Vermelho – One of the largest and highest-grade undeveloped laterite nickel-cobalt resources in the world – will generate US$7.3 billion in total cash flow over 38 years, Horizonte Minerals (TSX: HZM; LON: HZM) says.
The company acquired the Brazilian asset last year from Vale (NYSE: VALE) for US$8 million in cash – US$2 million upfront and the balance on production.
The project will produce nickel and cobalt sulphate for the battery industry, and a prefeasibility study released this month outlined an after-tax net present value at an 8% discount rate of US$1.7 billion and internal rate of return of 26% at a base case nickel price of US$16,400 per tonne.
“If you flex those economics to current long-term pricing at US$19,800 per tonne, the NPV goes to US$2.4 million and the IRR to 31.5%,” says Jeremy Martins, the company’s co-founder and CEO. “It’s a very cash generative asset.”
The PFS puts initial capex at US$652 million, and …
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