Horizonte Minerals - Case Update

Chad Griffin and Geoff Rowley of FRP Advisory, the joint administrators of Horizonte Minerals Plc (AIM:HZM) (TSX:HZM), have provided an update on their hopes for the company, which largely hinge on the outcome of a restructuring plan filed with the Brazilian Court.

Horizonte Minerals had been developing two nickel projects in Brazil which, if complete, would have made the company one of the leading suppliers of nickel for the stainless steel and battery markets. These were Project Vermelho, which was operated by Brazilian entity Trias Brasil Mineracao Ltda, and Project Araguaia, which was operated by Brazilian entity Araguaia Niquel Metals Ltda (“ANML”).

However, higher than expected costs to complete left the company with insufficient capital to complete the projects. An extensive global roadshow where over 150 parties were approached failed to result in a deal, with parties citing the unfavourable nickel market as the primary reason for declining the opportunity.

In the meantime, on 14 March 2024, ANML was granted an injunction by the Brazilian Court giving it a 60-day stay period to negotiate a restructuring plan with its senior lenders (various financial institutions owed approximately $215 million). This process is known as the Extra-Judicial (“EJ”) process. The majority of these debts were guaranteed by Horizonte Minerals, which would therefore benefit from any compromise of these debts within the EJ process.

ANML and the senior lenders entered into a standstill agreement as they negotiated alternative options, such as a care and maintenance programme or a liquidation of the assets of the Araguaia Project via an EJ plan in ANML which was due to be filed in the Brazilian Court on 16 May. The standstill agreement ultimately expired on 14 May and the senior lenders were not willing to extend it. As a result, Horizonte Minerals was placed into administration on 16 May.

The joint administrators continued to trade the company’s limited business to facilitate the filing of an EJ plan on June 6. If successful, the plan will result in the mitigation of the guaranteed debts to the senior lenders and Horizonte’s largest shareholders — La Mancha Investments S.a.r.l., OMF Fund III (F) LTD and Glencore International AG — who are also creditors of Horizonte by virtue of the guarantees.

The joint administrators ceased trading at the end of June. Since the filing of the EJ plan, they have been liaising with the directors of ANML to ensure all information required is readily available and to address outstanding issues. The deadline for funding arrangements for a care and maintenance strategy to be agreed is 6 August.

The administrators’ proposals can be found HERE. They have been assisted by Norton Rose Fulbright, SIA Group and Marsh.