The Horizonte Minerals Plc (LON: HZM) share price rallied 4.8% after revealing that it had satisfied all the necessary conditions for the first utilisation of the senior secured project finance debt facilities of US$346.2 million as outlined in March 2022.
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The mining company also noted that it had met all the conditions for releasing the Cost Overrun Debt Facility (COF) and has received all the COF funds worth US$25 million from OMF Fund III (Orion).
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Investors cheered the news, which now de-risks the Araguaia nickel project and allows the company to proceed with the project’s construction. All the necessary funding, including the COF funds, the senior secured debt financing and the Export Credit Agencies (ECA) guarantees, are now in place.
I expected a more significant reaction from the markets, which we did not get, primarily because the HZM share price has been rising recently and is up 63.44% in the past month. In addition, investors had already priced in the positive outcome regarding the project’s funding arrangements.
Jeremy Martin, Horizonte Minerals’ CEO, commented: “This significant milestone for Horizonte is the culmination of a multi-year effort to sufficiently de-risk the Araguaia Nickel Project to access low-cost debt funding from a syndicate of leading international financial institutions. The rigorous due diligence process, and the extensive list of obligations that Horizonte was required to meet to access this funding, should provide all our stakeholders with confidence in the robustness of Araguaia.”
Adding:
“This milestone demonstrates that we have made significant progress on construction and have been able to satisfy the Senior Lenders that we have, among others, i) shown that Araguaia is fully funded through to completion and first cash flows; ii) made significant progress with construction, and in line with the schedule; iii) awarded all of the key material contracts, including equipment supply, Engineering Procurement and Construction Management (EPCM), port access and power supply; iv) have a long term offtake in place for 100% of Araguaia's production from line 1 with a high-quality counterparty in Glencore; and lastly, v) have built out a high-quality team to deliver the Project.”
Horizonte Minerals' prospects are promising, but I wouldn’t buy HZM now due to the recent rally. Instead, I would wait for a pullback.
*This is not investment advice.
Horizonte Minerals share price.
The Horizonte Minerals share price rallied 4.80% to trade at 142.0p, rising from Wednesday’s closing price of 135.5p.
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