As previously announced, Horizonte has received credit approvals and a signed commitment letter for US$346.2 million of senior debt from a syndicate of international financial institutions (BNP Paribas, BNP Paribas Fortis, ING Capital LLC, ING Bank N.V., Natixis, New York Branch, Société Générale and Swedish Export Credit Corporation). The Proposed Senior Debt Facility which is subject amongst other things to diligence and agreeing definitive documents will comprise two tranches: Tranche A, of US$146.2 million, will be guaranteed by two Export Credit Agencies (EKF, Denmark’s Export Credit Agency (“EKF”), and Finnvera plc, Finland’s Export Credit Agency (“Finnvera”)); and Tranche B of US$200 million. Further details of the Proposed Senior Debt Facility can be found in the Company’s announcements dated 13 September 2021 and 30 September 2021.

The Company also intends to raise up to US$8 million (approximately £6 million) by way of an open offer to holders of existing ordinary shares. Further details will be found in the announcement to be released immediately after this announcement.
Completion of the Placing and the Strategic Investments are conditional upon each other (as further described below) and are not conditional upon the completion of other parts of the Proposed Funding Package, and the Placing and Strategic Investments are expected to become unconditional on admission to trading of the Ordinary Shares to be issued pursuant to them. The issue and allotment of the securities to be issued in connection with Proposed Funding Package is conditional upon, among other things, the passing of resolutions by the Company’s shareholders at the General Meeting. The Company is proposing to convene the General Meeting for on or around 20 December 2021 to seek such approvals. Further details of the General Meeting will be announced in due course.
Horizonte is also pleased to announce that Araguaia Niquel Metais Ltda (“Araguaia Ltda”), a member of the Company’s group has entered into a conditional ten year offtake agreement with Glencore (with the obligations of Araguaia Ltda being guaranteed by the Company), where Glencore has committed to acquire 100% of the production of ferronickel from Araguaia for that period (“Offtake Agreement”). The entry into the Offtake Agreement is a key requirement of the Lenders and significantly de-risks future cash flows from the Project. The Offtake Agreement is conditional upon, among other things, the completion of the Glencore Subscription and the entry by Glencore into a direct agreement with the Lenders in relation to typical intercreditor matters.
In addition to its participation in the proposed Equity Fundraise, Convertible Notes and the provision of the Proposed Cost Overrun Debt Facility, an affiliate of Orion will also purchase a 2.1% gross revenue royalty on the Vermelho project (the “Vermelho Royalty”) for cash consideration to the Company of US$25 million. 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.
BMO Capital Markets Limited is acting as exclusive financial advisor to the Company in relation to the La Mancha Strategic Investment and Endeavour Financial is acting as exclusive financial advisor to the Company in relation to the investments being made by Orion and the Proposed Senior Debt Facility. Norton Rose Fulbright LLP has acted as legal counsel to the Company in respect of these investments and facilities.
Highlights
The net proceeds of the Proposed Funding Package will be used towards the construction of the Araguaia, as well as for general working capital purposes.
Araguaia is a high grade, low cost, long life asset located south of the Carajas Mining District, north east Brazil. The feasibility study disclosed in the Araguaia Technical Report demonstrates robust economics with the Stage 1 process plant producing 14,000 tonnes of nickel per year and generating a Post-tax IRR of 28.1%; Post-tax NPV(8%) of US$740 million; a Payback Period of approximately 3 years; and Net Cashflow of US$2.582bn, based on a market consensus nickel price of US$16,800 per tonne (see the Araguaia Technical Report) and in each case based upon the various assumptions set out in the Araguaia Technical Report. The spot nickel price is currently US$19,625 per tonne.
Development of Araguaia will provide the Company with a platform for growth in an established mining region, with potential to become a significant nickel producer of scale through the potential future development of a second production line at Araguaia and second potential operation with the Vermelho Project.
The Company has a second 100% owned project, the Vermelho Nickel Cobalt project which is being advanced towards feasibility stage with the final products targeted for the EV battery market. This project is expected to produce ~24kt Nickel pa and ~1.25kt Cobalt pa with low capital intensity of US$27kt/t and a long mine life of 38 years at an NPV(8%) of US$1.7 billion (see the Vermelho Technical Report).
There is a strong long-term outlook for the nickel market driven by acceleration of demand from the EV battery sector which, combined with continued robust growth in stainless steel demand has led to Nickel price increasing by 24% in the last 12 months. Global demand is expected to reach 3.9Mt in 2030, an increase of 1.6x compared to 2020 and projected demand growth of 5% per annum[1]

Jeremy Martin, Chief Executive Officer of Horizonte, commented:

“We are delighted to announce the Proposed Funding Package which, subject to satisfaction of the conditions and successful completion of the Placing, is expected to fully fund Araguaia into production. This represents a significant milestone in the Company’s journey to become a major nickel producer and will enable Horizonte to capitalise on the significant projected growth in nickel demand.
We are delighted to welcome La Mancha and Orion as new and existing, respectively, strategic investors and shareholders in Horizonte, and also grateful for the continued support of Glencore who, in addition to their proposed cornerstone subscription, have also extended their relationship with Horizonte by agreeing to enter into the Offtake Agreement. La Mancha and Orion have long track records of creating sustainable shareholder value in the mining sector and their previous investments highlight their ability to identify compelling growth opportunities at an early stage.
We are aiming to become a leading nickel producer. We believe the terms of the financing package and calibre of the lenders and strategic investors we have attracted is a testament to the strong project fundamentals offered by Araguaia. The proposed investments from La Mancha, Orion and Glencore, alongside the Proposed Senior Debt Facility from a syndicate of leading international financial institutions, provides strong endorsement of our broader corporate strategy. We would like to thank all parties involved in enabling Horizonte to secure this comprehensive funding package.”
Philip Clegg, Portfolio Manager of Orion, commented:
“Orion is extremely pleased to cornerstone Horizonte’s latest fundraising with a total commitment of US$150 million. Subsequent to our US$25 million royalty investment in 2019, this is our second deal with the Company and demonstrates our confidence in and support of Horizonte’s quality projects and management team. We look forward to furthering our partnership with Horizonte as Araguaia is built and Vermelho advances to construction.”
Karim Nasr, Chief Executive of La Mancha, commented:
“Our investment in Horizonte represents La Mancha’s first direct investment into the base and EV metals space. Throughout our extensive diligence, we were impressed not only by the quality of the assets, but also by the team and the very high standard of work carried out to date. La Mancha was attracted to the organic growth potential, coupled with the longer-term nickel product optionality to sustainably supply both the stainless steel and battery markets. We are honoured to be able to support Horizonte’s team and look forward to the journey toward becoming a globally significant and responsible nickel producer.”

02/10/2023
HORIZONTE MINERALS PROVIDES UPDATE ON ITS ARAGUAIA NICKEL PROJECT CONSTRUCTION
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