Mr. Jeremy Martin reports

HORIZONTE MINERALS PLC ANNOUNCES Q3 2023 CONSTRUCTION UPDATE

Horizonte Minerals PLC is saying that construction activities continue to progress well at its Araguaia nickel project. As of Sept. 30, 2023, $429-million (U.S.) has been spent on Araguaia with progress made across key work fronts and no interruptions to date on construction activities.

As stated in the press release dated Oct. 2, 2023, a number of factors arising from the completion of the detailed engineering work has led to an increase in material and quantities, scope changes, increased costs around the main electromechanical erection contract, and increased duration on delivery schedule. These changes require additional financing, resulting in an expected increase in the overall project capital requirement by at least 35 per cent (from the current capex (capital expenditure) budget of $537-million) and delay of first production to Q3 2024. Reta Engenharia is expected to complete its capital cost and schedule analysis report, following which an independent technical adviser, nominated by senior lenders, will review the updated costs with targeted completion by mid-Q4 2023.

Highlights:

• Construction progress continues to be made at Araguaia:
  • Strong safety performance, no lost time injuries with close to 5.1 million hours worked;
  • Rotary kiln sections have been installed on the support piers;
  • The furnace shell is complete with roof installation under way;
  • All critical equipment packages have been contracted and are either on site or en route to site;
  • As of Sept. 30, 138,000 tonnes of ore averaging 1.92 per cent Ni (nickel) has been stockpiled;
  • Commissioning of the 126-kilometre (230 kV (kilovolt)) power transmission line under way.
• $429-million (U.S.) has been spent at Araguaia as of Sept. 30, 2023;
• As stated on Oct. 2, 2023, Reta Engenharia has been retained to complete a detailed capital cost and schedule analysis which is expected to be completed by mid-Q4 2023;
• The company is continuing to progress construction activities, while advancing financing discussions with its cornerstone shareholders and lenders;
• Araguaia nickel project line 2 feasibility study (FS), which aims to double nickel production from 14,500 tonnes per annum to 29,000 tonnes per annum, to be published in mid-Q4 2023.

Jeremy Martin, chief executive officer of Horizonte, commented: "Despite the current challenges, I am pleased to report that construction activities at the Araguaia project continue to progress well, with a strong safety performance to date.

"Notwithstanding the expected increase in capital, the Araguaia project remains a Tier 1 nickel project with lower quartile C1 cash costs, and a long mine life of 28 years producing a high-grade, low-impurity FeNi [iron-nickel] product. Discussions with the company's major shareholders and lenders to fund the project to completion are progressing."

Capital cost review process

Reta Engenharia's detailed capital cost and schedule analysis is continuing, with the updated estimate being assessed to meet the requirements of AACEI Class 1, improved from the estimate utilized in September, 2022.

Principal capital changes are linked to the following:

• Civil works: The development of engineering maturity and identification of new scopes to the project resulted in increases in civil quantities (concrete, rebar and formwork) and the corresponding rise in the installation costs. These changes relate to the water storage reservoir, the water abstraction pipeline, selected major equipment packages and equipment interfaces.
• Electromechanical (EM) assembly: Increased equipment and materials quantities have resulted from the completion of the critical detailed engineering, and the shift of more EM activities into the wet season given the expected delay to Q3 2024. This represents a significant percentage of the cost increase given the lower productivity in the wet season and increased quantities.
• Refractory: The cost to install 4,300 tonnes of refractory was significantly underestimated.
• Vendor delays: One of the vendors has not been able to deliver key packages in line with the project timeline, leading to termination of the contract and the sourcing of alternatives at higher prices.
• Schedule extension: Given the above, and the expected schedule delay of around six months, there is an associated increase in costs and working capital linked to the increased schedule duration.

More detailed information will be given once the final engineering study is complete by mid-Q4 2023.