Horizonte Minerals PLC (LON:HZN) is a natural choice for investors looking for exposure to nickel ahead of the expected boom in electric vehicles, according to a new note from broker Cantor.
The broker, which has a buy recommendation and 23p (C$0.43) target price for the AIM and Toronto-listed junior, highlighted the potential of the company’s two projects in the Carajás Mining District in Pará State, northeast Brazil.
Project financing is underway for the lower-risk Araguaia project, which will produce ferronickel for the stainless steel industry.
Work, meanwhile, is ongoing to develop the Vermelho project into a producer of nickel and cobalt sulphate for the battery and EV markets.
Araguaia is construction-ready and accounts for the bulk of the broker’s price target, with Vermelho higher risk and less advanced.
Cantor added expects Horizonte to finalise project financing for Araguaia in 2021 and sees it developing into a long-life ferronickel project.
Over a 28-year life, Araguaia’s after-tax NPV8% is US$850.9mln with an internal rate of return of 28.3%.
Vermelho is an advanced nickel laterite project that can produce nickel sulphate and cobalt sulphate for batteries and EVs.
The project has a NPV8% (net present value) of US$1.9bn and an IRR of 32.1%.
Both projects are also located in the Carajás Mining District in Brazil, said Cantor, which has a long history of mining and supportive infrastructure.
Shares in Horizonte rose 1% to 9p giving the company a market cap of £129mln.