(Alliance News) - Horizonte Minerals PLC on Monday said costs related to the design and execution of its 100%-owned Araguaia nickel project in Brazil have increased by at least 35%, and have delayed expectations of first production until the third quarter of 2024.

Shares in the London-based nickel development company, which owns two projects in Brazil, were down 55% to 56.36 pence each in London on Monday morning.

To de-risk the operation, Horizonte Minerals said the final detailed engineering work has added "additional scope items linked to the major equipment packages, made several enhanced design changes from the original engineering study (including changes to the water abstraction pipeline design and water storage reservoir), and has identified the requirement for additional civil works and quantities".

This is alongside changes which are "required with selected suppliers who have not been able to deliver to the project timeframe", adding further cost pressures, Horizonte Minerals said.

However, it stressed it has made good progress in completing the final detailed engineering and construction design for line 1 of the Araguaia project.

The company said it is working on a plan with "its various financial institutions together with the cornerstone shareholders" for a financing solution to complete construction.

Horizonte Minerals said it continues to have strong support from its major partners, given the progress made to date with construction, the value of the Araguaia line 1 project and the upcoming delivery of the feasibility study on Araguaia line 2.

Horizonte Minerals said the feasibility study results remain on track to be published in the fourth quarter of 2023, while the combined production of Araguaia line 1 and 2 is expected to be 29,000 tonnes per year.

"We continue to make solid progress with construction at Araguaia line 1 and are confident that the project is now significantly de-risked given the near-finalization of detailed engineering and procurement, together with the detailed review of the costs to project completion, ensuring successful delivery," said Chief Executive Officer Jeremy Martin.

"Despite the anticipated higher capital requirement, Araguaia remains a tier 1 asset that will deliver strong margins over its 28-year mine life once production commences next year...We appreciate the strong support provided by both local stakeholders and cornerstone shareholders, as we work towards a financing solution to complete construction."

By Greg Rosenvinge, Alliance News reporter

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