From its headquarters in London, Horizonte Minerals Plc (TSX:HZM) quietly goes about its business, mostly underappreciated by the Toronto markets, as measured by relatively low trading volumes. On Tuesday, shares are trading at record volume, with more than eight million shares already changing hands an hour into the trading session on news of an acquisition and capital raise.
The company said it penned a deal to buy the Vermelho nickel-cobalt project in Brazil from mining giant Vale S.A. (NYSE:VALE) for $8.0 million. The terms of the acquisition seem favorable enough, with $150,000 in cash up front, $1.85 million due on the second anniversary of the transaction and the remaining $6.0 million not due until the first sale of commercial material from the property.
The advanced project was approved by Vale 12 years ago with production capacity pegged at 46,000 tonnes of nickel and 2,500 tonnes of cobalt annually, with a mine life of 40 years. The purchase also includes Vale's feasibility study for Vermelho and all accumulated data on the property.
While announced as positive in 2005, Vale idled the project following the feasibility study, perhaps due to metal prices much lower than today's values.
Horizonte says that the combination of Vermelho with its Araguaia project in Brazil "creates one of the leading nickel development companies globally."
Across North American, market participants have cheered metal stocks lately, particular anything with the word "cobalt" in it against the backdrop of forecasts of a possible supply shortfall at the hands of swelling demand for material needed for electric vehicle batteries.
What investors don't seem to happy about today is Horizonte saying that it is looking to raise £8.5 million ($14.64 million Canadian) by selling about 242 million shares at 3.5 pence, or about six Canadian cents each. Shares of HZM have been steadily marching forward since hitting a low of 3.5 cents at the end of July, including reaching 8.5 cents in November.
Shares closed at seven cents on Monday and are trading down 7.14% at 6.5 cents on the volume surge today as traders weigh the new property with all the news shares potentially hitting the market.
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