Mr. Jeremy Martin reports

Q3 2018 ARAGUAIA OPERATIONAL UPDATE

Horizonte Minerals PLC has provided an update on its operations covering its 100-per-cent-owned flagship Araguaia nickel project. Horizonte is a multiasset company focused on its objective of becoming a nickel producer.

Highlights:

• Final results of the Araguaia National Instrument 43-101 feasibility study are being prepared and expected to be announced to the market in October, 2018.
• Optimization around the plant layout, engineering design and process flow sheet is now complete and is resulting in considerable opportunities.
• Plant design has been modified to accommodate the potential expansion of a second rotary kiln electric furnace (RKEF) process line in the future after the first line is fully commissioned, providing flexibility to double the output of the operation.
• The final Araguaia capex (capital expenditures) estimate is currently being prepared for internal review.
• A water permit has been obtained for full-scale operation at Araguaia.
• Brazil's environment agency (SEMAS) visited Araguaia in late July, 2018, a key part of construction licence approval process.
• The company's cash position was 8.9 million British pounds as at June 30, 2018.

Horizonte chief executive officer Jeremy Martin commented: "I am pleased to provide an operational update on our progress on a number of key work streams as we move towards completion of the feasibility study on our 100-per-cent-owned Araguaia nickel project, representing an important milestone in the transition of the company from an explorer to a developer. There has been a considerable amount of work involved in the optimization of the plant layout and design where we have been able to successfully reduce the overall plant footprint, close couple the equipment packages leading to a reduction in the overall material quantities (cut and fill material, concrete and steelwork). Additionally, we have now designed the plant in such a way to allow the potential to include a second RKEF process line in the future allowing for an increase in the annual nickel production.

"As the various feasibility work streams are coming together, we have also been working hard on the social, infrastructure and licensing aspects of the project that will allow us to move to the development stage in 2019.

"From a markets perspective, recent talk of tariff-related barriers has negatively affected the prices of a number of commodities during the last couple of months. However, the nickel price, given its strong fundamentals, has been more resilient in relation to the wider metals market. LME inventories continue to be drawn down and the demand side driven by the stainless steel market and EV battery sector continues to show strong growth, this bodes well for the longer-term fundamentals of nickel.

"The company has a strong cash position to allow us to deliver the key milestones going forward. It is an exciting time for the company and we look forward to updating the market on the company's developments as we move through the next phase of development at Araguaia, in addition to providing updates on the Vermelho Ni-Co project."

Araguaia nickel project feasibility study update

The FS for Araguaia is designed around an open-pit mining operation targeting 900,000 tonnes per annum of ore feeding a central processing RKEF smelting facility, and designed to produce 14,500 tonnes of nickel per annum contained in 52,000 tonnes of ferronickel.

The current mineral reserve supports a 28-year mine life with a two-year construction period. Work on the ground is nearing completion, with the following work streams either in near final form or complete: The FS results are expected to be available for announcement to the market in October, 2018.

Geology and mining

Snowden Mining Industry Consultants, which is conducting the geology and mining sections of the study, has optimized the mine plan and schedule such that the study will be in a position to publish mineral reserves sufficient for more than 25 years of mine life. Snowden has also completed an update of the mining costs with respect to the latest economic conditions in Brazil.

In addition, further geotechnical work has been completed that supports the study and the detailed engineering.

Infrastructure and process

As previously reported, the derisked RKEF technology will be deployed and detailed engineering work has been completed for the plant. The plant design has been optimized and modified to accommodate a second RKEF process line in the future after the first line is fully commissioned, providing flexibility to double the output of the plant and increasing overall revenue.

The higher cost equipment items are being sourced from suitably qualified engineering firms around the world in a bid to identify high-quality, cost-effective vendors. A detailed operating cost and capital cost estimate is well advanced with the updated plant layout and the selected large equipment items.

Detailed designs for roads, the power line, river abstraction and a cooling dam have been complete and costed. This includes detailed surveys of the various routes, and development of early works packages with firm quotations from vendors for construction.

All logistics challenges have been identified and engineered including those around sourcing of coal, energy and consumables, which have been costed with quotations and proposals from prospective vendors.

Significant effort has been expended on risk management and risk mitigation that covers sovereign, climate, logistics, geographical and geological risk factors. This work has resulted in specific changes to designs and operational plans so that the project risks are minimized while still delivering Tier 1 economics.

The project implementation schedule is well advanced, taking into account the updated engineering and current operating regime in Brazil.

Financial

Operating and capital cost work for the FS is in the final stage. All capex items have now been received from equipment vendors together with material and installation costs from Brazilian suppliers. Savings have also been pursued by optimizing plant layout as well as sourcing from appropriate vendors.

Social and environmental status

The company is on track with its program of licence applications and approvals for and construction permit requests for a number of key environmental and regulatory parts of the overall project effectively derisking the permitting component of the project. Milestones in this area include:

• Successfully obtained the water permit for full-scale operation of the Araguaia project;
• Submission of the fauna and flora inventories as well as the vegetation suppression request in early 2018;
• In July, the company welcomed a team from the environmental agency (SEMAS) to the Araguaia project. This is an important step in the process for the approval of the construction licence.

The company has also signed an agreement with SENAI's Institute of Innovation to research potential uses for Araguaia slag. SENAI operates a network of 208 certified laboratories in the country and this particular research has already commenced with testing of slag produced from Araguaia's pilot plant process at the SENAI Institution in Belem.

Agreement has also been reached with Brandt Medio Ambiente Consulting LLC to undertake environment studies and permitting for the energy transmission line. This commenced in June, 2018.

Nickel and cobalt market developments

Nickel has continued its strong performance this year rising to $14,823 (U.S.) per tonne by the end of June, up 18 per cent since the start of 2018. The average price for the period, at $14,465 (U.S.) per tonne, was also the highest quarterly average since the three months to end December, 2014.

Global demand for nickel has been reported to be increasing by 7.3 per cent this year, while supply rises 6.8 per cent to 2.21 million tonnes. Analysts in the sector have also stated this year that they expect the global nickel market deficit to widen to 88,000 tonnes, from 72,000 tonnes in 2017.

Of significance for the company is that long-term analyst forecasts are pricing nickel above the current levels. These forecasts are being driven by both traditional uses for nickel in stainless steel, as well as the new drivers; superalloys and the battery sectors.

This bodes well for Horizonte as it looks to benefit from the growth in both end markets, through the development of the advanced-stage Araguaia ferronickel project and the Vermelho nickel-cobalt project, which was acquired in December, 2017.

About Horizonte Minerals PLC

Horizonte Minerals is a nickel development company focused in Brazil. The company is developing the Araguaia project as the next major ferro-nickel mine in Brazil. With the Vermelho nickel-cobalt project being advanced with the aim of being able to supply nickel and cobalt to the EV battery market. Both projects are 100 per cent owned.

We seek Safe Harbor.