In an astute move, Jeremy Martin, founder and CEO of Horizonte Minerals
(TSX: HZM; LON: HZM) purchased the Vermelho nickel-cobalt project in Brazil from Vale
(NYSE: VALE) six months ago for US$8 million in cash.
Vale discovered Vermelho, one of the largest, highest grade undeveloped laterite nickel-cobalt resources globally, and spent roughly US$200 million drilling it out and delivering a feasibility study, which showed annual production capacity of 46,000 tonnes of nickel and 2,500 tonnes of cobalt over a commercial life of 40 years.
Vale intended Vermelho to become its principal nickel-cobalt operation and approved a US$1.2 billion investment to build the mine in 2005, Martin says, but the project was put on the backburner after the Brazilian miner acquired Inco for $19.4 billion in October 2006.
“We paid US$2 million upfront and the balance is on first production and everyone goes, ‘What’s wrong with it’,” Martin says, “but the deal was struck at the bottom end of the nickel market — it was only late last year that nickel started to move and then it moved quite aggressively.”
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