Horizonte Minerals (AIM: HZM) (TSX: HZM) has paused most construction activities at its Araguaia nickel project in Brazil with the company continuing to seek new sources of funding as its cash resources are running out.
As of last week, the Araguaia project had total liquidity sources of $169 million, with only $38 million in cash. This, according to Horizonte, should provide the company with only sufficient working capital to around mid-December 2023.
The remaining liquidity comprises $131 million undrawn on the company’s senior debt facility, which it needs fresh capital injection to access.
However, it is likely that new funding won’t be secured until late in the first quarter of 2024, potentially leaving the company with insufficient capital.
In an update Tuesday, Horizonte confirmed it has hosted a series of site visits with shareholders and lenders representatives. These groups are undertaking their respective due diligence as part of a funding plan and expect to finalize these plans in the first quarter of 2024.
It remains the company’s objective to put in place a financing solution that will satisfy the cost to complete requirements and thereby allow it to continue to access its senior debt facility, Horizonte stated.
“Discussions with the company’s major shareholders and lenders on funding the project to completion are progressing. While work on the funding solution continues, we have elected to focus capital and human resources on the critical work packages,” CEO Jeremy Martin said in the news release.
The Araguaia project is being developed as Brazil’s next major ferronickel mine. A feasibility study has confirmed it to be a Tier 1 project with capable of producing 14,500 tonnes of nickel over a 28-year mine life.
In October, Horizonte announced that the cost of the project is expected to rise by 35%, a year after the company had increased the capital expenditure for Araguaia to $537 million. As a result, its production has been delayed to the second half of 2024.
Shares of Horizonte Minerals plummeted by nearly 47% as of 12:20 p.m. EDT on Tuesday. The UK-based nickel developer has a market capitalization of C$45.4 million ($33.1m).
