Horizonte Minerals Plc has awarded Wood Plc the principal engineering contract to undertake the feasibility study for its 100%-owned Vermelho nickel-cobalt project, in Brazil.

Vermelho is a large high-grade, long mine life, scalable resource, designed to be a low-cost producer of nickel and cobalt for the battery industry, Horizonte says. The Vermelho FS contract award is another key milestone for Horizonte as it advances towards its long-term objective of becoming a 60,000 t/y nickel producer, following the start of construction at Araguaia, its ferronickel project, early this year, which is on schedule to produce first nickel in the March quarter of 2024.

Vermelho is designed to produce 25,000 t/y of nickel and 1,250 t/y of cobalt over a 38-year mine life. The prefeasibility study (dated October 2019) estimated a post-tax internal rate of return of 38.6% using a nickel price of $23,000/t.

Wood, Horizonte says, is a global leader in project delivery, engineering and technical services with experience across a number of the major high pressure leach nickel operations globally.

Jeremy Martin, CEO of Horizonte Minerals, said: “The commencement of the feasibility study is an important step forward in unlocking Vermelho’s significant value. There are very few nickel resources of this scale and quality at an advanced stage of development, leaving Vermelho well positioned to capitalise on the growing demand for sustainable critical metals.

“Vermelho is located in the Carajás mining district, an area that features well-developed infrastructure and hydroelectric power. The project is designed to produce nickel in intermediate or refined form and will be a globally significant, non-conflict, ethical source of cobalt.

“Araguaia and Vermelho have a combined inventory of over 4 Mt of nickel. By leveraging the synergies of these two world-class projects, located within trucking distance of each other in a stable and pro mining jurisdiction, Horizonte is well positioned to deliver its growth target of producing 60,000 t of nickel per year, placing the company amongst the global leaders in primary nickel production outside Indonesia.”

Wood (formerly GRD Minproc) undertook a successful Vermelho feasibility study for Vale between 2003 and 2006. In this regard, it already has a detailed understanding of the project, enabling it to leverage this existing knowledge during the process of producing this updated study for Horizonte, the company said.