Mr. Karim Nasr reports

HORIZONTE MINERALS PLC ANNOUNCES UPDATED CAPEX AND SCHEDULE ESTIMATE

Horizonte Minerals PLC has released the preliminary results of a review of the cost-to-complete estimate and schedule for its 100-per-cent-owned Araguaia nickel project. The preliminary results of the review indicate that the estimated capital required to complete the construction of Araguaia, commission the project and deliver first metal is approximately $454-million (U.S.). As a result, the estimate at completion currently stands at $1,004-million (U.S.), approximately 87 per cent higher than the previously disclosed capital expenditure budget of $537-million (U.S.) (prior to October, 2023). The company anticipates achieving mechanical completion in first quarter 2026.

G Mining Services, a specialized mining construction and engineering firm, was engaged by the company to undertake the review process, delivering the re-estimated CTC and achievable schedule estimates. GMS is currently constructing the Tocantinzinho gold project located in Para state and has notable accomplishments in the successful construction of other mining projects including Lundin Gold's Fruta del Norte project in Ecuador, Newmont Mining's Merian mine in Suriname and Iamgold's Greenstone project in Ontario.

The company will continue to work closely with its major shareholders and senior lenders on a full financing solution, targeted for second quarter 2024. As part of these conversations and given the increase in the CTC estimate, discussions to restructure the company's debt facilities are being held in conjunction with actively engaging existing and new potential investors. The company notes that additional interim financing will be required to implement such a full financing solution.

Interim chief executive officer Karim Nasr commented: "Since our last update, a significant volume of work has been completed to develop a new project execution plan, develop a realistic mine plan and business plan, all while continuing to pro-actively engage with the company's cornerstone shareholders, senior lenders, vendors and contractors, as well as the community and local authorities.

"While the new cost to complete is higher than previously announced by the company, it is now built on solid methodologies, which is a testament to the hard work undertaken to date by the whole Horizonte team. The company is pleased to partner with G Mining Services, who have a track record of success in the region and are currently building the Tocantinzinho project with G Mining Ventures in Para state. The company is now in a position to properly assess its ability to finance and complete the Araguaia nickel project (line 1) and bring it into production.

"It is important to note that, while completing the cost-to-complete estimate is a significant milestone, resuming and completing construction activities at Araguaia are still subject to the successful completion of a full financing solution, which the company will seek to develop in the coming weeks, but with no guarantee of success. Further, the CTC estimate is the capital required to complete the construction of Araguaia, commission the project and deliver first metal. The final financing amount will be higher and will depend on a variety of factors, including discussions with senior lenders, suppliers, cornerstone investors and other third parties."

Basis of cost-to-complete estimate

Based on the work to date, a total of around 4.7 million workhours are required to finish construction of Araguaia line 1. The current optimized plan assumes a smaller work force, which drives a revised construction schedule of approximately 18 months.

The EAC currently stands at $1,004 million (U.S.), of which a total of $479-million (U.S.) has been spent up to the end of 2023, and $52-million (U.S.) is outstanding to trade creditors, $15-million (U.S.) for critical activities during the slowdown period and $4-million (U.S.) for prefirst metal mining costs, resulting in a CTC of $454-million (U.S.). The capex estimate includes all the direct and indirect costs, local taxes and duties, and $54-million (U.S.) contingency deemed to be required to complete the construction of line 1, commission the project and deliver first metal. This estimate is based on the Association for the Advancement of Cost Engineering (AACE) Class 3 standard, with an accuracy range between minus 10 per cent and plus 30 per cent of the final project cost. The company intends to work with GMS over the refinancing period to refine this to a control estimate, with AACE Class 1, with an accuracy range of minus 3 per cent to plus 15 per cent.

The costs for these items have been derived from vendor quotes for the equipment and materials. The capex estimate is after tax, including growth and contingency and excluding escalation. The CTC excludes the owner costs incurred during the slowdown phase between Nov. 10, 2023, and June, 2024, which are being financed with current cash and the aforementioned additional interim financing requirement. The CTC also excludes working capital, capitalized ramp-up costs and financing costs, which will be included in the full financing solution.

Schedule estimate

The project schedule has been re-estimated by GMS following a complete review of the quantities remaining, the procurement packages and logistics, and re-estimation of the workhours required to complete construction and commissioning. GMS has been working with key equipment suppliers including Hatch Ltd. and FLSmidth to fully assess the remaining work. The current project schedule estimate anticipates approximately 18 months of construction from remobilization to the projected first metal date. Remobilization is currently planned for third quarter 2024 with a first metal date of first quarter 2026, subject to successful refinancing and restart decision.

One of the key inputs for the new schedule was the productivity assumptions that drive the estimated progress for the principal project work streams. GMS provided updated productivity figures based on its experience at the Tocantinzinho gold project located in Para state, Brazil, and therefore, has recent, first-hand experience of achievable productivity rates for the main trades.

Further, as part of the review exercise, the company reviewed the production ramp-up schedule and associated working capital and capitalized operating cost requirements. The original schedule assumed a 12-month ramp-up to nameplate capacity. While achievable, this was considered to be a best-case scenario and has since been replaced by a more conservative 18-month ramp-up.

Project execution plan

GMS has also redeveloped the project execution plan (PEP) as a self-perform model as employed at Tocantinzinho and other projects GMS has been involved in. Under this model, the company will directly employ the owner team and construction employees with expertise and support from GMS. GMS employees brought into the project will be seconded directly to Araguaia nickel project with objectives, salaries and any incentives set and paid by the company.

The benefits of this model include a simplified management structure, a reduction in the number of contractors and consultants, and full alignment of the owner team and construction team. Specialist contractors and original equipment manufacturers will continue to be critically important partners in the project execution.

Senior management changes

Maryse Belanger, interim chief operating officer of the company, will step down as COO, effective Feb. 21, 2024, following a period of handover to Graham Crew, who is appointed as new interim COO. The company wishes to thank Ms. Belanger for her invaluable assistance in this challenging period.

Mr. Crew was chief technical officer of La Mancha Resource Capital LLP, which advises La Mancha Resource Fund SCSp, one of the company's major shareholders. Mr. Crew has been on a period of secondment to the company in recent months, having stepped down from his day-to-day executive role within La Mancha. He was previously a non-executive director at Golden Star Resources Ltd. before becoming chief operating officer. He has extensive operational experience in Australia, Africa and Asia, and was previously operations manager for La Mancha Resources Australia, including the development, construction and ramp-up of the Mungari processing facility, prior to the divestment of those assets to Evolution Mining. He began his career with Western Mining Corp. at Olympic dam and Leinster nickel operations. He holds a BEng (mining engineering) from the West Australian School of Mines, and is a member of the Australian institute of Corporate Directors and a fellow of the Australasian Institute of Mining and Metallurgy.

Completion of construction activities at Araguaia will be subject to successful completion of a full financing solution in 2024. There can be no certainty at this stage that the full financing solution will be achieved, and further updates will be provided in due course.

About Horizonte Minerals PLC

Horizonte (Alternative Investment Market/Toronto Stock Exchange: HZM) is developing two 100-per-cent-owned Tier 1 projects in Para state, Brazil: the Araguaia nickel project and the Vermelho nickel-cobalt project. Both projects are high grade and low cost, with low carbon emission intensities, and are scalable. Araguaia is under construction and, when fully ramped up with both line 1 and line 2, is forecast to produce 29,000 tonnes of nickel per year. Vermelho is at feasibility study stage. Horizonte's combined production profile of over 60,000 tonnes of nickel per year positions the company as a globally significant nickel producer. Horizonte's top-three shareholders are La Mancha Investments Sarl, Glencore PLC and Orion Mine Finance.

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