(Reuters) – Horizonte Minerals plc, London, United Kingdom, said on Wednesday it has secured a $325 million syndicated loan to help fund construction of a nickel mine in Brazil, and is in advanced talks to secure a further $115 million from offtakes and equity by the end of the year.
London-listed shares in the company jumped 30% to 4.3 pence by 1450 GMT, to near its highest level in a year, on the news.
The Araguaia project will produce ferro-nickel. Construction is expected to begin early next year and the first stage of the project will cost a total of $440 million, Horizonte said.
Nickel projects outside of Asia have had trouble securing financing as production in Asian countries such as Indonesia is cheaper and has pressured prices.
Benchmark prices for nickel are trading at around $14,000 per tonne, a far cry from a peak of $50,000 in 2007, keeping investors at bay.
“We believe in financing the Araguaia project at the bottom of the cycle so that we come online and start producing on an upwards increasing nickel price,” Horizonte’s CEO Jeremy Martin told Reuters by phone.
The syndicated loan announced on Wednesday was arranged by BNP Paribas, ING, Mizuho, Natixis and Société Générale.
Martin said Horizonte was in advanced discussions with miner and trader Glencore and private equity firm Orion Resources Partners, amongst others, for equity and project financing.
The company was also in talks to supply nickel to stainless steel producers primarily in Europe and North America.
Martin said Horizonte, which is also listed in Toronto, Canada, plans to invest in its other nickel project in Brazil, which produces battery-grade material as interest in the metal and electric vehicles gathers pace.
While stainless steel accounts for about 70% of nickel demand, its growing use in electric vehicles is expected to be the main driver of consumption in the longer term.
(Reporting by Zandi Shabalala; Editing by Susan Fenton)