A YEAR OF TRANSITION
2022 Report and Accounts
HORIZONTE MINERALS PLC
IS DEVELOPING TWO TIER ONE
NICKEL PROJECTS IN BRAZIL
Who we are
Horizonte Minerals is a leading nickel company that
is developing the Araguaia ferronickel project and the
Vermelho nickel-cobalt project, both high-grade, low
er quartile of the cost curve, and long mine life projects.
As a critical component in both stainless steel and electric
vehicle battery technology, nickel is a key enabler of the
clean energy transition. Listed on the AiM and TSX Stock
Exchanges, we have been operating in Brazil for over a
decade and have a long-term commitment to generate
sustainable value for the societies and environments
where we operate.
What we do
We are constructing Line 1 of the Araguaia Project,
a 14,500 tonne per annum nickel mine with first
production due in 1Q 2024 with an initial mine life of
28 years. The infrastructure of the site is designed to
accommodate the Line 2 expansion, which will double
production to 29,000 tonnes per annum. Our second
Project, Vermelho, is undergoing a Feasibility Study.
The Project is comprised of a 38-year mine life with
average annual production expected to be 24,000 tonnes
of nickel and 1,250 tonnes of cobalt.
@HorizontePLC
Horizonte Minerals
Horizonte Minerals Plc
For more information visit
www.horizonteminerals.com
How we do it
We are developing a new sustainable supply of nickel
to enable the clean energy transition with our focus on
building a profitable company which will generate long-
term value for all our stakeholders.
CONTENTS
2022 highlights
1
At a glance
2
2022 in review
4
STRATEGIC REPORT
Chair's statement
6
Building a sustainable business
8
Business model
10
Market review
12
Strategy
14
Key performance indicators
16
Chief Executive’s review
18
Projects
20
Financial review
24
Sustainability governance
26
Sustainability highlights
28
Sustainability strategy
30
Stakeholder engagement
32
Managing our risks and opportunities
34
CORPORATE GOVERNANCE
Note from the Chair
42
Approach
44
Corporate governance structure
45
Board of directors
46
Board report
48
Directors’ report
54
Statement of directors’ responsibilities
56
FINANCIAL STATEMENTS
Independent auditor’s report
57
Consolidated statement
of comprehensive income
64
Consolidated statement
of financial position
65
Company statement
of financial position
66
Consolidated statement
of changes in equity
67
Company statement
of changes in equity
68
Consolidated statement of cash flows
69
Company statement of cash flows
70
Notes to the financial statements
71
Statutory information
113
2022
HIGHLIGHTS
Araguaia Project
approval
Breaking ground
at Araguaia
Long term power
offtake supply
secured from
renewable sources
Zero fatal injuries
and zero lost time
recordable injuries
Strategic partnerships
with SENAI and
FIEPA for local skills
development initiated
Secured
US$633 million
for Araguaia line 1
Vermelho
Feasibility Study
initiation
First draw down
of senior debt
facility
Critical risk
controls
implemented
34% project
completion as of
31 December 2022
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Paved Road
Power Line 500 kV, in construction
Power Line 500 kV
Carajás Mining District
Nickel Mines
Copper Mines
Iron Mines
Tucuruí Dam
(hydropower)
Itaqui Port
(contingency port)
Vila Do Conde Port
(Primary Port)
Belo Monte Dam
(hydropower)
Puma
Sossego
Canaã dos Carajás
Salobo
N1
N4
SL1
S11D
Onça
Xinguara
Floresta
do Araguaia
Conceição do Araguaia
Parauapebas
Vermelho
Araguaia North
Araguaia South
1.
Scale and distances are approximate
1
Infrastructure
VNCP
ANP
North
ANP
South
AT A GLANCE
Low cost
Both Araguaia and Vermelho
are expected to be in the lower
quartile of the cost curve for C1
costs, recently demonstrated by
the signing of a ten-year power
contract for Araguaia, locking in a
price 30% lower than that used in
the feasibility study.
Scalable
Over 3Mt of contained nickel re
sources and the potential for over
60,000t per annum production,
would position Horizonte as a signif
icant global nickel producer.
We are building a low-cost, scalable, nickel operation,
focused on producing a low-carbon product, ethically,
safely and responsibly
Pará
Brazil
Nickel operation
Nickel is fundamental in the
production of stainless steel and
in battery chemistry as part of the
green energy transition and the
drive towards the decarbonisation
and electrification of the global
economy.
Low carbon
product
Leveraging the abundant re
newable energy sources found
in Brazil, Horizonte is able to
ensure that the production from
Araguaia emits lower levels of
carbon than alternate produc
ers reliant on hydrocarbons &
non-renewable power sources.
Ethically, safely
and responsibly
Horizonte has a long-standing
commitment to contribute to the
sustainable development of the
communities associated with our
operations, to conduct ourselves
ethically in all our business ac
tivities and with a focus on the
responsible management of ESG
aspects of our projects.
Project location
Horizonte draws on the country’s
significant geological resources pro
viding potential for future growth.
We benefit from Brazil’s skilled work
force and well developed infrastruc
ture, we are proud to be playing an
important part in developing Brazil’s
strategically important nickel indus
try. Following the construction of
Araguaia, we are securing valuable
employment for around 450 people in
the operational phase and expect to
generate in excess of US$700 million
of direct socio-economic value over
the life of mine.
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2022
IN REVIEW
APRIL
MAY
MARCH
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SECURED US$633 MILLION
FOR ARAGUAIA LINE 1
Financing secured through a project
finance debt facility of US$346.2
million from BNP Paribas, ING,
Natixis, Société Générale, SEK
and two export credit agencies
Finnvera and EFK. The balance
of the financing was through
equity, cornerstoned by La Mancha,
Glencore and Orion
BROKE GROUND
AT ARAGUAIA
Construction of the Araguaia
project began, marking
the Projects transition
from development to the
construction phase
ENTERED STRATEGIC
PARTNERSHIPS WITH
LEADING BRAZILIAN
SOCIAL AGENCIES
As part of Horizonte’s Local
Content Initiative, the Company
entered partnerships with
SENAI and FIEPA for local
skills development
VERMELHO FEASIBILITY
STUDY INITIATED
The Feasibility Study is an important step
in determining the overall operational
parameters and economics of this Tier 1
nickel-cobalt project
Background photo — aerial view of the
Tucuruí hydroelectric power plant
OCTOBER
NOVEMBER
DECEMBER
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34% PROJECT
COMPLETION AS OF
31 DECEMBER 2022
Araguaia on schedule for
first production in 1Q 2024
LONG TERM POWER OFFTAKE
SUPPLY SECURED FROM
RENEWABLE SOURCES
Electrical power will represent roughly
a third of Araguaia’s operational cost,
by securing a 10-year fixed-price power
contract 30% lower than that used in
the feasibility study, Horizonte has
ensured that operational costs will
be in the lower quartile of the nickel
cost curve
FIRST DRAW DOWN
OF SENIOR DEBT FACILITY
Following the culmination
of a multi-year effort to
sufficiently de-risk Araguaia,
the first tranche of low-cost
debt was received
ZERO LOST TIME
INJURIES RECORDED
AFTER 990,000 HOURS
WORKED
We aim to provide a safe
working environment for
all our people
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CHAIR'S
STATEMENT
William Fisher
Interim Non-Executive Chair
I am pleased to present my first Annual
Report statement as interim Chair of
Horizonte. Having been a long serving
member of the Board, I am very familiar
with the Company, and to that end, I would
like to reiterate that we find ourselves
in a truly exciting period of progression.
The transition from a developer into
construction is the next phase for the
business but our objectives, commitments
and vision have remained the same:
positioning Horizonte to be a significant
global
producer,
committed
to
the
ethical, safe and responsible production
of a low-carbon nickel product. We have
built an extremely capable management
team and I have every confidence
that we will deliver on our mission.
Following the completion of our US$633
million funding package at the end of
2021, the transformation of Araguaia
and the rate at which construction has
advanced is notable and a testament to
the hard work and commitment of our
workforce and partners. More than 2,000
people are now employed on the Project,
demonstrating
the
transformational
potential for jobs and growth that the
Project is providing to the local area.
Given the challenging nature of the market
across the board in 2022, we believe that
the standout quality of the asset has been
the biggest reason for the success of the
construction fundraise. Araguaia’s long
mine life of 28 years (with potential for
expansion), low-cost, low-carbon nickel
product is what underpins the business.
The build-out of the electrification market
and the move away from carbon as a
fuel source have also contributed to the
nickel market’s strong performance over
the last 12 months. Read more about our
markets on pages 12-13.
During the year we also made strong
progress at our second project, Vermelho,
a large high-grade, long mine life, scalable
resource, designed to be a low-cost
producer of nickel and cobalt for the
battery industry. Having successfully
completed a Pre-Feasibility study in 2019,
this year we initiated a Feasibility study,
an important step forward in unlocking
Vermelho’s significant value. Read more
about Vermelho on pages 22-23.
2022 was the year Horizonte
transitioned from developer
to construction
Unique Investment Opportunity
World-class portfolio
of 100% owned projects
in established mining
jurisdiction
Funding package for
Araguaia Stage 1 with a
clear path to cash flow with
key strategic shareholder
support
Funding in place to complete
a Feasibility Study on
Vermelho (results due
early 2024)
Exposure to robust stainless
steel and high-growth
battery markets
Targeting ~60,000t per
annum of low-cost, long-
life and scalable nickel
production – Tier 1 quality
and scale
Clean Energy transition
driving significant nickel
demand
Strong corporate and
project team
Potential re-rating as
Araguaia transitions to a
producer
Scarcity of near-term Tier 1
nickel projects
Board development
Horizonte’s
successful
move
to
construction,
inevitably,
necessitated
a
reinvigoration
of
our
governance
structures and leadership at Board
level. It is on this basis that, in 2022, a
number of changes to the Board were
effected. I’d like to formally welcome Dr
Gillian Davidson and Mr Vincent Benoit,
who joined the Board in March 2022.
Gillian’s sustainability experience in the
extractives and natural resources sectors
is a fantastic asset to Horizonte as we
transition into a producer, as is her role as
founding member and chair of the Global
Battery Alliance, an initiative created to
drive a sustainable battery value chain.
Vincent also brings a wealth of knowledge
in the mining sector with 30 years’
experience in corporate finance, business
development and M&A. Vincent has been
a partner at La Mancha since 2012, where
his work on developing greenfield sites
with Endeavour Mining saw its market
capitalisation quadruple and positioned
La Mancha as a leading private investor in
the gold mining sector. We’re very pleased
to have their expertise on board, and
you will likely see new additions to the
Board in 2023 as we transition towards
becoming a producing nickel company.
David Hall, my predecessor as Chair,
Allan Walker and Sepanta Dorri stepped
down from the Board and I would like to
thank them sincerely for their important
contributions to Horizonte’s success in
recent years.
The Board remains committed to good
corporate
governance,
the
Quoted
Company Alliance’s Corporate Governance
Code (QCA Code) and to aligning the skills
and experience of the Directors and
management with the needs of Horizonte
as
it
advances
toward
production.
Read
more
about
our
Governance
on pages 42-49.
Sustainability
As a Company, we are committed to
positioning Horizonte as a long-term
partner for our stakeholders. We have
always worked hard to ensure that we
engage effectively with all of our local
stakeholders around our projects, from
local individuals and families to municipal
authorities. 2022 was no exception, with
the highlight of this engagement being
our community development agreement
with Serviço Nacional de Aprendizagem
Industrial (SENAI), which we signed in July.
SENAI is Brazil’s leading national industrial
training provider and our partnership
is a key component of Araguaia's Local
Content Initiative to train and develop
local community members in core skills
required during Araguaia's construction
and
operational
phases.
Horizonte
has funded classrooms and upskilling
courses in critical skills like welding and
electromechanical insulation, and so far
this year over 420 people have enrolled in
two cohorts, including a high proportion
of women, which bodes well for a diverse
and educated future workforce.
As a demonstration of our commitment
to responsible mining, at the end of the
year we completed the construction of our
biodiversity centre, where as part of our
significant biodiversity programme, we
will see close to eighty thousand seedlings
of native species grown on-site each
year, helping to replant and rehabilitate
large areas of degraded land following
prior agricultural practices surrounding
Araguaia, including biodiversity corridors
to link key areas of biodiversity habitat
around the project area. You can read more
about our sustainability programmes in
our 3rd annual Sustainability Report found
on our website as well as an update on
activities during the year on pages 26-31.
Positioning Horizonte for the future
Our strategy now is to focus on the con
struction of Araguaia, defining the ex
pansion potential of Araguaia as well as
advancing Vermelho towards a construc
tion decision, thereby delivering value to
shareholders. As we move through this
critical phase in our Company’s develop
ment, on behalf of the Board, I would like
to take this opportunity to thank all of our
workforce partners and stakeholders for
their ongoing contribution towards deliv
ering on our vision of becoming a signifi
cant global nickel producer.
William Fisher
Interim Chair of the Board
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BUILDING
A SUSTAINABLE
BUSINESS
Our actions are informed
by our guiding principles:
Operational
Excellence
We achieve our goals
for growth
We act with integrity
Stakeholders are proud
to partner with Horizonte
Horizonte is a great
place to work
Read more about
our actions in our
Sustainability strategy
on pages 30-31
When we consistently apply these principles to how we do our work, we will achieve:
We are focused on
generating value for all our
stakeholders through our
purpose of “Sustainably
supplying nickel to enable
the clean energy transition”.
This purpose directs
decisions, and actions,
shapes our culture and
drives our strategy
Values
In order to deliver our vision, all team members must share and uphold a universal set of values that
are critical to the evolution of an enhanced culture. Our values guide our behaviours and define the
way we work with each other and within the wider society.
Integrity
Prevents the negative consequences of unethical
actions, acting with full transparency and honesty.
Our behaviour and actions should always reflect our
ethical culture. Operating with integrity is the only
way to contribute to the well-being of people
Trust
Makes strategic relations more appreciated
and resilient. We build trust when we
engage
our
people,
communities,
authorities and shareholders on the
issues that matter to them. We trust
in our people and their talent to
deliver on our company Purpose
Responsibility & Accountability
We empower our people to take responsibility and
accountability in the workplace. We manage our
operations and projects responsibly. Our social
acceptability relies on being accountable for our
positive and negative impacts on our people,
communities and the environment
Sustainability & Innovation
We put the health and safety of our
people first, actively considering the
environment and communities in the
choices we make, always learning
and looking for ways to improve
through innovation
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Our culture is inclusive and supportive, encouraging all employees to take ownership of their work,
lead by example and be accountable for their successes and failures. Proudly Brazilian, we promote
local employment wherever possible and provide continual training to upskill our workforce.
Purpose
Sustainably supply
nickel to enable the
clean energy
transition
Strategy
Operate responsibly
Deliver low cost, low
carbon nickel & cobalt
Capital efficiently
Values
Integrity
Trust
Responsibility &
Accountability
Sustainability &
Innovation
Vision
To be a
globally significant,
sustainable producer of nickel
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Inputs
Our Sustainable Business Model
Market fundamentals
Global demand
Read about the demand trends on pages 12-13
Global supply
Read about expected supply shortages
on pages 12-13
Commodity price
Read about the nickel price trend on pages 12-13
Integrated approach
Responsible approach
Read about our approach to sustainability
on pages 26-31
Good corporate governance
Read about our corporate governance
on pages 42-49
Stakeholder engagement
Read about our stakeholder engagement
on page 32-33
Assets
Tier 1 projects
Read about our projects on pages 20-23
Our people
Read about our experienced team on pages 18-19
Financial position
Read about our strong financial position
on pages 24-25
Renewable electricity source
Read more about our renewable sources
of electricity on page 19
Integrity
Trust
Explore
Maximising our geological under
standing is the foundation of our busi
ness model, to ensure predictability
and consistency of ore. Our geologists
systematically and methodically ex
plore our prospective land holdings,
having been fundamental to deliver
ing a resource of over 3 million tonnes
of contained nickel
Operate
Through our commitment to sus
tainable business practices, we are
building a portfolio of high-quality
assets. At all times, we target safe,
environmentally responsible working
practices and a high-performing cul
ture that delivers results on time and
on budget
Develop
Every investment decision is careful
ly evaluated around risk, with a focus
on potential returns, long-term val
ue and sustainability. Once we have
approved an investment, the design
and construction process is informed
by input from our partners and those
stakeholders most affected. We aim
to develop every potential site with
safety as our first priority and to
achieve optimal, long-term produc
tivity while minimising risks and our
environmental footprint
Sustain
By embedding our sustainability
frameworks into our workplaces,
meeting our own high standards and
being aware of the needs and re
quirements of our local communities,
we strive to reach the highest expec
tations of ethical behaviour, health
and safety, environmental steward
ship and governance
BUSINESS
MODEL
Underpinned
by our values
Our ability to create value is underpinned by the
quality of our assets, the capability of our people,
our operational performance, mitigation of risks
and disciplined capital allocation
Value created outputs
Sustainability & Innovation
Responsibility & Accountability
Suppliers and customers
Through building long-term, mutually beneficial relationships, our goal is to supply our
customers with low-carbon, responsibly sourced nickel
Employees
We strive to provide a safe, inclusive working
environment, empowering our employees
and contracts to fulfil their potential
Local community
Proudly Brazilian, we promote local
employment and provide continual training
to upskill our workforce, committed to
leaving a strong legacy
Shareholders
We aim to deliver long-term value to
shareholders
Environment
Horizonte is committed to responsible
environmental stewardship and efficient
use of natural resources
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MARKET
REVIEW
Nickel has an essential role to play in delivering the low carbon, renewable energy that the world
requires to help combat climate change. The International Energy Agency’s roadmap to achieve
net zero emissions by 2050 identifies the contributions of various renewable technologies to
electrical capacity. Nickel’s properties in stainless steel and battery technology are helping to
reduce greenhouse gas emissions - enabling clean energy solutions to be a central part of our
effort to tackle global warming.
The transition to a net-zero economy
will be metal-intensive
Nickel’s role in the clean energy transition
Nickel, a naturally occurring, lustrous,
silvery-white metallic element has out
standing physical and chemical proper
ties, which make it essential in hundreds
of thousands of products. Its biggest use
is in alloying - particularly with chromium
and other metals to produce stainless and
heat-resisting steels, with two-thirds of
global nickel production used for its man
ufacture. Here nickel provides toughness,
strength and enhanced corrosion resist
ance, significantly increasing the end
product’s life.
As the world transitions towards a green
economy, nickel’s role has begun to
evolve, as its critical role in sustainable
energy systems and new battery tech
nology has emerged. The move to energy
storage systems has largely been driven
by significant growth in renewable en
ergy resources, primarily wind and solar.
In the US, wind and solar made up more
than half of all new generating capacity
in the past three years. Asia and Europe
are also investing billions in renewables.
However, the challenge is that the wind
doesn’t blow and the sun doesn’t shine on
demand. This is why batteries are being
deployed to capture the energy and re
lease it when required, helping stabilise
our complex and widespread electricity
infrastructure.
Nickel’s role in the clean energy transition,
includes:
~ 325m EVs expected to be in operation
globally by 2040. A 60Kwh NMC
battery needs 39kg of nickel
~ Carbon Capture & storage - 200t
of nickel required to capture and store
1.5mt CO2 / per annum
~ Nickel improves the strength &
durability of wind turbines. Each
turbine requires 2,000 kg of nickel
~ Hydro-electric plants need durable
nickel-rich stainless-steel turbines.
Global hydro-electric capacity is
expected to grow 70% by 2040
~ Nickel alloys play an important role
in ensuring the integrity, durability
& long-term performance of nuclear
power stations.
Growing demand in 2022
2022 global nickel demand was 3 million
tonnes. To put this in context, in 2000
demand had not surpassed 1.1 million
tonnes. This demand growth is set to
continue if the world hopes to achieve the
targets set out by the Paris agreement on
climate change. Governments around the
world have been enacting policy change
in order to hit these targets, the United
States of America for instance passed
the US Inflation Reduction Act in August
this year, promising US$369 billion for
climate and clean energy policies, at the
same time setting out an ambitious tar
get to extract and process key battery
minerals locally, with an aim of reducing
carbon emissions by roughly 40% by 2030.
Affirmative actions such as this will help
drive the change towards a green econo
my and to becoming net zero.
Turning to supply, despite a complicated
geopolitical situation coupled with the en
ergy crisis and rising inflation, the nickel
deficit that emerged in 2021 swung to a
surplus in 2022 on the back of strong Indo
nesian supply. The surplus observed was
driven by low-grade Nickel Pig Iron (NPI),
while the current Class 1 nickel tightness
is likely to hold given the potential sup
ply disruptions and bottlenecks that ma
jor existing producers are facing and the
challenges in bringing online the new mine
supply from outside of Indonesia.
Looking forwards, while Indonesia will
be the primary source of increased nickel
supply globally, the country still heavily
relies on powering their processing plants
through coal-fired electricity resulting
in high carbon emissions. This will be a
key point of difference compared to the
renewable sources Horizonte will use. This
is increasingly important as end users and
consumers focus on transparency and the
sourcing of the metals that are used in
their products.
Accelerating battery demand will
fundamentally alter the market
Stainless steel continues to be nickel’s
main driver of demand, representing
around two thirds of global nickel demand.
With a balanced demand profile between
investment and consumption, and rea
sonable leverage to growing wealth,
stainless steel offers annuity demand
growth linked to global GDP. Longer term,
BMO Commodities research believe that
demand for nickel in the use of batteries is
set to match or exceed that from stainless
steel over the coming years positioning
Horizonte well to capitalise on the poten
tial supply demand imbalance.
Nickel’s volatile year
Nickel has continued to attract a lot of
attention over the course of 2022, in par
ticular following an unprecedented short
squeeze in the first quarter of the year,
resulting in a 250% surge in prices for the
metal on the London Metal Exchange
(LME) in the space of twenty-four hours.
Prior to the event, nickel prices were on the
rise as demand in most nickel consuming
sectors continued to recover from wide
spread COVID-19 disruptions two years
earlier, whilst strong underlying demand
trends driven by the global energy transi
tion continued to propel nickel prices higher.
Following the event, the nickel market
entered a state of paralysis, with limited
material being traded given concerns over
further price volatility and distrust of the
LME. As we moved through the year, elec
tric vehicle (EV) demand began to pick up
as inventories were worked through and
restocking began, with nickel ending the
year at US$29,901 per tonne, 43% higher
than at the start of the year.
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STRATEGY
STRATEGIC PILLARS
2022 PERFORMANCE
2023 PRIORITIES
Operate responsibly
Horizonte has a long-standing commitment to contribute to the sustainable
development of the communities associated with our operations, to conduct
ourselves ethically in all our business activities and with a focus on the
professional management of ESG aspects of our projects
~ Zero fatal injuries and zero recordable injuries
~ Golden Rules implemented
~ Critical risk controls implemented
~ Inaugural employee satisfaction survey completed
~ Long term power offtake supply secured from
renewable sources
~ Submitted Social Environmental Impact
Assessment for Vermelho
~ Appointed Gillian Davidson as an independent non-
executive director and Vincent Benoit as a non-
executive director to the Board
~ Appointment of Philipa Varris as Head of Sustainability
~ Published our 3rd Annual Sustainability Report
~ Zero fatalities and zero recordable injuries
~ Authorise Group Health, Safety and
Wellbeing Policy
~ Employee pulse survey program to monitor
culture evolution through transition to operations
~ Zero reportable environmental incidents
~ HZM Supplier Code of Conduct implementation
~ Group level policies for governance
framework endorsed
~ Continue critical risk control implementation
through construction
Deliver low cost, low carbon nickel and cobalt
Progressing our two, tier one projects through construction and into
production is central to our business model and allows us to deliver
value to our stakeholders
~ Began construction of Araguaia
~ Araguaia approved as a Strategic Minerals Project by
the Brazilian Government
~ Award of Electro-mechanical contract
~ Araguaia construction remains on schedule
having advanced 34%
~ Initiated a Feasibility Study for Vermelho
~ Maintain construction schedule of Araguaia
~ Initiate Ore Stockpiling
~ Begin cold commissioning of Araguaia
~ Undertake a Feasibility Study on Line 2
expansion of Araguaia
~ Advance Vermelho development
Capital efficiently
A strong balance sheet and efficient capital allocation provides the financial
security and flexibility, central to successfully delivering our vision
~ Secured the US$346.2m Senior Debt Facility
~ ~US$400m of key contracts awarded as of
31 December 2022
~ Secured an oversubscribed equity fundraise
of ~US$80m
~ Completed first draw down of Senior Debt
~ Cash balance of US$154 million as of 31 December 2022
~ Liquidity of US$495 million as of 31 December 2022
~ Remain within project budget for Araguaia
~ Maintain a strong balance sheet
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
Our vision is to be a globally significant, sustainable
producer of nickel to fulfil our purpose of supplying
sustainable metals to enable the clean
energy transition
14
HORIZONTE MINERALS 2022 ANNUAL REPORT
15
HORIZONTE MINERALS 2022 ANNUAL REPORT
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
16
17
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
KEY
PERFORMANCE
INDICATORS
We use various financial and non-financial performance
measures to help evaluate the ongoing performance
of our business. Linked to our strategic objectives, the
following measures are considered by management to
be some of the most important in evaluating our overall
performance year on year
ENVIRONMENTAL AND SOCIAL
CONSTRUCTION
FINANCIAL
LOST TIME INJURY
FREQUENCY RATE
(per 1,000,000 hours worked)
MAJOR ENVIRONMENTAL
INCIDENTS
LOCAL
EMPLOYMENT
SCHEDULE
BUDGET
LIQUIDITY
KPI
2022: 0
2021: 0
2020: 0
2019: 0
2022: 0
2021: 0
2020: 0
2019: 0
2022: 39%
2021: 50%
2020: 53%
2019: 46%
34% constructed
as of 31 December 2022
US$537 million
2022: US$495m1,
2021: US$211m2,
2020: US$15m3
Why we
measure
An indicator of safety in the
workplace and the effectiveness
of our management controls
to protect our workforce. We
aim to provide a safe working
environment for all our people
An indicator of environmental
and social impact and the
effectiveness of management
controls to protect the area
in which we operate, key to
our long-term success. We
operate in an environmentally
conscientious manner and
minimise the impact of our
activities, targeting zero
environmental incidents.
An indicator of the socio-economic
benefit to our host communities and
our effectiveness to enhance our local
economic participation in Pará state.
We remain committed to delivering
shared value to our local communities,
partially achieved through creating
employment opportunities for local
community members. We refer to
local employment as people from
Pará state, not Brazil as a whole
given the vast majority of our people
are Brazilian
Vital for the continued
growth of Horizonte and our
ability to deliver Araguaia
on time
An indicator of fiscal control
and management’s ability
to preserve value. Provides
the capex budget for the
construction of Araguaia
We are focused on securing
a strong balance sheet
to fund the construction
of Araguaia Stage 1 and
maintain financial flexibility
2022
Performance
We continue our
demonstrable track
record of zero LTIFR
in 2022
We continue to maintain
our strong track record
of zero environmental
incidents
As Araguaia construction has ramped up,
an experienced and technical workforce is
required meaning we have sourced labour
from outside of Pará state. As Horizonte
transitions into an operator, the Company
would expect for the downward trend
to reverse, as we train more people from
Pará state
On schedule
US$~80m of additional
equity funding was raised
in 2022 following cost to
complete analysis, primarily
driven by inflation and
interest rates
US$495m as of 31
December 2022, 135%
higher year-on-year
Link to
Strategy
Operate responsibly.
Deliver low cost,
low carbon nickel
and cobalt
Operate responsibly.
Deliver low cost, low
carbon nickel and cobalt
Operate responsibly. Deliver low cost,
low carbon nickel and cobalt
Deliver low cost, low carbon
nickel and cobalt
Deliver low cost, low
carbon nickel and cobalt.
Capital efficiently
Deliver low cost, low
carbon nickel and cobalt.
Capital efficiently
Link to
Risks
Safety, Health and
Wellbeing
Stakeholder relations
and social licence. Critical
permits delayed or declined
Stakeholder relations and social
licence. Human Capital
Capital project delivery and
operational transition
Capital project delivery
and operational transition.
Liquidity, access to capital
and debt covenants
Liquidity, access to capital
and debt covenants
1. As of 31 December 2022
2. As of 31 December 2021
3. As of 31 December 2020
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
18
19
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
CHIEF
EXECUTIVE’S
REVIEW
Jeremy Martin
CEO
A ground breaking year
for Horizonte
It is a pleasure to reflect on the achieve
ments of 2022 which was a ground break
ing year for Horizonte and has laid the
foundations for the years ahead, position
ing the Company to be a significant global
producer, committed to the ethical, safe
and responsible production of a low carbon
nickel product.
Araguaia Nickel Project
Our focus for 2022 at Araguaia was to
secure the funding, build our team, award
key equipment and construction contracts
required for construction and the move to
operations, commencing our 24-month
journey to becoming a nickel producing
Company. We’re delighted to have fin
ished the year having advanced construc
tion by 34% and importantly, remain on
track to produce first metal in Q1 2024.
The 2022 reporting period began by clos
ing out the Araguaia construction funding
package, in which a total of US$633 mil
lion was raised comprising a combination
of senior debt and equity with support
from a number of high-quality, long-term
financial institutions and leading mining
sector investors. By the end of the year
and following a multi-year effort to de-
risk Araguaia, we were able to success
fully access the low-cost debt and draw
down on the first tranche of funds.
The rigorous due diligence process, and
the extensive list of obligations that Hori
zonte was required to meet to access this
funding, should provide all our stakehold
ers with confidence in the robustness
of Araguaia and the quality of the team
working on the project.
The first debt drawn-down milestone
demonstrates that we had made signif
icant progress on construction and were
able to satisfy the Senior Lenders that we
had, among others;
i.
shown that Araguaia is funded through
to completion and first cash flows
following the subsequent ~US$80m
equity raise;
ii.
made significant progress with
construction, and in line with the
project schedule;
iii. awarded all of the key material
contracts, including equipment
supply, Engineering Procurement and
Construction Management (EPCM),
port access and power supply;
iv. have a long-term offtake in place for
100% of Araguaia’s production from
line 1 with a high-quality counterparty
in Glencore; and lastly,
v.
have built out an experienced team to
deliver the Project.
18
HORIZONTE MINERALS 2022 ANNUAL REPORT
To highlight, the most critical of these
contracts, is the low-cost power contract.
Electrical energy makes up approximately
a third of our operating costs, so having a
power contract with renewable sourcing,
at the extremely competitive pricing
that we were able to lock in, means that
Araguaia will be operating in the lowest
quartile of the cost curve for at least the
ten-year duration of the initial contract life.
Furthermore, this contract demonstrates
our ability to become one of the lowest
CO2 nickel producers, a major competitive
advantage when compared to nickel peers.
Turning to the physical progress that we
saw on the ground at Araguaia, 2022
was a hugely transformative year in the
process of developing the greenfield site
into a producing asset. The foundations
of the furnace and rotary kiln are now
well-advanced and earthworks are close
to completion. To facilitate reliable power
to site, a 125 kilometre, 230kV powerline
is being constructed and pre-assembly of
the towers and construction of the main
substations at site made good progress.
Vermelho
Horizonte has a second Tier 1 asset in Ver
melho. 100% owned, it is an excellent op
portunity to develop a low-cost supply of
nickel and cobalt to meet the fast-grow
ing demand due to global efforts to tran
sition to net zero emissions.
In October 2022 we awarded the prin
cipal engineering contract to undertake
the Feasibility Study (FS) at Vermelho to
Wood plc, a major milestone in advancing
the project through to a funding decision.
Wood is a global engineering and techni
cal services provider with extensive ex
perience specifically in the nickel sector,
and undertook the original Vermelho FS
for its previous owner, Vale, from 2003 to
2006, resulting in a positive construction
decision. We anticipate results from the
Feasibility Study in 1H 2024.
We were also pleased to announce the
filing of the Social and Environmental
Impact Assessment (EIA) for Vermelho in
late 2022, an essential part of the per
mitting process of the project. Approval
of the EIA and subsequent granting of
a preliminary licence is expected during
2024, the first stage in a three-stage
environmental licencing process to devel
op a mine in Brazil. This filing followed an
18-month period where Horizonte, in con
junction with Rambol Group (“Rambol”) (a
leading global environmental and social
consultancy firm) together with Integra
tio (a leading Brazilian social consultancy
firm), undertook the collection and analy
sis of the baseline social and environmen
tal data specified by the Pará State Secre
tariat for Environment and Sustainability
(SEMAS), to reflect the current physical,
biological and social settings at Vermelho.
Health and Safety first
Alongside the difficult macro inflation
ary environment, there have been some
challenges specific to the construction
phase. Brazil itself experienced a sudden
step-up in industrial activity in 2022 fol
lowing COVID-19 disruption, meaning that
construction contractors were scarce, as
was the labour force. Securing and main
taining our high-quality team at Araguaia
has therefore been an added challenge, but
one which we have managed to overcome.
We now have over 2,000 people working at
site, with this number expected to increase
to 3,100 by the end of Q2 2023. Notwith
standing this sharp increase in employ
ment and activity on site, we are extremely
proud to have lost zero hours to injury this
year, giving us a lost-time injury frequen
cy rate (“LTIFR”) rate of 0.00, for the fifth
consecutive year. There is of course no
place for complacency and the health and
safety of our people remains central to
everything we do. Further information re
lating to our health and safety can be found
on pages 28-29 of this report and also in
our 3rd annual Sustainability Report found
on our website.
Building out our Team
As mentioned above, 2022 saw the Hori
zonte owners team continue to grow as
well. At the beginning of the year, we had
a team of around 25 people. By year-end
this had grown close to 150 people span
ning across various disciplines from envi
ronmental and social-focused activities
to commissioning and Business readiness
professionals. Creating a strong working
culture is key for 2023 as we look to en
gage our people over the long term to instil
a culture that encourages commitment to
results, empowerment, flexibility, collab
oration, transparency and participation.
New Chair
I’d like to welcome Mr William (Bill) Fisher
to the role of Interim Chair of the Board.
Bill has served alongside me on the Board
for the past eight years, so he is very fa
miliar with the business. We have always
had a view that we want to maintain
continuity throughout the construction
stages, and as we move into ramp-up, Bill
brings this required balance.
2023 Objectives
Looking ahead to the coming 12 months,
we are cognisant of the work that lies
ahead. Our primary focus will be on de
livering Araguaia on-time, on-budget
and safely. We are targeting cold com
missioning towards the end of 2023 with
hot commissioning and subsequent first
nickel in 1Q 2024. Alongside this work,
we are planning to conduct a feasibility
study on the second line at Araguaia, a
relatively low capex project that will dou
ble production from 14,500 tonnes per
annum to 29,000 tonnes per annum. Ver
melho workflows will be centred around
the Feasibility study and EIA permitting
process, both expected to be finalized in
2024. Although these objectives are, in
practice, considerable undertakings, we
are reassured by the progress already
made across the Group, and are confident
in the ability of our teams on the ground
to deliver.
Thank you
To conclude, I would like to thank all our
stakeholders for your continued support
which is never taken for granted. I would
also like to take this opportunity to direct
ly thank the Horizonte team, led on the
ground in Brazil by Mike Drake, our Head
of Projects and Leo Vianna, our Project
Director. The whole team has achieved
many significant milestones this year. We
have entered 2023 with confidence and
look forward to delivering and communi
cating our progress as we continue to un
lock value from across our portfolio.
Jeremy Martin
Chief Executive Officer
19
HORIZONTE MINERALS 2022 ANNUAL REPORT
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
20
21
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
PROJECTS
ARAGUAIA
Araguaia on schedule for first
nickel in 1Q 2024
Ownership
100% Horizonte Minerals
Location
Para, Brazil
Stage of development
Construction
Process
Rotary Kiln and Electric Furnace (RKEF)
Commercial production timeline
1Q 2024
Anticipated production from Line 1
Average annual production of 14,500
tonnes nickel
Average grade over the first 10 years of mine life
1.8%
Product
Ferronickel (FeNi)
Life of mine
28 years
Total budgeted capex of Line 1
US$537 million
Key contracts signed during
the year included:
~ EPCM Contract
~ Earthworks contract
~ Civils contract
~ All major long-lead time process
plant equipment contracts
~ 125km power line construction
~ Electro mechanical contract
~ Ten-year renewable power
~ Port contract
Key operational developments in the year
2022 was a transformational year for
Araguaia having broken ground in May
when
construction
began.
Over
the
following months, earthworks transformed
the site, preparing the groundwork ahead
of the plant foundations being laid mid-year.
Construction work is now into the electro
mechanical installation phase where steel
work is being erected. By 31 December
2022, project construction had advanced
34%, importantly remaining on schedule for
first nickel by 1Q 2024.
As of 31 December, around US$400m of
a total US$537m had been committed,
representing close to three quarters of the
total budget.
About the project
Araguaia is a 100% owned project compris
ing of an open pit nickel laterite operation
that will mine a 27.3 Mt mineral Reserve,
part of a larger 119 Mt mineral resource.
Annually, line 1 is designed to produce
52,000 tonnes of ferronickel (FeNi) con
taining 14,500 tonnes of nickel over a 28-
year mine life. The metallurgical process
comprises of a Rotary Kiln and Electric
Furnace (RKEF), a proven technology with
over 60 years of commercial experience
in more than 30 operations worldwide,
three of which are located in Brazil, oper
ated by Anglo American and Vale.
After a construction period expected
to last 24 months and an initial ramp-
up period of 12 months, the plant will
reach full capacity of approximately
900,000 tonnes of dry ore feed per year.
The FeNi product will be transported by
road to the port of Vila do Conde for sale
to overseas customers.
The Value Engineering Study and sub
sequent Execution Preparation Phase
work has optimised the RKEF flow sheet
and worked to establish integrated
process islands with tier one suppliers
linked to the Export Credit Agency (ECA)
project financing.
A key part of the Stage 1 project design
was that the RKEF plant and associated
infrastructure
was
designed
to
accommodate the addition of a second
RKEF process line (Line 2 expansion),
which is intended to double Araguaia’s
production capacity from 14,500 tonnes
nickel per annum up to 29,000 tonnes
per annum nickel. The Project Mineral
Resource inventory has the grade and
scale to support the planned increase
in plant throughput from 900 kt/pa
(Stage 1) to the Stage 2 rate of 1.8 Mt/pa
supporting the twin line RKEF flow sheet.
The Stage 2 expansion assumes operating
at a Stage 1 production rate of 900 kt/pa
for three years, then expand the plant to
1.8 Mt/pa via the addition of a second line.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
22
23
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
PROJECTS
VERMELHO
There are very few high-grade scalable nickel cobalt
resources of this quality at an advanced stage of
development, positioning Vermelho to be able to
capitalise on the growing demand for sustainable
critical metals
Ownership
100% Horizonte Minerals
Location
Pará, Brazil
Stage of development
Feasibility Study
Process
High Pressure Acid Leach (HPAL)
Anticipated production
Average annual production of 24,000 tonnes
nickel, 1,250 tonnes cobalt
Average grade for the first 10 years
1.8%
Product
Nickel & Cobalt mixed hydroxide
precipitate (MHP)
Life of mine
38 years
All assumptions are as per October 2019 NI 43-101 Technical Report
About the project
Vermelho is a 100% owned project locat
ed in the Carajás mining district, an area
that features well-developed infrastruc
ture and abundant hydroelectric power.
Comprising of a planned 38-year mining
operation through an open pit nickel lat
erite mine, Vermelho has a Probable Min
eral Reserve of 141.3 million tonne (at a
cut-off of 0.7% Ni) and is forecast to pro
duce 924,000 tonnes of nickel contained
in nickel sulphate and 36,000 tonnes of
cobalt contained in cobalt sulphate over
the life of mine.
The Vermelho project pre-feasibility study
utilised a hydro-metallurgical process
comprised of a beneficiation plant where
ore is upgraded prior to being fed to a
High-Pressure Acid Leach (HPAL) plant.
The plant will be constructed in two phases,
with an initial capacity of 1 Mt per annum
(Mt/a) autoclave feed (Stage 1). After three
years of production, a second process train
(Stage 2 Expansion) will be constructed,
which will effectively double the autoclave
feed rate to 2 Mt/a. The Stage 1 plant and
project infrastructure will be constructed
over a 31-month period. The MHP product
will be transported by road to the port of
Vila do Conde (the same facility planned for
Araguaia) for sale to overseas customers.
At full production capacity, the Project is
expected to produce an average of 24,000
tonnes of nickel and 1,250 tonnes of
cobalt per year.
Key operational developments
in the year
A Feasibility Study (FS) was initiated in
2022 with results due to be published in
1H 2024. In parallel with the FS, Horizonte
submitted the Social Environmental Impact
Assessment (“EIA”) with the Pará State
Environmental Agency (“SEMAS”), which
forms an essential part of the permitting
process, and the Company is targeting the
approval of the EIA and subsequent grant
ing of a preliminary licence in during 2024.
Over the coming
months,
Horizonte
will continue to work
closely with local stake
holders as Vermelho is
expected to contribute signif
icant employment opportunities
for the region and deliver significant
socio-economic value.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
24
25
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
FINANCIAL
REVIEW
2022
2021
Cash and cash equivalents
US$154M
US$210.5M
Administrative expenses as a percentage
of Total assets
2.41%
2.53%
Funds raised to advance Araguaia
US$175M
US$197M
Funds raised to advance Vermelho
US$25M
—
Undrawn senior debt facility available
US$341.2M
—
Mine Development and exploration costs capitalised
US$188.6M
US$13.6M
KPI’s are not GAAP measurements and are
not intended to be a substitute for these
measures. The KPI’s used by the Group may
not be the same as those used by other com
panies and so should not be used as such.
Administrative expenses as a percentage of
total assets have decreased, as a result of
financing secured during the year to finance
the Araguaia project construction and in
creased activity in advancing the Araguaia
project which was capitalised to the Mine
Development asset.
Exploration costs capitalised predominant
ly relate to expenditure on the Araguaia
project construction. This amount excludes
capitalised borrowing costs as a result of
the Royalty financing arrangement, con
vertible loan notes and loan facilities. It also
excludes the capitalised environmental re
habilitation provision.
During the current year US$175 million was
secured to advance the Araguaia project
construction. US$95 million (US$65 million
convertible loan notes, US$25 million cost
overrun facility and US$5 million first
utilisation on senior debt facility) was part
of the US$633 million funding package
concluded in December 2021 to finance
the construction of the Araguaia project.
Gross proceeds of US$80million was
secured through an equity fundraise as the
forecast capital cost for the construction
of the Araguaia Project increased due
global inflationary pressures, engineering
improvements to de-risk the project and to
accelerate engineering studies and basic
engineering for the development of line 2
at Araguaia, as well as further invest in the
decarbonisation strategy for the Project.
Simon Retter
Chief Financial Officer
Loss for the year
The loss for the year is US$5.3 million com
pared to a loss of US$13.4 million in 2021.
This was primarily due to increased head
count and activity in securing the financing
for the construction of the Araguaia Project,
gain on change in fair value of convertible
loan note embedded derivative, overall net
foreign exchange gain due to the weakening
of the Pound Sterling to the US Dollar and an
increase in net finance cost.
The Group has continued to keep a tight
control on its administrative costs, but they
are expected to rise as the Group increases
its headcount and progresses with the con
struction at Araguaia as well as the contin
ued advancement of Vermelho. As a result of
this the administrative expenses increased
during the year from US$7.8 million to
US$12.5 million.
The convertible loan notes issued during the
year were classified as a hybrid financial in
strument, whereby a debt host liability com
ponent and an embedded derivative liability
component was determined at initial rec
ognition. The movement in the embedded
derivative fair value from initial recognition
to the year-end date was a gain of US$6.8
million. For further details on the valuation
refer to note 22.
The value of the Mine Development asset
and intangible assets has increased signifi
cantly during year due to the additions aris
ing from the Araguaia Project construction
and the capitalisation of interest. During
the year US$13.2 million of borrowing costs
was capitalised to the Mine Development
asset for the Araguaia Project compared to
US$7.1 million in 2021. The net finance costs
of US$6.4 million is primarily the borrowings
costs as a result of the Vermelho royalty
agreement. These borrowing costs are not
capitalised as the project has not yet com
menced development.
Furthermore, total comprehensive loss at
tributable to equity holders of US$10.9 mil
lion included loss on currency translation dif
ferences of US$6.7 million. This was due to
the weakening of Pound Sterling against the
USD as at 31 December 2022, as compared
to 31 December 2021. The BRL strength
ened against the USD and GBP as at 31 De
cember 2022 when compared to 31 Decem
ber 2021.
Intangible Assets & PPE
Intangible Assets & PPE, which comprise
both the Araguaia and Vermelho projects,
have increased to US$ 276.8 million as at 31
December 2022 as compared to US$67.4
million at 31 December 2021. The Group in
curred US$184million in capital expenditure
relating to the Araguaia Project construction;
as well as borrowing costs capitalisation of
US$13million.
There was also a foreign exchange revalua
tion gain of US$7 million due the strength
ening of the BRL. The exploration assets of
the business are recorded in the functional
currency of Brazil, the country in which they
are located.
Trade and other receivables
Included in trade and other receivables are
prepaid transactions costs of US$42 million
(2021: US$12.6million) relating to the senior
debt finance facility. The transaction costs
will be offset against the debt when it is
drawn down.
Cash and cash equivalents
The group held cash and cash equiva
lents of US$154 million compared to
US$210.5 million in the prior year. The de
crease was a result of funds spent in the
Araguaia Project construction.
Royalty Liability
The Group has secured two royalty financing
arrangements of US$25million each for each
of its projects -Araguaia and Vermelho.
The Araguaia royalty finance secured in 2019
has been recognised as a liability and valued
using the amortised cost basis at US$48.8
million at 31 December 2022 (US$44.5 mil
lion at 31 December 2021). This funding is
not repayable until the project enters into
production and following that the royal
ty payments are made at a royalty rate of
2.95%. The royalty is due on revenue less
some associated costs on a quarterly basis
and has been revalued based on the expec
tation of the future royalty payments under
the agreement using the effective interest
method. Included in the agreement are cer
tain embedded derivatives which can under
certain circumstances result in the Company
having the ability to buy back certain levels
of the royalty, the buy-back price is driven by
the holder obtaining certain milestones on
its return on investment. The result of these
options is a derivative asset being recognised
on the balance sheet at a fair value of US$5
million (2021: US$4.95 million).
The Vermelho royalty finance secured in
2022 has been recognised as a liability and
valued using the amortised cost basis at
US$41 million at 31 December 2022. This
funding is not repayable until the project
enters into production and following that
the royalty payments are made at a royalty
rate of 2.1%. The royalty rate will increase to
2.25% if substantial construction of the Ver
melho Project has not commenced within
5 years of the closing date, 30 March 2022.
The royalty is due on revenue on a quarterly
basis and has been revalued based on the
expectation of the future royalty payments
under the agreement using the effective
interest method. Included in the agreement
are certain embedded derivatives which
can under certain circumstances result in
the Company having the ability to buy back
certain levels of the royalty, the buy-back
price is driven by the holder obtaining certain
milestones on its return on investment. The
result of these options is a derivative asset
being recognised on the balance sheet at a
fair value of US$9.5 million. For more details
on the royalty financing arrangements, refer
to note 21 of the financial statements.
Convertible loan note liability
The Company issued convertible loan notes
to the value of US$65 million at an interest
rate of 11.75% with interest accruing quarter
ly in arrears. The convertible loan notes were
issued at a discount of 5.75%. The maturity
date of the instruments is 15 October 2032.
At any time until the Maturity Date, the
Noteholder may, at its option, convert the
notes, partially or wholly, into a number
of ordinary shares up to the total amount
outstanding under the Convertible Note
divided by the Conversion Price. The con
version price is £1.268/US$1.71.
The convertible loan is a hybrid financial in
strument, whereby a debt host liability
component and an embedded derivative
liability component was determined at
initial recognition. For convertible notes
with embedded derivative liabilities, the
fair value of the embedded derivative li
ability is determined first and the resid
ual amount is assigned to the debt host
liability. Thereafter the debt host liability
is valued using the amortised cost basis.
At 31 December 2022 the total carrying
value for the convertible loan notes was
US$59 million. For more details on the
convertible loan notes refer to note 22 of
the financial statements.
Senior debt facility
On 7 December 2022, the Group satis
fied all conditions precedent for the first
utilisation under the senior debt facility of
US$346.2 million. The first utilisation was for
US$5million.
The total senior debt facility is US$346.2mil
lion (Commercial Facility US$200million and
ECA Facility US$146.2million). The final ma
turity date on the Commercial Facility is 15
July 2030. The final maturity date on the ECA
Facility is 15 July 2032.
Both the Commercial and ECA facilities
are valued using the amortised cost basis.
At 31 December 2022 the total carrying
value for the senior debt facility is US$4.3
million. For more details on the senior
debt facility refer to note 24 of the finan
cial statements.
Cost overrun facility
On 30 November 2022, the Group satisfied
all conditions precedent in relation to the cost
overrun facility (COF) and had received all COF
funds from Orion. Access to the COF funds
is restricted and will only be available in the
case of a cost overrun against the Araguaia
Project construction schedule and budget.
The COF is US$25million with an interest
rate of 13% and a maturity date of 15 Octo
ber 2032. Interest will be calculated quarterly
and be payable in arrears.
The COF is valued using the amortised cost
basis. At 31 December 2022 the carrying val
ue of the COF was US$23.8 million. For more
details on the COF refer to note 23 of the fi
nancial statements.
Simon Retter
Chief Financial Officer
28 March 2023
Year ended
31 December
2022
US$
Year ended
31 December
2021
US$
Loss before taxation
(5,317,302)
(13,370,515)
Trade and other receivables
58,739,737
13,796,627
Cash and cash equivalents
154,027,967
210,492,280
Exploration & Mine Development assets
276,799,663
67,435,919
Fair value of derivative asset
(Royalty buy-back options)
14,489,387
4,950,000
Royalty finance liability
89,745,254
44,496,504
Convertible loan notes
59,447,520
—
Senior debt facility
4,328,241
—
Cost overrun facility
23,809,827
—
Total equity
299,429,702
229,284,646
Loss per share (pence)
(2.634)
(15.698)
The Group is not yet producing minerals and
so has no income other than bank interest.
Consequently, the Group is not expected
to report profits until it is able to profitably
develop or dispose of its exploration and
development projects. Horizonte Minerals
Plc changed its presentation currency from
Pounds Sterling to US Dollars effective 1
January 2022. The presentation currency
has been revised as the financing package
concluded by the Group to construct the Ara
guaia project is denominated in US Dollars
and future revenues will also be in US Dollars.
The board therefore believes that US Dollar
financial reporting provides more relevant
presentation of the Group’s financial posi
tion, funding and treasury functions, financial
performance and its cash flows. The principal
financial key performance indicators (‘KPIs’)
monitored by the Board concern levels and
usage of cash. The main financial KPIs for the
Group allow it to monitor costs and plan fu
ture exploration and development activities
and are as follows:
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HORIZONTE MINERALS 2022 ANNUAL REPORT
SUSTAINABILITY
GOVERNANCE
As an experienced non-executive direc
tor and sustainability practitioner, the
feedback I receive from stakeholders that,
‘companies with good governance are
more likely to have enhanced environ
mental and social practices relative to
their peers’, resonates with me.
The last year marked a number of im
portant achievements for Horizonte, not
just in the development of our Araguaia
project, but also in the further evolution
of our governance framework and asso
ciated systems.
I am delighted to be the Chair of Horizon
te’s inaugural Sustainability Committee,
established in April 2022. Our vision to be a
globally significant, sustainable nickel produc
er, means that sustainability plays a critical
part in our overall business strategy. The
mandate of the Sustainability Committee
has wide-reaching objectives that reflect
our strategy:
~ maintaining healthy and safe work
places, environmentally sound and
responsible resource development,
good community relations and the
protection of human rights;
~ promoting the appropriate culture,
behaviours and actions in relation to
these matters; and
~ communicating the Board’s commit
ment to these matters to the Group’s
employees, contractors and other
stakeholders.
The Sustainability Committee will meet
three times a year, including a visit to our
operations in Brazil, to provide oversight,
but also to support and promote leader
ship in sustainability throughout the Hori
zonte. In fact, during our October 2022 visit
to Brazil I was impressed by the excellent
programs designed to increase the number
of local people in our workforce. On a visit
to our ‘Transforming Horizons’ partnership
with SENAI, I met a lady with her infant
grand-daughter, who was studying to be
come a worker at our mine, whilst her own
daughter was studying university night
classes. I was thrilled to hear that the pro
gram was recognised in the ESG Category
of the Ser Humano Awards in Brazil.
Within the workplace we are supported
by local, Pará State and Brazilian compa
nies and I have been delighted to see the
increasing participation by these teams in
our safety programs. Our programs have
a strong behaviour-based safety focus and
leading indicators to support this. Con
tracting partners who initially struggled
to participate are now significantly better
performing, with the resulting benefits to
workplace safety and health. Look at our
highlights overleaf to see these results.
The discussions we have had on advanc
ing our enterprise risk management (ERM)
and materiality processes also brought
me great satisfaction. Risk management
is the foundation of how we demonstrate
respect and caring for our stakeholders,
and most importantly, those who may be
impacted – positively and negatively – by
our activities. This year we invited, for the
first time, a number of external stake
holders to participate in our materiality
assessment process, which is industry
leading practice (see the following page).
In 2023 we will also formalise our ERM
continuous improvements with Manage
ment reports to the Board on ERM action
plan implementation.
Dr Gillian Davidson
Chair of the Board Sustainability
Committee
Companies with good governance
are more likely to have enhanced
environmental and social
practices relative to their peers
Reflecting our commitment to the success
ful achievement of the growth principle of
our strategy - with production at Araguaia
fast approaching and successful funding of
a feasibility study for Vermelho underway
– we completed a systematic review of our
corporate policies. We subsequently en
dorsed a Horizonte Policy on Security and a
Policy on Inclusion and Diversity, as well as
supporting Management’s development of
a Supplier Code of Conduct, to complement
our existing Policies. Additional comple
mentary corporate policies are expected to
be released in 2023. I will share more de
tails of these objectives in our 2022 Hori
zonte Sustainability Report.
As a result of conversations at the World
Economic Forum (WEF) in 1999, the then
Secretary-General of the United Nations
(UN) and Nobel Peace prize laureate, Kofi
Annan issued a call for a ‘Global compact
of shared values and principles’ on human
rights, labour standards, environmental
practices and anti-corruption. This was
the genesis of what later became the UN
Global Compact (UNGC), a movement of
over 21,000 companies and 162 countries!
As a former member of the WEF team, I
have seen first-hand, around the world,
the significant positive impacts that mining
companies can bring to host communities
when aligned to these values, principles
and the Sustainable Development Goals.
Horizonte’s efforts in 2022 to commence
target setting and reporting aligned with
the UNGC, for a company which had not
yet even commenced construction, was
leading practice.
Accompanying the Sustainability Report
and our reporting on our progress in im
plementation of the UNGC targets that
we set for ourselves, will be a significantly
expanded set of disclosures of our sus
tainability performance to standards, sup
porting our transition from developer to
producer and a demonstration of our com
mitment to honesty (integrity) and courage
in our actions.
Beyond our own work in sustainability gov
ernance, the Horizonte Board of Directors
is supported by the work of an independ
ent, environmental and social consultancy.
This group conduct quarterly assurance
reviews of our Araguaia operations to
monitor conformance to the international
standards that have been adopted by Hori
zonte. The outcome of these reviews are
presented to the Sustainability Committee
and inform the processes of governance
that we undertake on behalf of sharehold
ers and stakeholders.
Dr. Gillian Davidson
Chair of the Board Sustainability
Committee
Materiality
Each year we analyse the most impor
tant sustainability issues for our busi
ness and stakeholders to inform our
strategy and focus areas for the up
coming year. In 2022/3 we enhanced
this process to reflect the evolution of
our business. In this more comprehen
sive process we:
~ Identified topics from industry
and peer bench-marking,
enterprise risk management
processes, industry standards,
ESG rating services and grievance
mechanisms;
~ Undertook a detailed analysis
of our peer group and their
published material topics
assessment;
~ Invited a variety of internal and
external stakeholder to complete
a materiality survey to indicate to
us which sustainability topics are
of most importance;
~ Conducted an assessment
process to identify priorities -
using weighting to ‘draw out’
issues that also intersect with
our enterprise risk management,
peer-based norms and industry
trends; and
~ Completed a validation process
with executive and sustainability
specialised Board members.
1. Topic
identification
2. Topic
categorization
3. Topic
prioritization
4. Assessment
and presentation
5. Validation
6. Reporting
and feedback
Figure – Overview of materiality
assessment process
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2022 HIGHLIGHTS
2023 OBJECTIVES AND TARGETS
Horizonte is a great
place to work
Safety, health and wellbeing
~ Zero fatal injuries
~ Zero recordable injuries
~ No material impact from COVID and 100% workforce vaccination
~ Leading practice 3D intelligent design review implemented at ANP1
~ Golden Rules implemented
~ Critical risk controls implemented
~ ANP occupational hygiene monitoring commenced
~ Zero fatal injuries
~ Zero recordable injuries
~ Group Health, Safety and Wellbeing Policy
~ Continue critical risk control implementation through construction
~ Develop Crisis Management Framework to complement Incident and Emergency
Management Frameworks
People and culture
~ Grievance mechanism embedded
~ Zero human rights complaints
~ 29% of employees are female
~ Group Inclusion and Diversity Policy drafted
~ Inaugural employee satisfaction survey
~ Group I&D Policy and related programming commencement
~ Grievance mechanism continuous improvement
~ Employee pulse survey program to monitor culture evolution through
transition to operations
~ Requisite organisation design for evolution to producer
Stakeholders are proud to
partner with Horizonte
Local socio-economic development
~ ANP strategic partnerships with SENAI and FIEPA for local
skills development
~ ANP local community employment program started
~ Continue SENAI and FIEPA partnerships implementation
~ Achieve >70% local community employment program graduates into ANP workforce
Environmental stewardship
~ ANP Biodiversity Action Plan implementation
~ ANP Critical Habitat Assessment completed
~ Advanced PPP2 to enhance community infrastructure and
mitigate ANP access road impacts
~ Update ANP BAP for operations
~ Update ANP Ecosystems Services Assessment
~ Invasive Species Management Plan developed for ANP
~ Zero reportable environmental incidents
~ Implement additional PPP initiatives including ANP access road asphalting
Supplier partnerships
~ HZM Supplier Code of Conduct development
~ ANP supplier development program inaugurated
~ HZM Supplier Code of Conduct implementation
~ Continue ANP supplier development program implementation
We act with
integrity
Environment and social governance
~ Review of the governance architecture by the BoD3
~ Inauguration of the Board Sustainability Committee
~ BoD endorsed HZM Security Policy
~ Upgrade ERM4 systems to reflect producer evolution
~ Group level policies for governance framework endorsed
We achieve our
goals for growth
Doing what we say we will do
~ Continued implementation of ANP Environmental Control Plans
~ ESIA and RIMA for Vermelho submitted to regulator
~ Vermelho public hearing
Construction partners performance
~ HZM Supplier Code of Conduct development
~ ANP Contractor Safety Scorecard implemented
~ HZM Supplier Code of Conduct implementation
Planning for the future
~ ANP Critical Habitat Assessment to complement BAP
~ Vermelho BFS sustainability technical studies
Creating and retaining value
~ Disclosed government payments in line with EITI5
~ Disclosed local supply chain value as per Mining LPRM6
~ Continued improvement in disclosures
Operational
excellence
Energy and climate change
~ 10 year energy supply secured providing renewable
supply to Araguaia
~ Conduct climate scenario modelling
~ Complete physical risk assessment
~ Update transition risk assessment
~ Prepare for TCFD disclosure
Waste and tailings
~ ANP re-designed to avoid on-site landfill
~ Engagement of specialist solid waste management provider
~ Complete GISTM gap analysis for ANP slag facility
SUSTAINABILITY
HIGHLIGHTS
1. Araguaia Nickel
2. Private public partnership
3. Board of Directors
4. Enterprise risk management
5. Extractive Industry Transparency Initiative
6. Local Procurement Reporting Mechanism
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SUSTAINABILITY
STRATEGY
Supporting the Horizonte
strategy are four key
strategic principles.
As a Company, we
recognise that it is through
operating in line with our
values-founded principles,
that we will achieve our
vision – to be a globally
significant and sustainable
nickel producer
Horizonte is a great
place to work
Mission
Safe and healthy workplaces
Inclusive culture
Material issues
Appropriate culture, behaviours
and actions within the business
Diversity and equal opportunity
Emergency management and
preparedness
Occupational health and safety
Pre-production targets
~ Zero fatalities and serious
potential incidents.
~ Maintain rigorous
adherence to our COVID-19
management protocols and
procedures.
~ Continue implementation
of our construction safety
program including hazard
and operability studies.
~ Commence development
of a Horizonte Health and
Safety strategy and policy.
~ Develop an Inclusion
and Diversity Policy and
programming for the
company.
~ Develop programming to
maintain and enhance our
successful levels of female
workforce representation
as we transition to
operations.
~ Develop and implement a
Horizonte Minerals Code of
Conduct.
Stakeholders are
proud to partner
with Horizonte
Mission
Protection of human rights
Good community relations built
on interdependent relationships
Environmental sound and respon
sible resource development
Transparent communications
Protection of privacy
Material issues
Biodiversity
Child labour
Community economic
development
Community health
Community and stakeholder
engagement
Human rights
Land use and reforestation
Local and national employment
Resettlement
Pre-production targets
~ Develop a Policy on Security
aligned with the Voluntary
Principles on Security and
Human Rights.
~ Zero legitimate human rights
complaints against Horizonte.
~ Develop and implement a
Supplier Code of Conduct.
~ Continue to advance
our programs on local
procurement and commence
disclosure in line with the
Mining Local Procurement
Reporting Mechanism.
~ Review supply chain systems
and policies to strengthen
these ahead of construction
and operations.
~ Develop an Environmental
Policy as the ‘umbrella’ for
extensive and detailed
Environmental Control Plans.
We act with
integrity
Mission
Responsible and ethical conduct in
all interactions
Fairness and integrity in all our
business dealings
Material issues
Anti-corruption and bribery
Ethics and transparency
Governance and risk management
Pre-production targets
~ Update the Horizonte
Governance Framework to
reflect the next phase of
company development for
endorsement by the Board of
Directors.
~ Develop an enhanced stand-
alone Anti-corruption Policy
to complement the Business
Integrity Policy and other
governance systems.
~ Enhance our existing
disclosures through alignment
to the Extractive Industries
Transparency Initiative (EITI).
~ Commence development of
systems to identify conflict of
interest within the business
ahead of rapid workforce
expansion.
~ Enhancement transparency
of our activities by disclosing
against international
standard of relevance to the
mining industry and seeking
assurance of our sustainability
reporting.
We achieve our
goals for growth
Mission
Doing what we say we will do
Data driven decision-making
Thinking about the future
Creating and retaining value
Efficient and requisite systems
Enabling a culture of accountability
and authority
Material issues
Climate change risk and adaptation
Economic performance
Permitting and compliance
Tailings management
Waste management and effluents
Water management and
stewardship
Pre-production targets
~ Zero reportable environmental
incidents.
~ Zero significant spills.
~ 100% compliance with air
quality, noise and vibration,
and water regulatory
requirements.
~ Advance development of our
net carbon neutral strategy
and associated technical
studies:
• Conduct climate scenario
modelling for our Brazilian
projects.
• Update the transition and
physical risk assessments for
the company.
• Complete PFS on Araguaia
RKEF decarbonisation
opportunities.
Early development targets
~ Conduct baseline energy audit
for the Araguaia operation
~ Advance development of our
net carbon neutral strategy
and associated technical
studies:
• Complete feasibility
study on Araguaia
RKEF decarbonisation
opportunities.
Operational
excellence
Mission
By adhering to our principles, we
will achieve our vision and create
the platform for operational
excellence.
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STAKEHOLDER
ENGAGEMENT
Clear and timely engagement
with stakeholders
~ Approval of the construction of the
Araguaia project
~ The approval of the Company’s
Business Plan and Budget
~ The award of key equipment
packages to certain suppliers
~ The appointment of two Non-
Executive directors to the Board
~ Approval of ~US$80 million
equity fundraise package for
the construction finance of the
Araguaia Project
The Board and its Committees are mindful
of the potential impact of decisions on
relevant stakeholders whilst also having
regard to a number of broader factors,
including the need to foster the Compa
ny’s business relationships with suppliers,
customers and others. Particular con
sideration is given to the impact of the
Company’s projects on the community
and environment, responsible business
practices and the likely consequences of
principal Board decisions in the long term.
The Company, its Board of Directors and
Company management are fully commit
ted to effectively engaging with all key
stakeholders.
All members of the Board of Directors
understand the duties as directors un
der Section 172 of the Companies Act
2006. We are committed to fostering
strong relationships with our stake
holders through purposeful engage
ment, and value creation, with fair and
thoughtful consideration of stakehold
er perspectives within our strategic
decisions. We recognise that we can
only achieve long-term success by con
sidering how our projects affect stake
holders such as communities and the
environment, supported by a strong
ethics culture.
Responsibility for stakeholder engage
ment is embedded across the business,
from the Board to the Executive Com
mittee and site leadership teams, to
our community liaison teams and our
contractors. Everyone who interacts
with Horizonte’s employees, inves
tors, lending banks, national or local
government, suppliers and host com
munities is responsible for ensuring
that we not only understand the con
text and impacts of our operations, but
also the benefits that can arise from
our activities.
Our stakeholders
We identify our relevant stakeholders
on the right by considering their influ
ence on the success of our business
model and strategy. Here we explain the
importance of engagement, how we do
it, significant topics raised, Horizonte’s
responses and the actions the Compa
ny has undertaken. In our ‘Managing
Our Risks and Opportunities’ section
on pages 34-41, we evaluate the risks
associated with these relationships and
the strategies we use to mitigate them.
EMPLOYEES
COMMUNITIES
SHAREHOLDERS
SUPPLIERS AND
CONTRACTORS
GOVERNMENT AND
CIVIL SOCIETY
Importance of
engaging
At Horizonte, we believe that our
employees are the cornerstone of
our business and that a partnership
approach is vital to achieving busi
ness objectives. We provide compet
itive remuneration and invest in pro
fessional and personal development
while providing an engaging, safe
and healthy working environment.
Trust, understanding and cooperation
with the communities that surround
our projects are critical to maintaining
our social licence to operate. Com
munity engagement informs better
decision making and aligns interests
to ensure the long-term success
of our projects.
Our shareholders are Horizonte’s owners
and their continued support is critical to
the business. As we seek to develop a
sustainable mining company for the long-
term, they provide the capital to develop
and build our operations responsibly and
sustainably and consequently, we need
to ensure we continue to deliver a com
pelling investor proposition.
Building stable, long-term relationships
based on mutually beneficial terms with
our suppliers and contractors ensures we
are not only able to deliver our projects on
time and on budget, but is also critical in
maintaining our reputation. It is integral
to business success that we work in col
laboration with the whole value chain, as
we strive for compliance with our ethical,
environmental and safety standards.
Horizonte complies with laws and
regulations applicable to it and we are
focused on ensuring Brazil shares in
the benefits of our Projects through
the creation of long-term value
creation. The ongoing support from all
government bodies and civil society
is critical to this development and
we value the importance of working
collaboratively and productively with
all relevant entities.
How Horizonte
engages
~ Maintain open lines of
communication for employees,
senior management
and the Board
~ Hold weekly team meetings
and host quarterly virtual town
hall meetings
~ Undertake quarterly staff
engagement surveys
~ Provide regular health and
safety training
~ Operate an independent
whistleblowing service
~ Host formal and informal ad
hoc community meetings to
understand and discuss our
host communities’ concerns
and priorities
~ Operate grievance mechanisms
to address community
concerns and maintain a
grievance register
~ Conduct quarterly sustainability
audits to identify potential
positive and negative impacts of
our project’s activities
~ Organise one-on-one meetings
and roadshows
~ Attend investor conferences
~ Host webinars and group
presentations
~ Direct dialogue at the Annual
General Meeting
~ Produce corporate materials
including announcements, company
website, Annual Report and social
media updates
~ Provide on-going dialogue
with retail investors via our
info@horizonteminerals.com
email address
~ Regular direct communication
~ All suppliers are required to adhere
to our Business Integrity Policy
~ Operate an independent
whistleblowing service
~ Committed to improving the
socio-economics of our host area,
promoting local procurement
~ Direct engagement with
local, provincial and national
government authorities regarding
mining rights, environmental
issues and permitting
~ Provide regular progress
updates to relevant government
departments
~ Built strong relationships with the
relevant government officials to
ensure the Company receives the
required permits
Significant
topics raised
~ Team resources
~ Training and development
opportunities
~ Working conditions
~ Labour and human rights
~ Health and safety
~ Employment and procurement
opportunities
~ Socio-economic development
~ Environmental stewardship
~ Health and safety
~ Operational progress
~ Project financing
~ Board and team capability
~ Environmental, social and
governance performance
~ Contract awards
~ Operational progress
~ Project financing
~ Working conditions
~ Labour and human rights
~ Health and safety
~ Employment opportunities
~ Social initiatives
~ Health and safety
~ Compliance with applicable laws
and regulations
Responses and
actions taken
~ Undertake continuous
safety training
~ Local SENAI training initiative
to aid recruitment
~ Investigate any reports under
the whistle-blower protocol
~ Launched a host community
development programme
with Brazil’s leading national
industrial training provider,
SENAI.
~ Created an information centre in
our local town
~ Ran multiple community
focused media campaigns
~ Undertook employment drives in
our host state, and across Brazil
~ Investor engaged as part of the
~US$80m equity fundraise
~ In depth due diligence ahead of first
tranche of Senior debt following
conditions precedents
~ Key senior appointments
~ New Chair of the Board and two new
directors appointed
~ Third Sustainability Report published
~ Competitive tendering
processes undertaken
~ Strict monitoring of sub-
contractors Health and Safety
(H&S) performance
~ Detailed technical evaluation &
Know Your Client (KYC) undertaken
prior to any contract award
~ Launched a host community
development programme with
Brazil’s leading national industrial
training provider, SENAI
~ Undertook employment drives in
our host state, and across Brazil
Our principal decisions
We consider ‘principal decisions’ to be
those decisions linked with our strategy, or
resulting from major regulatory changes,
that entail significant implications for our
stakeholders and the Company’s future.
During 2022, the Board’s principal de
cisions with relevant implications for
our stakeholders and the Company’s
future were:
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MANAGING
OUR RISKS AND
OPPORTUNITIES
A key accountability and authority of
the Horizonte Board of Directors is de
fining the boundaries of risk tolerance
and appetite within the business, to
drive alignment to the company values,
ethics and business conduct standards.
The Horizonte risk management system
operationalises the processes of Board
input and oversight into the manage
ment of risk, as well as the mechanisms
by which the Executive Management
determine materiality.
The risk management system, aligned
to ISO 31000, is designed to achieve
the following:
~ Board visibility on material risks.
~ Personnel understand their
accountabilities and authorities in
relation to risk, including:
• Any Horizonte team member
may stop an activity that they
consider presents a threat of loss
of life, loss of human rights and/or
loss of protected environmental,
cultural or social values.
• Only the CEO has the authority to
approve activity with a residual
(after controls) ‘catastrophic’
level of risk.
~ Executive Management are
accountable to identify, assess
and manage strategic risks,
including cumulative, emerging and
evolving risks, as well as those of a
tactical nature.
To deliver these objectives, the risk
management system comprises:
~ Enterprise Risk Management – the
process by which the Board and
Management identify and manage
Horizonte’s strategic risk universe.
~ Materiality assessment - the
process through which the Board,
Management, specialists and key
external stakeholders identify and
manage material sustainability
risks and associated governance
related disclosures.
~ A risk matrix to ensure consistency in
risk assessment across the company.
~ Project pipeline risk identification,
assessment and management
processes including due diligence,
impact assessments and
related analysis.
~ Business unit (Araguaia, Vermelho)
level risk identification, assessment
and management processes
including the documentation of
risk registers.
In undertaking the Horizonte enterprise
risk management process to identify and
assess the prevailing risk universe, the
company reviews industry trends, peer
group benchmarks, market analysis and
business unit risk registers.
RISK FACTORS
In accordance with disclosure and trans
parency laws, the company is required to
provide a description of the material ad
verse risks and uncertainties that it faces.
These risks are similar to those faced by
many companies in the mining industry
and specifically companies in the opera
tional development phase.
A description of such risks and uncertain
ties, as well as mitigating factors and con
trols applied by Horizonte, are documented
in the following table.
This table is not prioritised list, nor is it ex
haustive. It is rather the Board’s view of
principal risks at this point in time. There
are additional risks which are not yet
considered material or which are not yet
known to the Board or fully understood
but which may assume greater importance
in the future.
Nature of risk
Management
and Mitigation
The value of the Company's assets, potential earnings or viability
of projects may be affected by fluctuations in commodity prices,
such as the US$ denominated nickel and cobalt prices. Commodity
prices can significantly fluctuate and are exposed to numerous
factors beyond the control of the Company such as world demand
for base metals, forward selling by producers, and production cost
levels in major metal producing regions. Other factors that can
affect commodity prices include expectations regarding inflation,
the financial impact of movements in interest rates, global, regional
and local economic trends, and domestic and international fiscal,
monetary and regulatory policy settings.
~ Monitor price movements and market
dynamics using primarily third-party
analysis and forecasts
~ Hedging policies for exchange rate risk
Risk trend
Risk Class
Strategy Element
Slightly improved
External
~ Deliver low cost, low carbon nickel
and cobalt
~ Capital efficiency
Nature of risk
Management
and Mitigation
It is not uncommon for new mining developments to experience
unexpected problems, increased costs and delays during
construction, commissioning and production start-up, or indeed
for such projects to fail. Any adverse event affecting Horizonte’s
projects, either during their development or following the
commencement of production, would have a material adverse
effect on the Company’s business, results of operations, financial
condition and the price of its Ordinary Shares.
~ Project execution planning and monitoring
by Management with the support of
specialist Technical Committees and
independent third parties
~ US$400m of key contracts awarded as
of 31 December 2022 and significantly
advanced detailed engineering at Araguaia
~ Pursuing acceleration options to reduce the
time required to reach first production
~ Highly experienced projects and
commissioning teams
Risk trend
Risk Class
Strategy Element
Slightly increased
Operational
~ Deliver low cost, low carbon nickel
and cobalt
~ Capital efficiency
Impact of metals prices and global macroeconomic developments
Capital project delivery and operational transition
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Stakeholder relations and social licence
Key contractors and supplier reliance
MANAGING OUR RISKS AND
OPPORTUNITIES CONTINUED
Nature of risk
Management
and Mitigation
Horizonte is committed to building and operating our projects in a
safe and responsible manner. At both a local and a global level, the
mining industry’s stakeholders have high expectations relating to
social and environmental performance. These expectations go be
yond the responsible management of negative impacts, to include
continuous engagement and meaningful contribution to stake
holder economic development. Failure to adequately address these
expectations increases the risk of opposition to mining projects
and operations. Negative sentiment towards mining or specifically
towards Horizonte Minerals plc could have an impact on our repu
tation and acceptability in the regions where we have a presence.
Legal or administrative proceedings, civil unrest, protests, direct
action or campaigns against us could materially and adversely af
fect our business, financial condition or project development.
~ Application of international standards for
social risk management
~ Local development agenda agreed at
Araguaia
~ Social development plans approved by
regulator
~ Up-to date compliance register of
commitments and obligations
~ Independently operated grievance
mechanism
~ Dedicated community relations and
social specialists
~ Independent monitoring and review of
social performance
~ Transparent performance reporting
Risk trend
Risk Class
Strategy Element
Slightly increased
Operational
~ Operate responsibly
~ Deliver low cost, low carbon nickel
and cobalt
Nature of risk
Management
and Mitigation
The mining industry frequently engages specialist EPCM contrac
tors to deliver major project construction. Horizonte is working
with EPC teams for the construction of its Araguaia project. The
outsourced nature of these activities means that the perfor
mance of such contractors and suppliers can impact project
deliverables. Performance issues by contractors or misalignment
in goals may manifest as delays to the construction programme
schedule, unanticipated costs being incurred, and/or in plant and
equipment performance in commissioning or operations.
~ Establishment of project execution plans
and controls
~ Technical Committee and independent third-
party review
~ Active performance and change
management processes
~ Major project authorisation and
intervention thresholds
~ Business key performance indicators
for project delivery, health and safety
and sustainability as components of the
rewards framework
Risk trend
Risk Class
Strategy Element
Unchanged
Operational
~ Operate responsibly
~ Deliver low cost, low carbon nickel
and cobalt
~ Capital efficiency
Critical permits delayed or declined
Nature of risk
Management
and Mitigation
Horizonte’s current and future operations require approvals and
permits from various federal, state and local governmental au
thorities, and such operations are and will continue to be gov
erned by laws and regulations governing prospecting, develop
ment, mining, production, taxes, labour standards, health, waste
disposal, toxic substances, land use, environmental protection,
mine safety and other matters. There can be no assurance that
the group will obtain required permits on reasonable terms or on
a timely basis, nor that delays will not occur in connection with
obtaining, maintaining or renewing any approvals or permits nec
essary for the business.
~ Develop a culture aligned with our
commitment to sustainable operations
~ Maintain cooperative and proactive relations
with relevant government departments
~ Established compliance obligations
systems for permits, regulations, and title
requirements
~ Collaborate with other members of the
mining community through the Brazilian
Mining Association (IBRAM) and as a member
of the Nickel Institute
Risk trend
Risk Class Strategy Element
Unchanged
External
~ Operate responsibly
~ Deliver low cost, low carbon nickel and cobalt
Liquidity, access to capital and debt covenants
Nature of risk
Management
and Mitigation
Pre-revenue mining companies are typically reliant on external
funding to provide the required liquidity to operate and to un
dertake project development activities. The inability to obtain
external funding of a sufficient quantum that allows project
development to be completed and production to generate positive
operating cash flows, presents the risk that the developer would
not be able to continue to operate. External funding when se
cured is contingent upon conformance to highly detailed, prescrip
tive and sometimes onerous conditions. The ability to conform to
these conditions may be affected by inputs outside of the bor
rower’s control, which could lead to breach of debt covenants and
related impacts.
~ Horizonte secured a US$713m funding
package for the development of Araguaia
which included a US$45m of cost over-run,
growth and contingency allowance
~ Horizonte secured a $25m royalty
agreement for the Vermelho
Feasibility Study
~ Supportive shareholder and lender group
~ Active investor relations to address existing
and new investor expectations
~ Financial delegation of authority framework
to control deployment of capital
Risk trend
Risk Class
Strategy Element
Improved
Financial
~ Deliver low cost, low carbon nickel
and cobalt
~ Capital efficiency
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OPPORTUNITIES CONTINUED
Human capital
Safety, Health and Wellbeing
Nature of risk
Management
and Mitigation
The development and success of a mine developer depends on
the ability to recruit and retain high quality and experienced staff,
reflecting the various skills and competencies needed for the
phases of evolution of the business. The loss of service of key
personnel or the inability to attract additional qualified person
nel at key points in the business growth, could have an adverse
effect on financial conditions and business delivery. Horizonte
has traditionally operated with a small number of key individuals,
in particular its senior Management, reflecting the pre-revenue
nature of the business. Talent management processes, such as
succession planning, attractive incentive plans comprising both
short and long term elements, and contractual agreements aim to
secure and retain the services of these and other key personnel,
however, the retention of their services cannot be guaranteed.
~ Significant recruitment programme
undertaken in Brazil
~ Araguaia Owner’s Lead Team recruited
including specialist operational readiness
resources
~ London corporate office strengthened to
support business growth
~ Formal Board nomination committee
inaugurated in 2022
~ Rewards benchmarking
Risk trend
Risk Class
Strategy Element
Slightly improved
Strategic
~ Operate responsibly
~ Deliver low cost, low carbon nickel
and cobalt
Nature of risk
Management
and Mitigation
It is an inherent risk in the mining industry, that incidents due to
unsafe acts or conditions, or the failure of equipment or infra
structure could lead to injuries or fatalities. Safety and health
incidents could result in harm to employees, contractors and local
communities. Within Horizonte’s workplaces people will work
with materials that are potentially explosive, or hazardous, they
may work with electricity, heavy equipment and machinery and at
heights, as well as being exposed to other occupational exposures.
Ensuring the safety and wellbeing of people in the workplace is
both an ethical obligation and regulatory requirement, and failure
to do so can impact lives, maintain licence to operate, ability to
attract and retain talent and can affect the company reputation
and share price.
~ Safety, health and wellbeing are inherent to
the Horizonte vision, values and strategic
principles
~ Establishment of systems of leadership
accountability
~ Safety Management Systems incorporating
targets, competency, monitoring and
auditing processes
~ Dedicated safety specialists and external
specialist support
~ Routine reviews by Management and the
Board Sustainability Committee
Risk trend
Risk Class
Strategy Element
Unchanged
Operational
~ Operate responsibly
~ Deliver low cost, low carbon,
nickel and cobalt
Accuracy of resource estimates
Nature of risk
Management
and Mitigation
There are numerous uncertainties inherent in estimating mineral
reserves and resources, including many factors beyond Horizon
te’s control. The accuracy of these estimates is a function of the
quantity and quality of available data, orebody characteristics and
assumptions and judgments used in engineering and geological
interpretation, which could prove to be unreliable, thereby af
fecting estimate accuracy, and ability to mine or process profit
ably or at all.
Fluctuations in metal prices, results of drilling, metallurgical test
ing, changes in operating costs, production, and the evaluation of
mine plans subsequent to the date of any estimate could require
a revision of the estimates. The volume and grade of material
mined and processed, and recovery rates, might not be the same
as currently anticipated. Any material reductions in estimates of
the Company’s reserves and resources, or of its ability to extract
these, could have a material adverse effect on its results of oper
ations and financial conditions.
~ Detailed production grade control drilling
underway to give high level of confidence
around short term mine planning.
~ External specialist resource consulting
group contracted to work as part of the
owners team to review and validate
updated short term mine plans
~ Review by external audit group to form part
of ongoing quarterly project audit
Risk trend
Risk Class
Strategy Element
Unchanged
Operational
~ Deliver low cost, low carbon,
nickel and cobalt
Climate and Decarbonisation
Nature of risk
Management
and Mitigation
Nickel has a critical role to play in the transition to a low car
bon economy, as a primary component of materials used in the
construction of solar, wind and hydro power generation, as well
as being a key component of electric batteries and stainless steel.
Mining operations themselves are reliant on energy and other
natural resources and typically result in the production of green
house gases. Physical risks, such as extreme weather events
and transition risks, such as changes in legislation resulting from
global community expectation, may also impact the industry and
markets.
~ Strategic purpose to be a low-carbon, nickel
and cobalt producer
~ Conduct of decarbonisation conceptual
studies for Araguaia
~ Conduct detailed climate scenario modelling
in 2023 to inform updates of the Company
transition and physical risk assessments
~ Commence disclosure in line with the
recommendations of the Task-force on
Climate Related Financial Disclosures in
2023 disclosures
Risk trend
Risk Class
Strategy Element
Evolving risk
Strategic
~ Operate responsibly
~ Deliver low cost, low carbon,
nickel and cobalt
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MANAGING OUR RISKS AND
OPPORTUNITIES CONTINUED
The Strategic Report on pages 6 to 41 was approved by the Board of
Directors and signed on its behalf by:
Simon Retter
Company Secretary and CFO
28 March 2023
Cybersecurity
Nature of risk
Management
and Mitigation
As a modern mining company, Horizonte has and will deploy tech
nologically advanced, automated systems and processes. This is
possible as a result of the use of advanced information systems,
data platforms, technologies and global systems, each of which
may be exposed to risk of failure or sabotage or which may be
used as an avenue for illicitly obtaining intellectual property or oth
er commercially sensitive information. Such failures or sabotage
could lead to disruption to critical business systems, loss or theft
of confidential information, competitive advantage, or intellectual
property, financial and/or reputational harm.
~ Support of internal and external, certified
IT specialists to ensure reliability and
protection of information systems
~ Third-party specialists provide network
assurance
~ On-going strategic and tactical efforts to
address the evolving nature of cyber threats
~ Increased user training and IT security
awareness
Risk trend
Risk Class
Strategy Element
Unchanged
Operational
~ Deliver low cost, low carbon,
nickel and cobalt
Nature of risk
Management
and Mitigation
Horizonte has operated in Brazil for over a
decade where there has been a stable operating
regime for mining; however, it remains subject
to risks similar to those prevailing in many
developing nations, including economic and
social instability, changing regulatory or tax
regime or disputes with the authorities in
relation to the same. These risks may cause
disruption to the Company or cause an
increase in costs in order to mitigate their
impact; for example a potential increases
in taxes could have an adverse effect on the
Group’s financial results.
~ Maintain a positive working relationship with all levels of
Government through dialogue
~ Continue to collaborate with other members of the mining
community through IBRAM, the Brazilian mining chamber, to
lobby against any potential legislative changes that may have a
negative effect to the business
~ Continue to comply with all applicable environmental
and fiscal regulations
~ Internal and external compliance reviews of
Horizonte’s tax administration
Risk trend
Risk Class Strategy Element
Unchanged
External
~ Deliver low cost, low carbon nickel and cobalt
Country risk
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NOTE FROM
THE CHAIR
Our governance structure
supports our business model
to ensure we create long-term
value for all our stakeholders
The Board believes in the value of good
corporate
governance
in
improving
performance and mitigating risk and
acknowledges its duty to take into account
all
stakeholders
during
its
decision-
making process. The Board is committed
to ensuring the sustainability of its
development strategy and to delivering
on its commitments to shareholders,
clients, employees, partners and other
stakeholders with sustainability in mind.
We
believe
that
transparency
and
fair dealing, particularly in relation to
environmental and community issues, are
essential in achieving the medium to long-
term success of the Company. As part of
securing the senior debt funding package,
Horizonte undertakes quarterly reviews
across a wide variety of topics using an
independent third party. These include,
but not limited to, Project execution,
expenditure and ESG related topics.
Horizonte’s primary listing is on the AIM
Market of the London Stock Exchange
(AIM). The Company abides by the AIM
Rule 26 regulation in respect to reporting
and has therefore chosen to adhere to
the Quoted Company Alliance’s (QCA)
Corporate Governance Code for Small and
Mid-Size Quoted Companies.
In Brazil the Company has been a member
of the Brazilian Association of Mineral
Exploration Companies (ABPM) since 2013
and in 2020 it became a member of the
Brazilian Mining Institute (IBRAM).
Creating a culture of good governance is
led from the top, by Horizonte’s Board,
and is cultivated in every part of the
organisation. Evolving the Company’s
corporate governance is a key part of the
Company’s transition. We have therefore
committed to a corporate governance
review and will be reporting on subsequent
changes in 2023 and beyond.
William Fisher
28 March 2023
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APPROACH
CORPORATE
GOVERNANCE
STRUCTURE
In line with the Company’s development and long-term strategic objectives, Horizonte
complies with the QCA Corporate Governance Code for small and Mid-sized companies.
Our QCA Code disclosures within this Annual Report are summarised in the table below.
Full details of how we have applied each of the ten principles of the QCA Code can be
found on our website.
Principle
Disclosure within
this report
1. Establish a strategy and business model which promotes long-term value for
shareholders
See pages 10-11 and 14-15
2. Seek to understand and meet shareholder needs and expectations
See pages 32-33
3. Take into account wider stakeholder and social responsibilities and their implica
tions for long-term success
See pages 26-31
4. Embed effective risk management, considering both opportunities and threats,
throughout the organisation
See pages 34-41
5. Maintain the board as a well-functioning, balanced team led by the chair
See pages 45-47
6. Ensure that, between them, the directors have the necessary up-to-date experi
ence, skills and capabilities
See pages 48-49
7. Evaluate board performance based on clear and relevant objectives, seeking con
tinuous improvement
See pages 48-49
8. Promote a corporate culture that is based on ethical values and behaviours
See pages 8-9 and 30-31
9. Maintain governance structures and processes that are fit for purpose and sup
port good decision making by the board
See pages 42-43
10. Communicate how the company is governed and is performing by maintaining
dialogue with shareholders and other relevant stakeholders
See page 49
The Board meets regularly to determine
the policy and business strategy of the
Company and has adopted a schedule
of matters that are reserved as the
responsibility of the Board.
The Board considers that there is an
appropriate
balance
between
the
Executives and Non-executives (both
independent and non-independent) and
that no individual or small group dominates
the Board’s decision making.
The Board has reserved the following
matters for sole approval by the Board:
~ Review and approval of the Company’s
strategic plan
~ Review and approval of the annual
operating plan and financial budget,
including any changes during the year
~ Review and approval of the Annual
Report, financial statements, MD&A
and quarterly financial statements.
These documents are also reviewed and
approved by the Audit & Risk Committee
~ Establishment of expenditure limits and
approval of exceptions
~ Hiring, review and compensation of CEO
and CFO (following recommendation
from the Remuneration Committee)
~ Director recruitment
~ Appointment of Chair
~ Appointment of Committee Chair and
Committee members
The Company has a policy on share
dealing and confidentiality of inside
information
for
persons
discharging
managerial responsibilities and persons
closely associated with them, which
contains provisions appropriate for a
company whose shares are admitted
to trading on AIM (particularly relating
to
dealing
during
close
periods
in
accordance with Rule 21 of the AIM Rules
and MAR) and the Company takes all
reasonable steps to ensure compliance
by the persons governed by such policy.
The Board continues to monitor its
governance framework on an ongoing basis.
Board
The Board of Horizonte is responsible
for setting the vision and strategy for
the Company to deliver value to all
stakeholders by effectively putting in
place its business model.
Chair
The primary responsibility of the Chair is to
lead the Board effectively and to oversee
the adoption, delivery and communication
of the Company’s corporate governance
model. The chair has adequate separation
from the day-to-day business to be able
to make independent decisions. Save
in exceptional (and well justified and
explained)
circumstances,
the
Chair
should not also fulfil the role of Chief
Executive Officer.
CEO
The Company’s CEO is charged with the
delivery of the business model within
the strategy set by the Board. The CEO
works with the Chair and NEDs in an open
and transparent way and keeps the chair
and NEDs up-to-date with operational
performance, risks and other issues to
ensure that the business remains aligned
with the strategy.
Non-Executive Directors
The Company’s NEDs participate in all
board level decisions and play a particular
role in the determination and articulation
of strategy. The Company’s NEDs provide
oversight and scrutiny of the performance
of the executive directors, whilst both
constructively challenging and inspiring
them, thereby ensuring the business
develops, communicates and executes
the agreed strategy and operates within
the risk management framework.
Remuneration Committee
The remuneration committee comprises
William Fisher (Chair), Owen Bavinton
and Vincent Benoit and is responsible
for
reviewing
the
performance
of
the
Executive
Director
and
senior
management,
and
for
setting
the
framework and broad policy for the scale
and structure of their remuneration,
taking into account all factors which it
shall deem necessary. The remuneration
committee
also
recommends
the
allocation of share options for the Board
to approve and is responsible for setting
up any performance criteria in relation
to the exercise of options granted under
any share options schemes adopted
by the Group.
Audit Committee
The audit committee, comprising Vincent
Benoit (Chair), William Fisher and Gillian
Davidson, has primary responsibility for
monitoring the quality of internal controls,
ensuring that the financial performance
of the Group is properly measured and
reported on and for reviewing reports
from the Group’s auditors relating to the
Group’s accounting and internal controls.
Nomination Committee
In December 2021, the company estab
lished a formal nomination committee
comprising Jeremy Martin (Chair), Owen
Bavinton and William Fisher. The com
mittee is responsible for finding and as
sessing appropriate candidates for the
Board in line with the company’s evolving
required skillset of mine building and pro
duction. The committee will also develop
a formal succession plan.
Sustainability & ESG
In April 2022, the Company established a
formal Sustainability and ESG Committee
initially comprising Dr Gillian Davidson
(Chair) and Dr Owen Bavinton. The
committee is responsible for assisting
the Board in maintaining healthy and safe
workplaces, environmentally sound and
responsible resource development, good
community relations and the protection of
human rights; promoting the appropriate
culture, behaviours and actions in relation
to these matters; and communicating the
Board’s commitment to these matters to
the Group’s employees, contractors and
other stakeholders
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Audit and Risk Committee
Remuneration Committee
Nomination Committee
Sustainability & ESG
Committee Chair
BOARD OF
DIRECTORS
JEREMY MARTIN
MSc, ASCM
Director and Chief Executive Officer
WILLIAM FISHER
Interim Non-Executive Chair
Qualifications
Appointed
Skills and Experience
Jeremy has over 20 years of
experience in the industry. He has
worked in South America, Central
America and Europe, where he has
been responsible for grassroots
exploration programmes, resource
definition and mine development
and operation. In 2011 Jeremy
founded Rathdowney Resources
which identified, acquired and
advanced a portfolio of zinc assets
in Ireland and was listed on the
TSX-V. He was the Founding Director
of MedGold Resources, listed on
the TSX, developing gold targets
Spain, Portugal and Serbia before
founding Fast Net Oil & Gas, an AIM
listed alternative energy company.
Jeremy was a Founding Director of
Horizonte Minerals in 2006 before
becoming CEO in 2010, he has led
the company through the discovery
and consolidation of Araguaia
through to the construction stage.
Mr Fisher has extensive industry
experience which has included
a number of residential posts in
Africa, Australia, Europe and Canada
in both exploration and mining
positions. Under his leadership,
Karmin Exploration discovered
the Aripuanã base metal sulphide
deposits in Brazil. From 1997 to
2001 Mr Fisher was Vice President,
Exploration for Boliden AB where
he was responsible for thirty-five
projects in nine countries. From
2001 to 2008, Bill led GlobeStar
Mining Corp. from an exploration
company to an emerging base metal
producer in the Dominican Republic
which developed and operated the
Cerro de Maimon mine until it was
sold to Perilya for USD 186 million.
Mr Fisher was also Chair of Aurelian
Resources which was acquired by
Kinross in 2008 for USD 1.2 billion
after the discovery of the Fruta del
Norte gold deposit in Ecuador and
was CEO of Goldquest Mining Corp
which discovered the Remero gold
deposit in the Dominican Republic.
Mr. Martin holds a degree in Mining
Geology from the Camborne School
of Mines, and a Master's Degree
in mineral exploration from the
University of Leicester. He is a
member of the Society of Economic
Geologists and the Institute of
Mining Analysts.
Mr Fisher graduated as a geologist
in 1979 and is registered as
a Professional Geoscientist
of Ontario (PGO).
2011
2006
2012
2022
2022
OWEN BAVINTON
BSc (hons), MSc, DIC, PhD
Non-Executive Director
GILLIAN DAVIDSON
MA (hons), PhD
Non-Executive Director
VINCENT BENOIT
MSc, CA
Non-Executive Director
Dr Bavinton has over 40 years of varied
international experience in the minerals
exploration and mining sector in several
commodities. After brief periods as a
junior consultant and an underground mine
geologist on a Witwatersrand gold mine,
from 1974 to 1985 he had several positions
with Western Mining Corporation, finally
as director of WMC’s activities in Brazil.
From 1986 to 1992 he was Chief Executive
Officer of Aredor Guinea SA. In 1992 he
joined the Anglo American group where he
stayed until his retirement in 2010. Based
initially in Turkey and then in Budapest,
he was responsible for Anglo American’s
exploration and project evaluation activities
in the Former Soviet Union, Central Europe
and the Middle East. He moved to London
in 1998, initially as Head of Exploration for
Minorco, and later Group Head of Exploration
and Geology for the Anglo American Group. In
those roles he was responsible for worldwide
exploration and geosciences covering a range
of exploration projects, through all stages of
development, including advanced projects
and feasibility studies, as well as providing
geoscience input into numerous acquisitions.
Dr Davidson, an industry leader in
sustainability, has over 25 years of
experience in the extractives and natural
resources sectors. She is an independent
sustainability advisor and currently
serves as a non-executive director
on the boards of AIM quoted Central
Asia Metals plc and TSX listed Lundin
Gold and New Gold Inc. Dr Davidson is
a founding member and Chair of the
Global Battery Alliance, an initiative
created to drive a sustainable battery
value chain. Gillian Davidson is also Chair
of International Women in Mining. Dr
Davidson was, until 2017, Head of Mining
& Metals at the World Economic Forum,
leading global and regional initiatives
for responsible and sustainable
development. Prior to this, she was
Director of Social Responsibility at Teck
Resources Limited. She holds a MA
(Hons) in Geography from the University
of Glasgow, a PhD in Development
Economics and Economic Geography
from the University of Liverpool and is
an alumnus of the Governor General of
Canada's Leadership Conference.
Mr Benoit joined La Mancha as Head
of Strategy & Business Development
in 2012. Between 2013 and 2015, he
led La Mancha’s portfolio restructuring
and contributed to the enhancement of
its mines performance in Australia and
Africa. Mr Benoit identified and executed
the combinations with Evolution and
Endeavour, which positioned La Mancha
as a leading private investor in the gold
mining sector. From 2016 to 2019, Mr
Benoit was CFO and EVP Corporate
Development at Endeavour where he
reshaped the strategy, improved the
mine portfolio quality, and enhanced the
balance sheet to fund the organic growth.
Endeavour’s market capitalization was
quadrupled by the time he left at the
end of 2019. In early 2020, he re-joined
La Mancha to oversee investments and
fund raising. Previously, Mr Benoit was
at Orange (2006-2012) where he served
as EVP M&A. He led the development of
the group’s footprint in Africa and Europe
and formed strategic partnerships with
key European telecoms players. Prior to
this, he held various finance positions
including with Orano (ex-Areva), Bull
Information Systems and PwC.
Dr. Bavinton graduated from the University of
Queensland in Geology in 1969, holds a Master’s
Degree in Mineral Exploration from Imperial
College, London and a PhD in Economic Geology
from ANU, Canberra, Australia. He is a fellow
of the Society of Economic Geologists, the
Association of Applied Geochemists and the
Institute of Materials, Mining and Metallurgy.
Dr Davidson has an Honours
Master of Arts in Geography from
the University of Glasgow, a PhD
in Development Economics and
Geography from the University
of Liverpool and is an alumna of
the Governor General of Canada’s
Leadership Conference.
Mr Benoit holds a MSc from
Kedge Business School and is a
Chartered Accountant with 30
years of corporate finance, business
development and M&A experience
in the mining, telecom and energy
sectors.
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HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
BOARD
REPORTS
Board Composition
The Board comprises a group of experienced
Directors with a diverse skillset relevant
to the development of a mining company.
Each Director has a wealth of experience
and depth of knowledge in the mining
industry
and
complementary
fields
including law, business development and
capital markets. This diversity of skills and
experience across multiple jurisdictions
and
professional
disciplines
provides
the Company with effective leadership
and direction. Each Director keeps their
skillset up to date through a combination
of continual professional development and
attendance at seminars and conferences
relevant
for
the
industry
Horizonte
operates in. All Directors retire on rotation
at regular intervals in accordance with the
Company’s Articles of Association.
We understand the importance of an in
dependent board and this independence
is constantly reviewed. Dr Owen Bavinton,
Dr Gillian Davidson and Mr William Fisher
are each considered an independent di
rector since they are each independent
of management and free from any ma
terial relationship with the Company. The
basis for this determination is that, de
spite their tenures on the board, since
17 January 2012 and 7 June 2011 respec
tively, Dr Owen Bavinton and Mr William
Fisher have not worked for the Company,
received remuneration from the Company
or had material contracts with or materi
al interests in the Company which could
interfere with their ability to act with a
view to the best interests of the Company.
Dr Gillian Davidson was appointed to the
Board on 24 March 2022 and has no direct
or indirect material relationship with the
Company. The Board continually assesses
the independence of its directors, the com
position and effectiveness of the Board as
a whole and is actively considering supple
menting the Board with additional inde
pendent non-executive directors in 2023
as the Company transitions to become a
producing nickel company.
Each of Messrs Vincent Benoit and
Jeremy Martin are considered to be non-
independent directors as a result of their
respective relationship with the Company.
The Board maintains the exercise of inde
pendent supervision over management by
encouraging open and candid discussion
from its independent directors. In addition,
although Mr Vincent Benoit is not consid
ered to be independent, the Board does
not view this relationship as impairing the
ability of the Board to act independently of
management.
Key Strengths
The following table highlights each Directors core competencies relevant to the successful development of the Company:
Project
Development
Natural
Resources
Business
Development
Governance
Capital
Markets
Sustainability
Brazil
William Fisher
X
X
X
X
X
Jeremy Martin
X
X
X
X
X
X
X
Dr Owen Bavinton
X
X
X
X
X
X
Dr Gillian Davidson
X
X
X
Vincent Benoit
X
X
X
X
X
Board changes
As part of the ongoing succession planning
for the Board, and as mentioned in the
Chair’s letter, David Hall stepped down as
Chair of the Board during 2022. Sepanta
Dorri and Allan Walker both stepped down
from the Board at the 2022 AGM. Dr Gillian
Davidson and Vincent Benoit both joined
the Board in March 2022.
Board diversity
We continue to recognise and embrace the
benefits of having a diverse Board; particu
larly the value that different perspectives
and experience bring to the quality of Board
debate and decision-making. We hold fast
to the importance of making Board ap
pointments on the basis of merit; but we
also take seriously considerations such as
background and experience, age, gender,
and shareholder perspectives in our re
views of the composition of the Board. We
believe that setting targets for the number
of people from a particular background or
gender is not an effective approach and
therefore we have no specific quotas or
targets. Nevertheless, currently the Board
believes that continuity of Board members
and familiarity with the Araguaia Project
are critical to the Company at its stage in
its development. The Board intends to
consider whether it should adopt specific
policies and practices regarding the rep
resentation of women on the Board and in
executive positions, including the setting of
targets for such representation at such a
time as the Corporation moves beyond its
development stage into production.
Board Changes and Nominations
The Company’s Nomination Committee has
assumed responsibility for the recommen
dation for appointment and assessment of
directors. While there are no specific crite
ria for Board membership, the Company
attempts to attract and maintain directors
with business knowledge and a particular
knowledge of mining, mineral exploration
and development or other areas (such
as accounting or finance) which provide
knowledge which would assist in providing
guidance to the officers of the Company.
As such, nominations tend to be the re
sult of recruitment efforts and discussions
amongst the Nomination Committee and
the Chief Executive Officer prior to the con
sideration of the Board as a whole.
Chairs
Board
Meetings
David Hall 1
5/5
William Fisher 1
11/11
Board Members
Jeremy Martin
11/11
Dr Owen Bavinton
11/11
Dr Gillian Davidson2
8/9
Vincent Benoit2
9/9
Alan Walker3
5/5
Sepanta Dorri3
5/5
1. David Hall stepped down from the Board at the
AGM, William Fisher was appointed Interim Non-
Executive Chair at the AGM.
2. Dr Gillian Davidson and Mr Vincent Benoit both
joined the Board in March 2023.
3. Alan Walker and Sepanta Dorri both stepped
down from the Board at the AGM.
The audit committee meets quarterly dur
ing the year to consider the Audit planning
report and Audit completion report pre
sented by the auditors regarding the year
end audit process. The year end audit find
ings were focused on the key areas identi
fied during the planning process, the main
items being:
~ Internal controls and man
agement override
~ Carrying value and impairment
of intangible exploration and
evaluation assets
~ Carrying value of investment in sub
sidiaries and intercompany loans
~ Convertible loan note accounting
and valuation
~ Accounting treatment of FEC hedges
~ Senior debt facility accounting treat
ment and valuation
~ Accounting for the royalty
finance agreement
~ Assessment recognition of contin
gent consolidation
~ Going concern
The audit committee were in agreement
with all the findings and recommendations.
The remuneration committee met twice
during the year to consider the remuner
ation levels of the board and key officers
of the company, to consider and approve
the basis of the long-term incentive plan
and to consider and award options to key
members of the team.
Evaluating Board Performance
In accordance with best practice and the
Code, the Board undertakes an annual
formal evaluation of its performance and
effectiveness, and that of each Director
and Committee. This evaluation is con
ducted by way of a questionnaire from
the Chair, co-ordinated by the Company
Secretary and concluded by Chair inter
views where necessary. In addition, the
Non-Executive Directors met, informally,
without the Chair present and evaluat
ed his performance. The Board currently
considers that the use of external con
sultants to facilitate the Board evalua
tion process is unlikely to be of signifi
cant benefit to the process, although the
option of doing so is kept under review.
The Chair has stated that he values this
annual evaluation opportunity and con
siders it to be key to his role in creating an
effective Board.
He has reported that the Board was satis
fied that the Board was effective and well
run, there were therefore no recommen
dations and none in the prior year.
The remuneration is determined in ac
cordance with the Articles of Association.
When determining executive director
remuneration policy and practices, the
Company’s remuneration committee ad
dresses the following:
~ Clarity – remuneration arrange
ments are transparent and promote
effective engagement with share
holders and the workforce
~ Simplicity – remuneration structures
avoid complexity and their rationale
and operation are easy to understand
~ Risk – remuneration arrangements
ensure reputational and other
risks from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated
~ Proportionality – the link between
individual awards, the delivery of
strategy and the long-term per
formance of the Group should be
clear. Outcomes do not reward poor
performance
~ Alignment to culture – incentive
schemes drive behaviours con
sistent with company purpose,
values and strategy.
Support to Directors
The Board has the full support of the Com
pany secretary.
The Board receives regular and timely infor
mation of the Company’s operational and
financial performance in order to perform
this function. Relevant, detailed informa
tion is circulated to all Directors ahead of
Board and Committee meetings. The Com
pany Secretary is responsible for keeping
the Board up to date on its responsibilities
in compliance with relevant regulations.
The Board and Culture
The Board believes that the promotion
of a corporate culture based on sound
ethical values and behaviours is essen
tial to maximising shareholder value.
Horizonte’s company culture is consistent
with its objectives, strategy and business
model. The Board regularly meets and
monitors the business and its stakehold
ers to ensure the values and strategy are
aligned with the company’s internal culture.
The Directors act with integrity, lead by ex
ample, and promote the desired culture.
We believe that transparency and ethical
behaviour are central to any successful
company and undertake all development
with respect to the environment and
neighbouring communities.
Shareholder Engagement
The Board attaches great importance to
providing shareholders with clear and
transparent information on the Company’s
activities, strategy and financial position.
Communication with all shareholders
is predominately led by the CEO, CFO
and Head of Investor Relations, but
the Chair and non-executive directors
provide additional points of contact
for shareholders, particularly at the
Company’s AGM. We value the views
and feedback of our shareholders and
these are often discussed as a collective
during board meetings, no significant
actions or feedback were reported during
the year. Further information on our
shareholder engagement can be found in
the stakeholder engagement section on
pages 32-33.
Material information in relation to the
Company is made publicly available via
the London Stock Exchange’s Regulatory
News Service (RNS) and via the System for
Electronic Document Analysis and retrieval
(SEDAR) in Canada.
Details of our shareholder engagement
during the year can be found in the follow
ing table.
2022 shareholder engagement
Q1
Q2
Q3
Q4
~ CEO & CFO attended the BMO Metals
and Mining Conference
~ 2021 financial results
~ Publication of Annual Report
~ Multiple operational updates
~ Investor video interview with CEO
~ Annual General
Meeting
~ Publication of
Sustainability Report
~ 1Q22 financial results
~ Operational
updates
~ 1H22 interim
financial results
~ 3Q22 financial results
~ Shareholder interview
and Q&A session hosted
by CEO & CFO
~ Multiple operational
updates
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HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
AUDIT AND RISK
COMMITTEE
REPORT
REMUNERATION
COMMITTEE
REPORT
The Audit and Risk Committee currently
comprises Vincent Benoit (Chair), Gillian
Davidson and William Fisher. The Audit
and Risk Committee met five times during
the year.
The Auditors have unrestricted access to
the Chair of the Audit and Risk Committee.
Audit and Risk Committee meetings are
usually attended by the Auditor and, by
invitation, senior management.
The main responsibilities of the Audit and
Risk Committee include:
~ Monitoring the integrity of the
Group’s financial statements,
including review of the financial
statements of the Company including
its annual and half-yearly reports
and any formal announcements
relating to its financial performance;
~ Reviewing the effectiveness of the
Group’s financial reporting, internal
control policies and procedures for
the identification, assessment and
reporting of risk;
~ Monitoring the effectiveness of the
internal control environment;
~ Making recommendations to the
Board on the appointment of the
Auditors;
~ Making a recommendation to the
Board on Auditors’ fees;
~ Agreeing the scope of the Auditors’
annual audit programme and
reviewing the output;
~ Ensuring the independence of the
Auditors is maintained;
~ Assessing the effectiveness of the
audit process; and
~ Developing and implementing policy
on the engagement of the Auditors
to supply non-audit services.
The Audit and Risk Committee has consid
ered the Group’s internal control and risk
management policies and systems, their
effectiveness and the requirements for
an internal audit function in the context
of the Group’s overall risk management
system.
The Committee is satisfied that the Group
does not currently require an internal au
dit function; however, it will continue to
periodically review the situation. An es
sential part of the integrity of the financial
statements lies around the key assump
tions and estimates or judgments to be
made. The Committee reviewed and was
satisfied that the judgements exercised
by management contained within the
Report and Financial Statements are rea
sonable.
Details of fees payable to the Auditors are
set out in Note 7.
Vincent Benoit
Chair of the Audit & Risk Committee
28 March 2023
The remuneration committee comprises
William Fisher, Owen Bavinton and
Vincent Benoit.
The main purpose of the Remuneration
committee is to:
~ Review the performance of the
Executive Director and senior
management
~ Setting the framework and broad
policy for the scale and structure
of their remuneration, taking into
account all factors which it shall
deem necessary
~ Recommend the allocation of share
options for the Board to approve:
and
~ Set any performance criteria in
relation to the exercise of options
granted under any share options
schemes adopted by the Group
~ Demonstrate to shareholders
that the remuneration of the
Executive Director and senior
management of the Group is set
by a committee whose members
have no personal interest in the
outcome of their decision and who
will have due regard to the interests
of the shareholders.
Procedures for developing policy and
fixing remuneration
The Remuneration Committee fixes
executive remuneration and ensures that
no Director is involved in deciding their
own remuneration. The Committee is
authorised to obtain outside professional
advice and expertise. The Remuneration
Committee is authorised by the Board
to investigate any matter within its
terms of reference and it is authorised
to seek any information that it requires
from any employee.
Details of the remuneration policy
The fees to be paid to the Directors and
senior management are set by the Remu
neration Committee.
Directors’ service agreements
Service agreements for Directors and
senior management are terminable by
either party on 12 months notice period.
51
HORIZONTE MINERALS 2022 ANNUAL REPORT
Vincent Benoit
Chair of the Audit & Risk
Committee
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HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
Directors’ remuneration
The following remuneration comprises Directors’ fees and benefits in kind that were paid to Directors during the year:
Short term benefits
Post
employment
benefits
Cost to
Company
Non-Cash
Aggregate
emoluments
Other
Emoluments
(1)
Long-term
incentive
plan
Pension
costs
Total
Social
Security
Costs
Share
Based
Payment
Charge (4)
Grand Total
Group 2022
£
£
£
£
£
£
£
£
Non-Executive Directors
William Fisher
65,503
—
—
—
65,503
—
—
65,503
Owen Bavinton
80,634
—
—
17,070
97,704
24,115
—
121,819
Gillian Davidson
50,250
—
—
—
50,250
5,979
—
56,229
Vincent Benoit
50,250
—
—
—
50,250
5,979
—
56,229
David Hall (2)
15,833
—
100,000
—
115,833
15,111
—
130,944
Allan Walker (3)
13,958
—
100,000
—
113,958
14,956
—
128,914
Sepanta Dorri (3)
—
—
—
—
—
—
—
—
Executive Directors
Jeremy Martin
363,025
240,000
447,745
— 1,050,770
213,156
478,735
1,742,661
Key Management
Simon Retter
250,000
187,500
447,745
—
885,245
198,827
361,013
1,445,085
889,453
427,500
1,095,490
17,070
2,429,513
478,123
839,748
3,747,384
Short term benefits
Post
employment
benefits
Cost to
Company
Non-Cash
Aggregate
emoluments
Other
Emoluments
(1)
Long term
incentive
plan
Pension
costs
Total
Social
Security
costs
Share
Based
Payment
Charge
Grand Total
Group 2021
£
£
£
£
£
£
£
£
Non-Executive Directors
William Fisher
33,500
—
100,000
—
133,500
—
—
133,500
Owen Bavinton
36,000
—
100,000
31,295
167,295
17,548
—
184,843
David Hall
38,000
—
100,000
—
138,000
17,824
—
155,824
Allan Walker
40,000
—
100,000
—
140,000
18,100
—
158,100
Sepanta Dorri
—
—
—
—
—
—
—
—
Executive Directors
Jeremy Martin
291,461
143,240
700,150
—
1,134,851
155,565
—
1,290,416
Key Management
Simon Retter
204,750
122,150
700,150
—
1,027,050
140,032
—
1,167,082
643,711
265,390
1,800,300
31,295
2,740,696
349,069
—
3,089,765
1. Denotes amounts payable for performance related bonuses
2. David Hall stepped down as Chair at the 2022 AGM. Table reflects remuneration received until resignation date
3. Sepanta Dorri and Allan Walker retired from the board at the 2022 AGM. Table reflects remuneration received
until resignation date
4. Share options awarded during the year represent options awarded for the periods 2018 to 2021 as the company was unable to
undertake its normal annual awards due to restrictions around being in a closed period as a result of the ongoing discussions
around the Araguaia Project financing. Following the successful closure of the project financing in December 2021 an award was
made to compensate for the prior 4 years.
The Company does not operate a pension scheme. Pension costs comprise contributions to Defined Contribution pension plans held by
the relevant Director or Key Management.
Directors’ interests in shares
Director
Shares
31 December 2022
Shares 31 December 2021
(After share consolidation)
Shares
31 December 2021
(before share consolidation)
Jeremy Martin
117,819
90,195
1,803,900
Owen Bavinton
110,000
100,000
2,000,000
William Fisher
98,750
98,750
1,975,000
Gillian Davidson
—
—
—
Vincent Benoit
—
—
—
David Hall (1)
—
51,997
1,039,955
Allan Walker (1)
—
35,273
705,479
Sepanta Dorri (1)
—
—
—
1. Stepped down as directors in 2022.
None of the Directors exercised any share options during the year.
There has been no change in the interests set out above between 31 December 2022 and 28 March 2023.
Share options
The Group operates two Share Option Schemes pursuant to which Directors and senior executives may be granted options to ac
quire Ordinary shares in the Company at a fixed option exercise price.
Director
Options
31 December 2022
Options
31 December 2021
(After share consolidation)
Options
31 December 2021
(before share consolidation)
Jeremy Martin
5,026,250
1,137,500
22,750,000
Owen Bavinton
575,000
575,000
11,500,000
William Fisher
575,000
575,000
11,500,000
Gillian Davidson
—
—
—
Vincent Benoit
—
—
—
David Hall (1)
—
650,000
13,000,000
Allan Walker (1)
—
575,000
11,500,000
Sepanta Dorri (1)
—
—
—
1. Stepped down as directors in 2022.
Further details of the Share Option Schemes can be found in note 17.
Long Term Incentive Plan (“LTIP”)
In 2019 the Company put in place a Long-Term Incentive Plan (‘LTIP’) for the purpose of incentivising, motivating and rewarding cer
tain employees in respect of their contributions to the Company’s mid and long-term commercial objectives designed to create value
for shareholders. The performance conditions are based upon major project milestones delivered across the Company’s two projects;
Araguaia and Vermelho.
The agreements for members include four performance conditions. The amount of any bonus payment shall be determined by the
performance conditions set out in the applicable bonus agreement for each individual participant.
The performance conditions are:
1. Completion of a comprehensive bankable feasibility study for each Project (‘Feasibility Study’);
2. Securing full project finance to construct either Project (‘Securing Project Finance’);
3. The first commercial production of each Project (‘First Commercial Production’); and
4. The sale of any interest in either Project or a specified percentage of the share capital of the Company (‘Sale’).
Both the CEO and the CFO are eligible for certain bonuses upon reaching certain operational milestones which are deemed to be
aligned with shareholder value enhancing points in the development pathway of both the Araguaia and Vermelho projects. They are
eligible for a fee of 0.475% of gross funds raised with certain Non-Executive Directors receiving Bonuses of £200,000 upon securing
Project Financing.
In 2021 the company secured a project finance package to fully fund the Araguaia project through construction therefore triggering
one of the key performance conditions of the LTIP. The bonuses paid in 2021 to the CEO & CFO represent those due upon the settle
ment of the equity portion of the project finance which was closed in 2021. The LTIP bonuses paid in cash during the year to the CEO
and CFO represent those due upon the settlement of the convertible loan notes, cost overrun facility and the Vermelho Royalty which
was closed in 2022. The non-executive directors that stepped down as directors during the year received the balance of their LTIP
bonus. All awards due for the senior debt portion of the project finance package including 50% of any awards due to certain Non-Ex
ecutive Directors have been deferred until the second draw down of the senior debt facility at which time the award will be paid in
full to those eligible. The award has been deferred in order to align with value creation for the shareholders. The CEO and CFO will be
eligible for a fee of 0.475% of the senior debt facility of US$346.2million.
By Order of the Board
William Fisher
Chair of the Remuneration Committee
28 March 2023
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55
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
DIRECTORS’
REPORT
The Directors present their Annual
Report on the affairs of Horizonte
Minerals Plc, together with the audited
Financial Statements for the year ended
31 December 2022.
Principal activities
The principal activity of the Group and
Company is the identification, acquisition,
exploration and development of mineral
projects. The main area of activity
comprises the development of the
Araguaia and Vermelho nickel projects,
located in Pará State in north-eastern
Brazil.
Financial results and dividends
The Group results for the year are set
out on page 64. The Group is currently
involved in exploration, evaluation and
development activities and not actively
mining. As a result, the Group is not
revenue generative.
During the year the Group made good
progress on the construction of the
Araguaia Nickel Project which remains
on-budget and on-schedule to commence
production in Q1-2024. The Group has
also advanced the permitting process
for the Vermelho Nickel Cobalt Project
in parallel with ongoing work on the
Feasibility Study which is expected to be
published in H1-2024.
In October 2022 the Group conducted a
further fundraising (the Fundraise) and
raised gross proceeds of ~ US$80 million.
Although the development of Araguaia
was running to schedule and a number of
key milestones achieved, in light of global
inflationary pressures and engineering
improvements to de-risk the project the
total capital cost for Araguaia is forecast to
be US$537 million versus US$477million.
The Fundraise is anticipated to allow the
Group to complete the construction of
the Project. In addition, the Fundraise will
allow the Group to accelerate engineering
studies and basic engineering for the
development of line 2 at Araguaia, as well
as further invest in its decarbonisation
strategy for the Project.
On 7 December 2022, the Group satisfied
all conditions precedent for the first
utilisation under the senior debt facility
of US$346.2 million. The first utilisation
was for US$5million. In addition the Group
also satisfied all conditions precedent in
relation to the cost overrun facility (COF)
and received all COF funds from Orion.
The Directors do not recommend payment
of a dividend (2020: £Nil).
Sustainability
Details of the Company’s approach and
activities in relation to sustainability can
be found on pages 26-31 of the Strategic
Report included within this Annual Report
and in a standalone Sustainability Report
available on the Company’s website
www.horizonteminerals.com.
While there is no requirement to publish
information under SECR in 2022, this
will be reviewed and it is the intention
of the Company to comply with the
reporting disclosures next year in line
with best practice.
Share Capital
Changes in the share capital of the Com
pany are set out in note 15 of the Finan
cial Statements.
Directors’ statement as to
disclosure of information to auditor
The Directors who held office at the date of
approval of this Directors’ Report confirm
that, so far as they are individually aware,
there is no relevant audit information of
which the Company’s auditor is unaware
and the Directors have taken all the steps
that they ought to have taken to make
themselves aware of any relevant audit
information and to establish that the
auditor is aware of the information.
Matters covered in the
Business Review
The business review and review of KPIs
are included in the Operations Review and
Strategic Report.
Financial risk management
The Company is exposed through its
operations to the following financial risks:
~ Commodity price risk
~ Foreign currency risk
~ Credit risk
~ Interest rate risk
~ Liquidity risk
The group undertakes certain policies
and procedures to mitigate these risks as
much as is practicable, including hedging
foreign exchange movements, only using
credit worthy financial institutions and
using short term deposits to manage
interest rate and liquidity risks. As the
Group moves towards being a producing
entity it will continually review these
risk mitigation policies to cover off
any potential exposure to commodity
prices
and
increase
exposure
to
foreign exchange risks.
In common with all other businesses, the
Group is exposed to financial risks that
arise from its operations, these along
with managements’ policies surrounding
financial risk management are explained
in note 3 to the financial statements.
Events after the reporting date
The events after the reporting date are set
out in note 38 to the Financial Statements.
Future developments
In 2023 the Group will be working towards
constructing and bringing the Araguaia
project
into
commercial
production.
Having published a Pre-Feasibility Study
on the Vermelho project during 2019, the
Group is focused on further advancing the
VNCP project towards a Feasibility Study
and eventual construction decision.
Directors and Officers Insurance
The Group provided Directors and
Officers insurance for both the current
and prior periods.
Annual General Meeting
The Notice of the Annual General Meeting
of the Company and the Management
Information
Circular
together
with
Management Discussion and Analysis as
at 31 December 2022 will be distributed
to shareholders together with the Annual
Report. Full details of the business to be
considered at that meeting can be found
in the Notice.
Independent auditor
The auditor, BDO LLP, will be proposed for
reappointment in accordance with section
485 of the Companies Act 2006.
BDO LLP has signified its willingness to
continue in office as auditor.
By Order of the Board
Simon Retter
Company Secretary
28 March 2023
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STATEMENT
OF DIRECTORS’
RESPONSIBILITIES
The directors are responsible for prepar
ing the annual report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the directors to
prepare financial statements for each fi
nancial year. Under that law the directors
have elected to prepare the group and
company financial statements in accord
ance with UK adopted international ac
counting standards. Under company law
the directors must not approve the finan
cial statements unless they are satisfied
that they give a true and fair view of the
state of affairs of the group and company
and of the profit or loss of the group and
company for that period.
In preparing these financial statements,
the directors are required to:
~ select suitable accounting policies
and then apply them consistently;
~ make judgements and accounting
estimates that are reasonable and
prudent;
~ state whether they have been
prepared in accordance with UK
adopted international accounting
standards subject to any material
departures disclosed and explained
in the financial statements;
~ prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
group and the company will continue
in business.
The directors are responsible for keep
ing adequate accounting records that are
sufficient to show and explain the compa
ny’s transactions and disclose with rea
sonable accuracy at any time the finan
cial position of the company and enable
them to ensure that the financial state
ments comply with the requirements of
the Companies Act 2006. They are also
responsible for safeguarding the assets
of the company and hence for taking rea
sonable steps for the prevention and de
tection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring
the annual report and the financial state
ments are made available on a website.
Financial statements are published on the
company’s website in accordance with
legislation in the United Kingdom gov
erning the preparation and dissemination
of financial statements, which may vary
from legislation in other jurisdictions. The
maintenance and integrity of the compa
ny’s website is the responsibility of the di
rectors. The directors’ responsibility also
extends to the ongoing integrity of the fi
nancial statements contained therein.
Opinion on the financial statements
In our opinion:
~ the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2022 and of the Group’s loss for the year then ended;
~ the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
~ the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting
standards and as applied in accordance with the provisions of the Companies Act 2006; and
~ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Horizonte Minerals PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2022 which comprise of the Consolidated Statement of Comprehensive Income, the Consolidated Statement
of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company
Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flowsand notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International
Accounting Standards and, as regards to the Parent Company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our re
port. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
INDEPENDENT AUDITOR’S
REPORT TO THE MEMBERS
OF HORIZONTE MINERALS PLC
FINANCIAL
STATEMENTS
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Material uncertainty related to going concern
We draw attention to note 2.2 to the financial statements which indicates that the Group is reliant upon further drawdowns under
the Senior Debt Facility to construct the Ararguaia Project. These drawdowns are conditional on the satisfaction of certain conditions
precedent and there is no guarantee that these conditions will be met. As stated in note 2.2 these events or conditions, along with the
other matters set out in note 2.2 indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent
Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
We have determined going concern to be a key audit matter as a result of the judgements and estimates made by the Directors
and significance of this area.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern
basis of accounting and our response to this key audit matter is set out below:
~ We obtained the Directors’ Group cash flow forecast to 31 December 2024. We assessed the reasonableness of underlying
assumptions, including forecast levels of expenditure used in preparing these forecasts. To assess the reasonableness and
timings of the cash inflows and outflows, we used our knowledge of the business and compared the Directors’ forecasts to
budgets used to raise equity in the 2022 financial year.
~ We agreed the total remaining cost associated with bringing the Araguaia Project to the point of generating cashflows and the
resources available to the company to the most recent cost to complete certificate dated 8 February 2023 that was prepared to
facilitate the most recent draw down from the senior debt facility.
~ We reviewed the conditions that are required to be complied with to draw down the Senior Debt Facility, discussed these with
the Directors, and considered factors that could cause non compliance. This included considering the risks associated with
forecast costs increasing above the available funds, which would prevent further draw downs on the Senior Debt Facility.
~ We considered the impact on the Group and Parent Company’s cash flow forecast should the Senior Debt Facility not be
available due to conditions not being complied with.
~ We assessed the appropriateness of the going concern disclosures included in the financial statements against the
requirements of the relevant accounting standards.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
Overview
Coverage1
90% (2021: 90%) of Group profit before tax
90% (2021: 90%) of Group total assets
Key audit matters
2022
2021
Valuation of convertible loan notes
Going concern
Carrying
value
of
exploration
and
evaluation
assets and mine development property
Valuation of royalty funding arrangement
Carrying value of exploration and evaluation assets and mine development property is no
longer considered to be a key audit matter given there has been no impairment triggers
in the period for either, the Araguaia mine which is currently under construction, or the
Vermelho project, for which a feasibility study has been initiated.
Valuation of royalty funding arrangement is no longer considered to be a key audit
matter given the increase in the Group’s materiality reduces the risk of there being a
material misstatement.
Materiality
Group financial statements as a whole
$7.8million (2021:$4.6 million) based on 1.5% of total assets.
1
These are areas which have been subject to a full scope audit by the group engagement team
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk
of material misstatement.
Our Group audit scope focused on the Group’s significant components, being Araguaia Níquel Metais Ltda, which was subject to a
full scope audit together with the Parent Company. The Parent Company was audited and the Group audit team and Araguaia Níquel
Metais Ltda was audited by a BDO network member firm in Brazil.
In addition, Trias Brasil Mineracao Ltda, Horizonte Nickel (IOM) Ltd, Champol (IOM) Ltd, Nickel Production Services BV and Battery
Material Services BV were the insignificant components, which were subject to specified audit procedures on the significant risk areas
and analytical procedures performed by the Group audit team.
The remaining components of the Group were considered insignificant and these components were principally subject to analytical
review procedures which were performed by the Group audit team.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude
whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a
whole. Our involvement with component auditors included the following:
~ Detailed Group reporting instructions were sent to the component auditors, which included the significant areas to be covered
by the audits (including areas that were considered to be key audit matters), and set out the component materiality and other
information to be reported to the Group audit team.
~ The Group audit team was actively involved in the direction of the audits performed by the component auditor for Group
reporting purposes, along with the consideration of findings and determination of conclusions drawn.
~ The Group audit team reviewed the component auditor’s work papers and engaged with the component auditors during their
fieldwork and completion phases.
~ For the principal operating component in Brazil, the Group audit team also performed audit procedures in respect of the
significant risk areas.
~ The Group audit team has held a number of virtual meetings with the component auditors throughout the engagement. Virtual
meetings spanned pre-planning, planning, execution and finalisation of the audit engagement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to
the matter described in the material uncertainty related to going concern of our report, we have determined the matter below to be
the key audit matter to be communicated in our report.
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Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of convertible
loan notes
See notes 4.6 and 22 to the
financial statements.
In the 2022 financial year, the
Group issued a convertible
loan note. The convertible
loan is a hybrid financial
instrument with a debt host
liability component and an
embedded derivative liability
component related to the
conversion option.
The embedded derivatives
was valued by independent
valuation experts using a
Monte Carlo simulation
method at both inception
and at the year end. This
method of determining
fair value is reliant upon
significant estimations over
the Company’s future share
price volatility and GBP:USD
exchange rate volatility at the
conversion date.
The host loan is accounted for
using the amortised cost basis.
Due to conditions attached to
when the note holders will be
repaid, estimation is required
in determining repayments
dates and amounts that
impact the effective interest
rate that the host loan is
unwound over.
Accordingly, the valuation
of the convertible loan note
is considered to be a key
audit matter.
Our procedures in relation to the valuation of the convertible loan
notes debt host and embedded derivatives are set our below.
We assessed the accounting treatment of the convertible loan
note as a hybrid financial instrument was in accordance with
accounting standards. We ensured that at inception the fair value
of the embedded derivative liability was determined first and
the residual amount was assigned to the debt host liability and
that associated transaction costs which were deducted, were
proportionately allocated.
In respect of the fair value of the embedded derivative at incep
tion and year end:
~ We reviewed the embedded derivative valuation
methodology adopted to check that the features of the
embedded derivative had been appropriately modelled.
~ We confirmed with BDO valuation experts that
the modelling was appropriate and in line with our
understanding of the embedded derivative features.
~ We assessed the reasonableness of the key assumptions
used in the valuation, including share price and foreign
exchange rate volatility by reference to independent
sources of data.
~ We assessed the competence and independence of the
valuation expert used by management.
In respect of the host loan which is accounted for using the
amortised cost basis:
~ We tested managements calculation of the effective
interest rate used to unwind the host loan. This included
agreeing repayment dates used in the effective interest
rate calculation were modelled in accordance with the
terms of the agreement and the timing and quantity of the
repayments were in agreement with managements most
recent budgets.
~ We also checked the arithmetical accuracy of the
amortised loan model.
Key observations:
Based on our work, we concur with managements valuation
methodology and the key estimates used in valuing the host loan
and embedded derivative.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Group financial statements
Parent company financial statements
2022
2021*
2022*
2021*
Materiality
$7.8 million
$4.6 million
$5.9 million
$4.1 million
Basis for determining
materiality
1.5% of total assets
1.5% of total assets
1.5% of total assets
90% of Group
Materiality
Rationale for the benchmark
applied
We consider total assets to be the most significant determinant of the
Group’s financial performance for users of the financial statements, given
the Group’s mine development focus as a result of the commencement
of the Araguaia mine construction. There was a significant increase in
total assets following the commencement of the mine construction
in May 2022 and additional cash received from the 2021 prospectus
debt package.
90% of Group
Materiality
Performance materiality
$5.9million
$ 3.5 million
$4.4 million
$ 3.1 million
Basis for determining
performance materiality
75% of materiality based on consideration of factors including the level of historical errors and
nature of activities.
*The presentational currency of the Group and Parent financial statements changed from GBP in 2021 to USD in 2022.
Component materiality
We set materiality for each component of the Group based on a percentage of between 37% and 68% (2021: 4% to 14%) of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component
materiality ranged from $2,900,000 to $5,300,000 (2021: $196,000 to $623,000). In the audit of each component, we further
applied performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $0.2million
(2021:$0.1m). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the 2022
Report and Accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
~ the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
~ the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report
or the Directors’ report.
Matters on which we
are required to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
~ adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us; or
~ the Parent Company financial statements are not in agreement with the accounting records and
returns; or
~ certain disclosures of Directors’ remuneration specified by law are not made; or
~ we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
~ We obtained an understanding of the Company and Group’s activities and considered the laws and regulations of the UK and
Brazil to be of significance in the context of the Group and component audit. In doing so, we made inquiries of management
and the Audit Committee, considered the Company and Group’s control environment as it pertains to compliance with laws
and regulations and considered the activities of the Group. We determined the most significant laws and regulations to be
Companies Act 2006, elements of the reporting framework, tax legislation and the Brazilian environmental regulations.
~ We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and
component auditors, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.
~ We made inquiries of management and the Board and reviewed Board and Committee minutes to identify any instances of
irregularities or non-compliance.
~ We assessed the suspectibility of the financial statements to material misstatement, including fraud. Our risk
assessment included:
• Understanding the journals passed throughout the period to ensure that sufficient and appropriate audit procedures are
designed to gain assurance over journal testing.
• Gain an understanding of the tender and procurement process to assess the controls in place.
• Review the terms of the financial instruments in place, including the valuation of the convertible loan notes and royalty
funding arrangements, the contingent consideration, and the carrying value of exploration and evaluation assets and
mine development property to gain an understanding of the accounts that are subject to greater management estimate.
Based on our risk assessment, we consider the areas most susceptible to fraud to be the journal testing which derives from the
valuations of the financial instruments that are subject to managements estimate and the tender and procurement process.
~ We agreed the financial statement disclosures to underlying supporting documentation and performed detailed testing on
accounts balances which were considered to be at a greater risk of susceptibility to fraud.
~ In addressing risk of management override of control we performed:
• testing of general ledger journal entries to the financial statements, including verification of journals which we consider
exhibit higher fraud risk characteristics based on our understanding of the Group. This included testing journals direct to
cash and expenses, which are outside of the normal purchase to pay cycle.
• procedures over the controls in the tender and procurement process which due to the significant level of additions were
considered to be at a greater risk of susceptibility to fraud.
• procedures on accounts subject to greater management estimate including the valuation of the convertible loan notes
and royalty funding arrangements, the contingent consideration, and the carrying value of exploration and evaluation
assets and mine development property.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and component
auditors, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit who were
all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit. For component engagement teams, we also reviewed the result of their work performed in
this regard.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk
of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the
audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Peter Acloque (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
28 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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HORIZONTE MINERALS 2022 ANNUAL REPORT
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Year ended
Year ended
31 December
31 December
2022
2021
Restated
(Note 2.8(a))
Notes
US$
US$
Administrative expenses
6
(12,544,856)
(7,811,477)
Charge for share options granted
17
(1,415,581)
—
Change in fair value of derivative
21,22
6,512,413
2,550,000
Change in fair value of special warrant liability
—
(1,616,120)
Gain/(loss) on foreign exchange
8,482,457
(862,739)
Operating profit/(loss)
1,034,433
(7,740,336)
Net finance (cost)/income
8
(6,351,735)
(5,630,179)
Loss before taxation
(5,317,302)
(13,370,515)
Income tax
9
—
—
Loss for the year from continuing operations attributable to
owners of the parent
(5,317,302)
(13,370,515)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedges – foreign forward contracts
1,087,561
—
Currency translation differences on translating foreign operations
18
(6,678,108)
258,977
Other comprehensive (loss)/income for the year, net of tax
(5,590,547)
258,977
Total comprehensive (loss)/income for the year attributable to
owners of the parent
(10,907,849)
(13,111,538)
Loss per share from continuing operations attributable to own
ers of the parent
Basic and diluted loss per share (p)
29
(2.634)
(15.698)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Company number: 05676866
As at 31 December 2022
Notes
31 December 2022
US$
31 December 2021
Restated (Note 2.8(a))
US$
31 December 2020
Restated (Note 2.8(a))
US$
Assets
Non-current assets
Intangible assets
10
13,208,837
8,309,484
8,490,339
Property, plant and equipment
11
277,902,428
70,594,091
42,090,825
Right of use assets
26
957,878
380,482
—
Trade and other receivables
12
9,965,590
—
—
Derivative financial assets
14
61,777
—
—
302,096,510
79,284,057
50,581,164
Current assets
Trade and other receivables
12
48,774,147
13,796,628
369,237
Derivative financial asset
14, 21
15,342,314
4,950,000
2,400,000
Cash and cash equivalents
13
154,027,967
210,492,280
14,925,021
218,144,428
229,238,908
17,694,258
Total assets
520,240,938
308,522,965
68,275,422
Equity and liabilities
Equity attributable to owners of the parent
Share capital
15
70,332,641
52,215,236
20,666,053
Share premium
16
306,719,689
245,388,102
65,355,677
Other reserves
18
(29,938,166)
(23,260,058)
(23,519,035)
Cash flow hedge reserve
1,087,561
—
—
Share options reserve
17
1,415,581
—
—
Retained losses
(50,187,603)
(45,058,633)
(33,304,238)
Total equity
299,429,703
229,284,647
29,198,457
Liabilities
Non-current liabilities
Contingent consideration
20
6,895,737
6,734,134
8,082,092
Deferred consideration
20
4,808,431
4,493,861
—
Royalty Finance
21
89,745,255
44,496,504
30,131,755
Convertible loan notes
22
59,447,520
—
—
Cost overrun facility
23
23,809,827
—
—
Senior debt facility
24
4,328,241
—
—
Environmental rehabilitation provision
25
634,883
—
—
Lease liabilities
26
715,290
321,717
—
Trade payables
19
723,333
608,975
—
191,108,517
56,655,191
38,213,847
Current liabilities
Trade and other payables
19
28,481,038
21,574,362
863,118
Deferred consideration
20
950,000
950,000
—
Lease liabilities
26
271,680
58,765
—
29,702,718
22,583,127
863,118
Total liabilities
220,811,235
79,238,318
39,076,965
Total equity and liabilities
520,240,938
308,522,965
68,275,422
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The Financial Statements were authorised for issue by the Board of Directors on 28 March 2023 and were signed on its behalf.
William Fisher
Jeremy J Martin
Interim Chair of the Board
Chief Executive Officer
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
66
67
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
COMPANY STATEMENT
OF FINANCIAL POSITION
Company number: 05676866
As at 31 December 2022
31 December 2022
US$
31 December
2021
Restated (Note2.8(a))
US$
31 December 2020
Restated
(Note2.8(a))
US$
Notes
Non-Current Assets
Investment in subsidiaries
33
2,827,030
3,164,591
3,204,979
Loans to subsidiaries
34
368,980,168
94,085,538
88,298,324
371,807,198
97,250,129
91,503,303
Current assets
Trade and other receivables
12
1,502,311
13,158,399
131,298
Cash and cash equivalents
13
24,607,673
198,595,764
7,246,192
26,109,984
211,754,163
7,377,490
Total assets
397,917,182
309,004,292
98,880,793
Equity and liabilities
Equity attributable to equity share
holders
Share capital
15
70,332,641
52,215,236
20,666,053
Share premium
16
306,719,689
245,388,102
65,355,677
Other reserves
18
(19,432,807)
10,353,031
7,637,872
Share options reserve
17
1,415,581
—
—
Retained losses
(31,048,767)
(25,780,330)
(19,894,744)
Total equity
327,986,337
282,176,039
73,764,858
Liabilities
Non-current liabilities
Convertible loan notes
22
59,447,520
—
—
Contingent consideration
20
6,895,737
6,734,134
8,089,798
66,343,257
6,734,134
8,089,798
Current liabilities
Trade and other payables
19
3,089,258
16,282,547
382,417
Loans from subsidiary
34
498,330
3,811,572
16,643,720
3,587,588
20,094,119
17,026,137
Total liabilities
69,930,845
26,828,253
25,115,935
Total equity and liabilities
397,917,182
309,004,292
98,880,793
The above Company Statement of Financial Position should be read in conjunction with the accompanying notes, loss for the period
was US$5,456,769 (Restated 2021: £7,501,706 loss).
The Financial Statements were authorised for issue by the Board of Directors on 28 March 2023 and were signed on its behalf.
William Fisher
Jeremy J Martin
Interim Chair of the Board
Chief Executive Officer
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the year ended 31 December 2022
Attributable to the owners of the parent
Share
capital
US$
Share
premium
US$
Other
reserves
US$
Cash flow
hedge
reserve
US$
Share
options
reserve
US$
Retained losses
US$
Total
US$
As at 1 January 2021
Restated (Note 2.8(a))
20,666,053
65,355,677
(23,519,035)
—
—
(33,304,238)
29,198,457
Loss for the year
—
—
—
—
(13,370,515)
(13,370,515)
Other comprehensive
income:
Currency translation
differences on translating
foreign operations
—
—
258,977
—
—
—
258,977
Total comprehensive
income for the year
—
—
258,977
—
—
(13,370,515)
(13,111,538)
Issue of ordinary shares
30,335,627
183,255,417
—
—
—
—
213,591,044
Issue costs
—
(10,389,470)
—
—
—
—
(10,389,470)
Conversion of special
warrants into shares
1,213,556
7,986,413
—
—
—
1,616,120
10,816,089
Special warrants issue
costs
—
(819,935)
—
—
—
—
(819,935)
Total transactions with
owners, recognised
directly in equity
31,549,183
180,032,425
—
—
—
1,616,120
213,197,728
As at 31 December 2021
Restated (Note 2.8(a))
52,215,236
245,388,102
(23,260,058)
—
—
(45,058,633)
229,284,647
Loss for the year
—
—
—
—
—
(5,317,302)
(5,317,302)
Other comprehensive
income:
Cash flow hedges – for
eign forward contracts
—
—
—
1,087,561
—
—
1,087,561
Currency translation
differences on translating
foreign operations
—
—
(6,678,108)
—
—
—
(6,678,108)
Total comprehensive
income for the year
—
—
(6,678,108)
1,087,561
—
(5,317,302)
(10,907,849)
Issue of ordinary shares
18,117,405
63,830,692
—
—
—
188,332
82,136,429
Issue costs
—
(2,499,105)
—
—
—
—
(2,499,105)
Share options granted
—
—
—
—
1,415,581
—
1,415,581
Total transactions with
owners, recognised
directly in equity
18,117,405
61,331,587
—
—
1,415,581
188,332
81,052,905
As at 31 December 2022
70,332,641
306,719,689
(29,938,166)
1,087,561
1,415,581
(50,187,603)
299,429,703
A breakdown of other reserves is provided in note 18.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
68
69
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
COMPANY STATEMENT
OF CHANGES IN EQUITY
Attributable to equity shareholders
Share
Share
Other
reserves
Share options
reserve
Retained
capital
premium
losses
Total
Company
US$
US$
US$
US$
US$
US$
As at 1 January 2021 Restated
(Note 2.8(a))
20,666,053
65,355,677
7,637,872
—
(19,894,744)
73,764,858
Comprehensive income
Loss for the year
—
—
—
—
(7,501,706)
(7,501,706)
Other comprehensive income
Presentation currency
translation differences
—
—
2,715,159
—
—
2,715,159
Total comprehensive income
for the year
—
—
2,715,159
—
(7,501,706)
(4,786,547)
Issue of ordinary shares
30,335,627
183,255,417
—
—
—
213,591,044
Issue costs
—
(10,389,470)
—
—
—
(10,389,470)
Conversion of special warrants
into shares
1,213,556
7,986,413
—
—
1,616,120
10,816,089
Special warrants issue costs
—
(819,935)
—
—
—
(819,935)
Total transactions with owners,
recognised directly in equity
31,549,183
180,032,425
—
—
1,616,120
213,197,728
As at 31 December 2021 Restated
(Note 2.8(a))
52,215,236
245,388,102
10,353,031
—
(25,780,330)
282,176,039
Comprehensive income
Loss for the year
—
—
—
—
(5,456,769)
(5,456,769)
Other comprehensive income
Presentation currency
translation differences
—
—
(29,785,838)
—
—
(29,785,838)
Total comprehensive income
for the year
—
—
(29,785,838)
—
(5,456,769)
(35,242,607)
Issue of ordinary shares
18,117,405
63,830,692
—
—
188,332
82,136,429
Issue costs
—
(2,499,105)
—
—
—
(2,499,105)
Share options granted
—
—
—
1,415,581
—
1,415,581
Total transactions with owners,
recognised directly in equity
18,117,405
61,331,587
—
1,415,581
188,332
81,052,905
As at 31 December 2022
70,332,641
306,719,689
(19,432,807)
1,415,581
(31,048,767)
327,986,337
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 31 December 2022
31 December 2022
US$
31 December 2021
Restated (Note 2.8(a))
US$
Notes
Cash flows from operating activities
Loss before taxation
(5,317,302)
(13,370,515)
Charge for share options granted
17
1,415,581
—
Net finance costs
8
6,351,735
5,630,179
Exchange differences
(8,482,457)
862,739
Change in fair value of derivative asset
21,22
(6,512,413)
(2,550,000)
Fair value of special warrant liability
—
1,616,120
Operating loss before changes in working capital
(12,544,856)
(7,811,477)
Increase in trade and other receivables
(2,693,021)
(13,427,391)
Increase in trade and other payables
5,336,114
16,675,664
Cash used in operating activities
(9,901,763)
(4,563,204)
Income taxes paid
—
—
Net cash used in operating activities
(9,901,763)
(4,563,204)
Cash flows from investing activities
Purchase of exploration and evaluation assets
(4,349,092)
(405,221)
Purchase of property, plant and equipment
(191,740,544)
(14,271,709)
Interest received
7,117,103
500,634
Net cash used in investing activities
(188,972,533)
(14,176,296)
Cash flows from financing activities
Proceeds from issue of ordinary shares
82,136,429
213,591,044
Issue costs
(2,499,105)
(10,389,470)
Proceeds from issue of convertible loan notes
61,262,500
—
Issue costs
(950,287)
—
Proceeds from royalty finance arrangement
25,000,000
—
Issue costs
(847,939)
—
Proceeds from cost overrun facility
25,000,000
—
Issue costs
(1,198,634)
—
Proceeds from senior debt facility
5,000,000
—
Issue costs
(678,536)
—
Lease liability repayments
(207,552)
—
Loan facilities interest payments
(304,892)
—
Senior debt facility prepaid transaction costs
(42,250,088)
—
Proceeds from issue of share warrants
—
10,816,089
Share warrants issue costs
—
(819,935)
Net cash generated from financing activities
149,461,896
213,197,728
Net (decrease)/increase in cash and cash equivalents
(49,412,400)
194,458,228
Cash and cash equivalents at beginning of year
210,492,280
14,925,021
Exchange (loss)/gain on cash and cash equivalents
(7,051,913)
1,109,031
Cash and cash equivalents at end of the year
13
154,027,967
210,492,280
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
70
71
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
COMPANY STATEMENT
OF CASH FLOWS
For year ended 31 December 2022
31 December 2022
US$
31 December 2021
Restated (Note 2.8(a))
US$
Notes
Cash flows from operating activities
Loss before taxation
(5,456,769)
(7,501,706)
Charge for share option granted
17
1,415,581
—
IFRS9 Expected credit loss (credit)/charge
384,409
38,485
Finance income
(396,992)
(1,286,295)
Finance costs
6,602,998
—
Exchange differences
(5,502,679)
623,889
Change in fair value of derivative
22
(6,821,201)
—
Fair value of special warrant liability
—
1,616,120
Operating loss before changes in working capital
(9,774,653)
(6,509,507)
Decrease/(increase) in trade and other receivables
11,656,088
(13,027,101)
(Decrease)/increase in trade and other payables
(13,193,290)
15,900,131
Cash flows used in operating activities
(11,311,855)
(3,636,477)
Taxes paid
—
—
Net cash flows used in operating activities
(11,311,855)
(3,636,477)
Cash flows from investing activities
Loans to subsidiary undertakings
(296,901,621)
(18,619,364)
Interest received
396,992
6,565
Net cash used in investing activities
(296,504,629)
(18,612,799)
Cash flows from financing activities
Proceeds from issue of ordinary shares
82,136,429
213,591,044
Issue costs
(2,499,105)
(10,389,470)
Proceeds from issue of convertible loan notes
61,262,500
—
Issue costs
(950,287)
—
Proceeds from issue of share warrants
—
10,816,089
Share warrants issue costs
—
(819,935)
Net cash generated from financing activities
139,949,537
213,197,728
Net increase/(decrease) in cash and
cash equivalents
(167,866,947)
190,948,452
Cash and cash equivalents at beginning of year
198,595,764
7,246,192
Exchange gain/(loss) on cash and cash equivalents
(6,121,144)
401,120
Cash and cash equivalents at end of the year
13
24,607,673
198,595,764
The above Company Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE
FINANCIAL
STATEMENTS
1 General information
The principal activity of Horizonte Minerals Plc (‘the Company’) and its subsidiaries (together ‘the Group’) is the exploration and devel
opment of base metals. The Company’s shares are listed on the AIM market of the London Stock Exchange and on the Toronto Stock
Exchange. The Company is incorporated and domiciled in England and Wales. The address of its registered office is Rex House, 4-12
Regent Street, London, SW1Y 4RG.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these Financial Statements are set out below. These policies have been
consistently applied to all the years presented.
2.1 Basis of preparation
These Financial Statements have been prepared in accordance with UK adopted international accounting standards. Financial State
ments have been prepared under the historical cost convention except for the following items (refer to individual accounting policies for
details):
~ Contingent consideration
~ Financial instruments – fair value through profit and loss
~ Cash settled share-based payment liabilities
~ Cash flow hedges at fair value through other comprehensive income (OCI)
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s Accounting Policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the Parent Company is not present
ed as part of these Financial Statements.
2.2 Going concern
The Group’s business activities together with the factors likely to affect its future development, performance and position are set out
in the Chairman’s Statement on pages 6 and 7; in addition, note 3 to the Financial Statements includes the Group’s objectives, policies
and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure
to credit and liquidity risk.
The Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and
an operating loss has been reported, the Directors consider that the Group has sufficient funds to undertake its operating activities
for a period of at least the next 12 months including any additional expenditure required in relation to its current exploration and de
velopment projects. The Group has cash reserves and access to liquidity which are considered sufficient by the Directors to fund the
Group’s committed expenditure both operationally and on its exploration project for the foreseeable future.
The Group concluded a comprehensive funding package of US$633 million in December 2021. The net proceeds of the fundraisings
will be used towards the construction of the Araguaia project as well as for general working capital purposes. In addition, the compa
ny has also concluded a US$25million royalty on the Vermelho Project, the net proceeds from the sale of this royalty will be used to
advance a feasibility study and permitting work streams on the Vermelho project. The equity fundraise (US$197million of the US$633
million) was finalized and funds received in December 2021 with a further equity fund raise completed in November 2022 for a gross
US$80 million. The debt elements of the funding package include Convertible Loan Notes (US$65 million), a cost overrun facility
(US$25 million) and a senior debt facility (US$346.2 million).
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
72
73
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
Funds from the convertible loan notes and the royalty were received in March 2022. The cost overrun facility funds were received in
November 2022 and the first drawdown under the senior debt facility was completed in December 2022 following the satisfaction
of certain conditions precedent customary to a financing of this nature. Subsequent drawdowns under the senior debt facility are
expected to follow during the remainder of the construction period, again following the satisfaction of certain conditions precedent
customary to a financing of this nature including but not limited to satisfaction of a cost to complete exercise prior to each draw down
on the facility, satisfaction of minimum order values from certain suppliers, maintaining the good standing of operational licences and
permitting, and financial models detailing the Group’s budget forecasting compliance with covenants and ratios.
The funds held at the year-end along with those to be raised post year end following the satisfaction of any condition’s precedent
for further drawdowns of the senior debt facility (including access to any of the funds secured as part of the cost overrun facility),
are considered sufficient by the Directors to execute the construction of the Araguaia Project and fund its general working capital
requirements for the foreseeable future. However, there exists a risk that the senior debt facility is not able to be drawn due to un
foreseen circumstances or noncompliance with any conditions precedent which may or may not be within the control of the Group.
At the time of the second drawdown of the senior debt facility (completed after the year end) the total remaining cost associated with
bringing the Araguaia Project to the point of generating cashflows were estimated to be US$356 million which includes a contingency
of US$19 million. This will be funded through the undrawn senior debt facility of US$341.2 million. In addition, the Group has a cost
overrun facility available of US$25million. If expected or actual costs were to increase as a result of delays or increases in capital or
pre-production operating costs by more than US$48 million (14% increase) of the total budget the project would fail the cost to com
plete test, a condition precedent of the senior debt facility. Additionally, despite being approximately 45% complete a number of risks
still exist around escalation costs linked to several of the major construction packages (these include labour and materials) potentially
exceeding the contingency. This could result in future drawdowns on the senior debt facility not being permitted and require the Group
to pursue alternative sources of funding to meet its commitments.
As the project moves into operational ramp-up phase there are a number of risk areas around commissioning the furnace and rotary
kiln. If any of these ramp-up risks exceed the pre-production funding allocated to the unit areas there will be a requirement for addi
tional funding.
As some of these events are outside of the Group’s control, a material uncertainty exists which may cast significant doubt about the
Group’s continued ability to operate as a going concern and its ability to realise its assets and discharge its liabilities in the normal
course of business.
The financial statements do not include any adjustments that would result if the Group were unable to continue as a going concern.
2.3 Changes in accounting policy and disclosures
a) New and amended standards adopted by the Group
New standards impacting the Group that are adopted in the annual financial statements for the year ended 31 December 2022, are:
Standard
Detail
Effective date
IAS 16
Amendments prohibiting a company from deducting from the cost of property, plant and
equipment amounts received from selling items produced while the company is preparing
the asset for its intended use
1 January 2022
IAS 37
Amendments regarding the costs to include when assessing whether a contract is onerous
1 January 2022
IFRS 3
Amendment - replacing a reference to an old version of the Board’s Conceptual Framework
for Financial Reporting with a reference to the latest version, which was issued in March
2018.
1 January 2022
Annual Improve
ments to IFRSs
(2018-2020 Cycle)
- IFRS 9
• IFRS 9 - Clarifies the fees a company includes in assessing the terms of a new or modified
financial liability to determine whether to derecognise a financial liability.
1 January 2022
The adopted amendments have not resulted in any changes to the Group Consolidated Financial Statements.
b) New and amended standards, and interpretations issued but not yet effective for the financial year beginning 1 January 2022 and
not early adopted
At the date of authorisation of these Consolidated Financial Statements, the following new standards, amendments and interpretations
to existing standards have been published but are not yet effective and have not been adopted early by the Group.
Standard
Detail
Effective date
IAS 1
Amendment – regarding the classification of liabilities
1 January 2024
IAS 8
Amendment – definition of accounting estimates
1 January 2023
IAS 1 and IFRS Practice
Statement 2
Amendment – disclosure of accounting policies
1 January 2023
IAS 12
Amendment - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
1 January 2023
Management anticipates that all the pronouncements will be adopted in the Group’s accounting policies for the first period beginning
after the effective date of the pronouncement. The adoption of the new and amended standards are not expected to have a material
impact on the Group's consolidated financial statements, except for the IAS1 amendment regarding the classification of liabilities. The
amendment will impact the classification of the convertible loan notes from non-current to current as the conversion option can be
exercised at any time.
2.4 Basis of consolidation and business acquisitions
Horizonte Minerals Plc was incorporated on 16 January 2006. On 23 March 2006 Horizonte Minerals Plc acquired the entire issued share
capital of Horizonte Exploration Limited (HEL) by way of a share for share exchange. The transaction was treated as a group reconstruction
and was accounted for using the merger accounting method as the entities were under common control before and after the acquisition.
Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power over the investee.
The Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
~ The contractual arrangement with the other vote holders of the investee.
~ Rights arising from other contractual arrangements.
~ The Group’s voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidat
ed financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Other than for the acquisition of HEL as noted above, the Group uses the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities in
curred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred unless
they result from the issuance of shares, in which case they are offset against the premium on those shares within equity.
If an acquisition is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree
is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an asset or a liability is recognised in accordance with IFRS9 either
in profit or loss or as a change in other comprehensive income. The unwinding of the discount on contingent consideration liabilities is
recognised as a finance charge within profit or loss. Contingent consideration that is classified as equity is not remeasured, and its sub
sequent settlement is accounted for within equity.
The excess of the consideration transferred and the acquisition date fair value of any previous equity interest in the acquiree over the
fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net
assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Accounting poli
cies of subsidiaries have been changed where necessary to ensure consistency with policies adopted by the Group.
Investments in subsidiaries are accounted for at cost less impairment.
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The following 100% owned subsidiaries have been included within the consolidated Financial Statements:
Subsidiary undertaking
Held
Registered Address
Country
of incorporation
Nature of business
Horizonte Exploration Ltd
Directly
Rex House, 4-12 Regent Street, London
SW1Y 4RG
England
Mineral Exploration
Horizonte Minerals (IOM) Ltd
Indirectly
1st Floor, Viking House, St Pauls Square,
Ramsey, IM8 1GB, Ilse of Man
Isle of Man
Holding company
HM Brazil (IOM) Ltd
Indirectly
1st Floor, Viking House, St Pauls Square,
Ramsey, IM8 1GB, Ilse of Man
Isle of Man
Holding company
Cluny (IOM) Ltd
Indirectly
1st Floor, Viking House, St Pauls Square,
Ramsey, IM8 1GB, Ilse of Man
Isle of Man
Holding company
Champol (IOM) ltd
Indirectly
First Names House, Victoria Road, Douglas,
IM2 4DF, Isle of Man
Isle of Man
Holding company
Horizonte Nickel (IOM) Ltd
Indirectly
1st Floor, Viking House, St Pauls Square,
Ramsey, IM8 1GB, Ilse of Man
Isle of Man
Holding company
Nickel Production Services B.V
Directly
Atrium Building, 8th floor, Strawinskylaan
3127, 1077 ZX, Amsterdam
The Netherlands
Provision of
financial services
Battery Material Services B.V
Directly
Naritaweg 165, 1043BW Amsterdam,
The Netherlands
The Netherlands
Provision of
financial services
HM do Brasil Ltda
Indirectly
CNPJ 07.819.038/0001-30 com sede na
Avenida Raja Gabaglia, n° 1.143, sala 1404,
bairro Luxemburgo, Belo Horizonte/MG, CEP
30.380-403, Brazil
Brazil
Mineral Exploration
Araguaia Niquel Metais Ltda
Indirectly
CNPJ 97.515.035/0001-03 com sede na
Avenida Raja Gabaglia, n° 1.143, sala 1401
e 1402, bairro Luxemburgo, Belo Horizonte/
MG, CEP 30.380-403, Brazil
Brazil
Mineral Exploration
Trias Brasil Mineração Ltda
Indirectly
CNPJ 23.282.280/0001-73 com sede na
Avenida Raja Gabaglia, n° 1.143, sala 1403,
bairro Luxemburgo, Belo Horizonte/MG, CEP
30.380-403, Brazil
Brazil
Mineral Exploration
2.4 (b) Subsidiaries and Acquisitions
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries) made up to 31 December each year. Control is recognised where an investor is expected, or has rights, to variable returns
from its investment with the investee, and has the ability to affect these returns through its power over the investee. Based on the
circumstances of the acquisition an assessment will be made as to whether the acquisition represents an acquisition of an asset or the
acquisition of asset. In the event of a business acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured
at their fair value at the date of acquisition. Any excess of the cost of the acquisition over the fair values of the identifiable net assets
acquired is recognised as a “fair value” adjustment.
If the cost of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in
profit or loss. In the event of an asset acquisition assets and liabilities are assigned a carrying amount based on relative fair value.
The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income from the
effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those
used by the Group.
2.5 Intangible Assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets, lia
bilities and contingent liabilities of the acquired subsidiary at the date of acquisition. Goodwill arising on the acquisition of subsidiaries
is included in ‘intangible assets’. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, iden
tified according to operating segment.
(b) Exploration and evaluation assets
The Group capitalises expenditure in relation to exploration and evaluation of mineral assets when the legal rights are obtained and are
initially valued and subsequently carried at cost less any subsequent impairment. Expenditure included in the initial measurement of
exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topograph
ical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical
feasibility and commercial viability of extracting a mineral resource.
Exploration and evaluation assets arising on business combinations are included at their acquisition-date fair value in accordance with
IFRS 3 (revised) ‘Business combinations’. Other exploration and evaluation assets and all subsequent expenditure on assets acquired as
part of a business combination are recorded and held at cost.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an
asset may exceed its recoverable amount. The assessment is carried out on a project by project basis as each project is considered as a
cash generating unit.
Impairment reviews for deferred exploration and evaluation expenditure are carried out on a project by project basis, with each
project representing a potential single cash generating unit. In accordance with the requirements of IFRS 6, an impairment review is
undertaken when indicators of impairment arise such as:
i.
unexpected geological occurrences that render the resource uneconomic;
ii.
title to the asset is compromised;
iii. variations in mineral prices that render the project uneconomic;
iv. substantive expenditure on further exploration and evaluation of mineral resources is neither budgeted nor planned; and
v.
the period for which the Group has the right to explore has expired and is not expected to be renewed.
See note 2.7 for impairment review process if impairment indicators are identified.
Whenever the exploration for and evaluation of mineral resources does not lead to the discovery of commercially viable quantities of
mineral resources or the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to
profit or loss. Whenever a commercial discovery is the direct result of the exploration and evaluation assets, upon the decision to pro
ceed with development of the asset and initial funding arrangements are in place the costs shall be transferred to a Mine Development
asset within property, plant and equipment.
(c) Acquisitions of Mineral Exploration Licences
Acquisitions of Mineral Exploration Licences through acquisition of non-operational corporate structures that do not represent a busi
ness, and therefore do not meet the definition of a business combination, are accounted for as the acquisition of an asset and recog
nised at the fair value of the consideration. Related future consideration if contingent is recognised when the probability that it will
be paid changes.
2.6 Property, plant and equipment
Mine development property
Following determination of the technical feasibility and commercial viability of a mineral resource, the relevant expenditure is trans
ferred from exploration and evaluation assets to mine development property.
Further development costs are capitalised to mine development properties, if and only if, it is probable that future economic benefits
associated with the item will flow to the entity and the cost can be measured reliably. Cost is defined as the purchase price and directly
attributable costs. Once the asset is considered to be capable of operating in a manner intended by management, commercial produc
tion is declared, and the relevant costs are depreciated. Evaluated mineral property is carried at cost less accumulated depreciation and
accumulated impairment losses.
Short lived Property, plant and equipment
All other property, plant and equipment is stated at historic cost less accumulated depreciation. Historic cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Major
repairs and maintenance are capitalised, all other repairs and maintenance costs are charged to profit or loss during the financial period
in which they are incurred.
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Depreciation and amortisation
Mine development property is not depreciated prior to commercial production but is reviewed for impairment annually (see “Impairment
of non-financial assets” section below). Upon commencement of commercial production, mine development property is transferred to
a mining property and is depreciated on a units-of-production basis. Only proven and probable reserves are used in the tonnes mined
units of production depreciation calculation.
Depreciation is charged on a straight-line basis for all other property, plant and equipment, so as to write off the cost of assets, over their
estimated useful lives, using the straight-line method, on the following bases:
Office equipment
25%
Vehicles and other field equipment
25% – 33%
Land is not depreciated. The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each report
ing period.
An asset’s carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its
estimated recoverable amount.
Capitalisation of borrowing costs
Borrowing costs are expensed except where they relate to the financing of construction or development of qualifying assets. Borrowing
costs directly related to financing of qualifying assets in the course of construction are capitalised to the carrying value of the Araguaia
mine development property. Where funds have been borrowed specifically to the finance the Project, the amount capitalised represents
the actual borrowing costs incurred net of all interest income earned on the temporary re-investment of these borrowings prior to utili
sation. Borrowing costs capitalised include:
~ Interest charge on the royalty finance
~ Adjustments to the carrying value of the royalty finance
~ Unwinding of discount and adjustment to carrying value on contingent consideration payable for Araguaia
~ Interest charge on the convertible loan note liability
~ Interest charge on the senior debt facility
~ Interest charge on the cost overrun facility
The capitalisation of adjustments to the carrying values as a result of changes in estimates is an accounting policy choice under IFRS
and management have selected to capitalise. To the extent that the Group borrows funds generally and uses them for the purpose of
obtaining a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation
rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to all borrowings
of the entity that are outstanding during the period.
All other borrowing costs are recognized as part of interest expense in the year which they are incurred.
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life, such as goodwill are not subject to amortisation and are tested annually for impairment.
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have suffered impairment. Prior to carrying out impairment reviews, the
significant cash generating units are assessed to determine whether they should be reviewed under the requirements of IFRS 6 – Ex
ploration for and Evaluation of Mineral Resources or IAS 36 – Impairment of Assets. Such determination is by reference to the stage of
development of the project and the level of reliability and surety of information used in calculating value in use or fair value less costs to
sell. Impairment reviews performed under IFRS 6 are carried out on a project by project basis, with each project representing a potential
single cash generating unit. An impairment review is undertaken when indicators of impairment arise; typically when one of the follow
ing circumstances applies:
i.
sufficient data exists that render the resource uneconomic and unlikely to be developed
ii.
title to the asset is compromised
iii. budgeted or planned expenditure is not expected in the foreseeable future
iv. insufficient discovery of commercially viable resources leading to the discontinuation of activities
Impairment reviews performed under IAS 36 are carried out when there is an indication that the carrying value may be impaired. Such
key indicators (though not exhaustive) to the industry include:
i.
a significant deterioration in the spot price of nickel
ii.
a significant increase in production costs
iii. a significant revision to, and reduction in, the life of mine plan
If any indication of impairment exists, the recoverable amount of the asset is estimated, being the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash generating unit) is reduced to its recoverable amount. Such impairment losses are recognised in profit or loss for the year.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impair
ment loss is recognised in profit or loss for the year.
2.8 Foreign currency translation
(a) Functional and presentation currency
Items included in the Financial Statements of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the ‘functional currency’). The functional currency of the UK and Isle of Man entities is Pounds Sterling and
the functional currency of the Brazilian entities is Brazilian Real. The functional currency of the project financing subsidiaries incorporat
ed in the Netherlands is USD, however debt costs capitalised to the mine development asset are recorded in Brazilian Real.
Horizonte Minerals Plc changed its presentation currency from Pounds Sterling to US Dollars effective 1 January 2022.
The presentation currency has been revised as the financing package concluded by the Group to construct the Araguaia project
is denominated in US Dollars and future revenues will also be in US Dollars. The board therefore believes that US Dollar financial
reporting provides more relevant presentation of the group’s financial position, funding and treasury functions, financial perfor
mance and its cash flows.
A change in presentation currency represents a change in an accounting policy in terms of IAS 8 Accounting Policies, Changes in Ac
counting Estimates and Errors requiring the restatement of comparative information. In accordance with IAS 21 The Effects of Changes
in Foreign Exchange Rates, the following methodology was followed in restating historical financial information from Pounds Sterling
to US Dollar:
~ Assets and liabilities were translated at the relevant closing exchange rate at the end of the reporting period. Items of income and
expenditure and cash flows were translated at average rates of exchange for the period;
~ The foreign currency translation reserve was reset to nil as at 1 January 2006, the date on which the group adopted IFRS. Share
capital and premium and other reserves, as appropriate, were translated at the historic rates prevailing at the dates of underlying
transactions; and
~ The effects of translating the group’s financial results and financial position into US Dollar were recognised in the foreign currency
translation reserve.
The exchange rates used were as follows:
GBP/USD
31 December 2021
31 December 2020
Closing rate
1.3477
1.3649
Average rate
1.3757
1.2837
USD/BRL
Closing rate
5.5710
5.1967
Average rate
5.3810
5.0869
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the trans
actions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such trans
actions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
(c) Group companies
The results and financial position of all the Group’s entities (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
1. assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that state
ment of financial position;
2. each component of profit or loss is translated at average exchange rates during the accounting period (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
3. all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items
receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to
other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in profit or loss as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and retranslated at the end of each reporting period.
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The major exchange rates used for the revaluation of the statement of financial position at 31 December 2022 were Pounds Sterling
£1:US$1.2039 (31 December 2022: £1:US$1.3477), Brazilian Real (R$):US$0.192 (31 December 2021: R$:US$0.180).
Foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional currencies
are not United States Dollar.
During the year ended 31 December 2022, the Brazilian Real strengthened by 7% since 31 December 2021. Currency translation dif
ferences for the year of US$6.7 million loss (2021:US$258,976 gain) included in the consolidated statement of comprehensive income
arose on the translation of property plant and equipment, intangible assets and cash and cash equivalents denominated in Brazilian Real.
The foreign exchange gain for the year of US$8.5 million included in the statement of comprehensive income relates to the translation
differences of foreign currency cash and cash equivalents balances, liability financing arrangements and intercompany balances denom
inated in currencies other than the functional currency of the entity.
2.9 Financial instruments
Financial instruments are measured as set out below. Financial instruments carried on the statement of financial position include
cash and cash equivalents, trade and other receivables, trade and other payables and loans to group companies.
Financial instruments are initially recognised at fair value when the group becomes a party to their contractual arrangements. Trans
action costs directly attributable to the instrument’s acquisition or issue are included in the initial measurement of financial assets
and financial liabilities, except for financial instruments classified as at fair value through profit or loss (FVTPL). The subsequent
measurement of financial instruments is dealt with below.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was
acquired. Other than financial assets in a qualifying hedging relationship, the Group’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives. They are carried in the statement of financial position at fair value with changes in
fair value recognised in the statement of comprehensive income in the operating profit or loss line. All directly attributable transaction
costs are recognised in profit or loss as incurred.
The buy-back options in the Group’s royalty financing arrangements are embedded derivative financial assets measured at fair value
through profit or loss.
Amortised cost
Financial assets that arise principally from assets where the objective is to hold these assets in order to collect contractual cash flows
and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction
costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective inter
est rate method, less provision for impairment.
Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains or losses, together with for
eign exchange gains or losses. Impairment losses are presented as separate line item in the statement of profit or loss. A gain or loss on
a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains or losses
in the period in which it arises. On derecognition of a financial asset, the difference between the proceeds received or receivable and the
carrying amount of the asset is included in profit or loss.
Financial assets at amortised cost consist of trade receivables and other receivables (excluding taxes), cash and cash equivalents, and
related party intercompany loans
Impairment provisions for receivables and loans to related parties and subsidiaries are recognised based on a forward looking expected
credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since
initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those
for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For
those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at cost. For the purpose of the cash flow statement, cash and
cash equivalents comprise cash on hand, deposits held at call with banks, other short term highly liquid investments with a maturity of
three months or less at the date of purchase.
Fair value through other comprehensive income
The Group does not have any assets held at fair value through other comprehensive income.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.
Fair value through profit or loss
This category comprises out-of-the-money derivatives where the time value does not offset the negative intrinsic value. They are car
ried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement
of comprehensive income. All directly attributable transaction costs are recognised in profit or loss as incurred. The Group’s embedded
derivative in its convertible loan notes is measured at fair value through profit or loss.
Other financial liabilities
Financial liabilities are subsequently measured at amortised cost using the effective interest method, except for financial liabilities des
ignated at fair value through profit or loss, that are carried subsequently at fair value with gains and losses recognised in the profit and
loss statement.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability, or, where appropriate, a shorter period.
The Group’s financial liabilities initially measured at fair value and subsequently recognised at amortised cost include accounts payables
and accrued liabilities, Group’s Royalty liability, Convertible loan notes liability, Senior debt facility as well as the cost overrun facility.
Hedge accounting
The Group has elected to adopt the hedge accounting requirements of IFRS 9 Financial Instruments, in respect of its foreign exchange
hedging strategy. The Group enters into hedge relationships where the critical terms of the hedging instrument and the hedged item
match, therefore, for the prospective assessment of effectiveness a qualitative assessment is performed. Hedge effectiveness is deter
mined at the origination of the hedging relationship. Quantitative effectiveness tests are performed at each period end to determine the
continuing effectiveness of the relationship. In instances where changes occur to the hedged item which result in the critical terms no
longer matching, the hypothetical derivative method is used to assess effectiveness.
Foreign exchange risk arises when the Group enters into transactions denominated in a currency other than their functional currency.
Where the risk to the Group is considered to be significant, the Group will enter into a matching non-deliverable forward foreign ex
change contracts with a reputable bank.
The hedged forecast transactions denominated in foreign currency are expected to occur between 14 May 2022 and 31 March 2025.
Gains and losses recognised in the hedging reserve in equity on non-deliverable forward foreign exchange contracts are recognised in
the consolidated statement of comprehensive income in the period during which the hedged forecast transaction affects the consolidat
ed statement of comprehensive income, unless the gain or loss is included in the initial carrying value of non-current assets through a
basis adjustment (immediate transfer from cash flow hedging reserve to cost of asset) in which case recognition is over the lifetime of
the asset as it is depreciated. The ineffective portion of the cash flow hedge is recognised immediately in the profit or loss.
2.10 Taxation
The tax credit or expense for the period comprises current and deferred tax. Tax is recognised in the Income Statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
The charge for current tax is calculated on the basis of the tax laws enacted or substantively enacted by the end of the reporting period
in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred
tax assets are recognised on tax losses carried forward to the extent that the realisation of the related tax benefit through future
taxable profits is probable.
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Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and inter
ests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax lia
bilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the Statement of Financial
Position date and are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets and liabilities are not discounted.
2.11 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
2.12 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppli
ers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as
non-current liabilities.
Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.
2.13 Leases
All leases are accounted for by recognising a right-of-use assets due to a lease liability except for:
~ Lease of low value assets; and
~ Leases with duration of 12 months or less
The Group has such short duration leases and lease payments are charged to the income statement with the exception of Araguaia’s
(Group’s wholly owned subsidiary) leases for the Belo Horizonte office and vehicles lease.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount
rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which
case the group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes
the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to
which they relate.
On initial recognition, the carrying value of the lease liability also includes:
~ amounts expected to be payable under any residual value guarantee;
~ the exercise price of any purchase option granted in favour of the group if it is reasonable certain to assess that option;
~ any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
~ lease payments made at or before commencement of the lease;
~ initial direct costs incurred; and
~ the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding
and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the
lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
2.14 Share-based payments and incentives
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from employees as con
sideration for equity instruments (options) of the Group. The fair value of employee services received in exchange for the grant of share
options are recognised as an expense. The total expense to be apportioned over the vesting period is determined by reference to the fair
value of the options granted:
~ including any market performance conditions;
~ excluding the impact of any service and non-market performance vesting conditions; and
~ including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period the Group revises its estimate of the number of options that are expected to vest.
It recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs
are credited to share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is recognised as an expense.
2.15 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer, the Compa
ny’s chief operating decision-maker (“CODM”).
2.16 Finance income
Interest income is recognised using the effective interest method, taking into account the principal amounts outstanding and the interest
rates applicable.
2.17 Provisions and Contingent Liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision
due to passage of time is recognised as finance cost.
Contingent liabilities are potential obligations that arise from past events and whose existence will only be confirmed by the occurrence
of one or more uncertain future events that, however, are beyond the control of the Group. Furthermore, present obligations may consti
tute contingent liabilities if it is not probable that an outflow of resources will be required to settle the obligation, or a sufficiently reliable
estimate of the amount of the obligation cannot be made.
The company has contingent consideration arising in respect of mineral asset acquisitions. Details are disclosed in note 4.2.
Restoration, Rehabilitation and Environmental Provisions
Management uses its judgement and experience to provide for and amortise the estimated mine closure and site rehabilitation over the
life of the mine. Provisions are discounted at a discounted at a pre-tax rate reflecting current market assessments of the time value of
money and risks specific to the liability and cost base inflated at an appropriate rate. The ultimate closure and site rehabilitation costs are
uncertain and cost estimates can vary in response to many factors including changes to relevant legal requirements or the emergence of
new restoration techniques. The expected timing and extent of expenditure can also change, for example in response to changes in ore
reserves or processing levels. As a result, there could be significant adjustments to the provisions established which could affect future
financial results.
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3 Financial risk management
The Group is exposed through its operations to the following financial risks:
~ Credit risk
~ Interest rate risk
~ Foreign exchange risk
~ Price risk, and
~ Liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes
the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements. There have been substantive changes in the
Group’s exposure to financial instrument risks compared to previous periods, however, its objectives, policies and processes for manag
ing those risks or the methods used to measure them are consistent with previous periods unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
~ Contingent and deferred consideration
~ Lease liability
~ Trade and other receivables
~ Cash and cash equivalents
~ Trade and other payables
~ Royalty finance
~ Convertible loan note liability
~ Senior debt facility
~ Cost overrun facility
~ Derivative financial assets and liabilities
~ Non-deliverable forward foreign exchange contracts
(ii) Financial instruments by category
Financial Assets
Fair Value
Amortised
cost
Total
Fair Value
Amortised cost
Total
2022
2022
2022
2021
2021
2021
Group
US$
US$
US$
US$
US$
US$
Cash and cash equivalents
—
154,027,967
154,027,967
—
210,492,280
210,492,280
Derivative financial asset
15,404,091
—
15,404,091
4,950,000
—
4,950,000
Total
15,404,091
154,027,967
169,432,058
4,950,000
210,492,280
215,442,280
Amortised cost
2022
2021
Company
US$
US$
Cash and cash equivalents
24,607,673
198,595,764
Loans to subsidiaries
368,980,168
94,085,540
Total
393,587,841
292,681,304
Financial Liabilities
Fair Value
Amortised Cost
Total
Amortised Cost
Total
Group
2022
2022
2022
2021
2021
US$
US$
US$
US$
US$
Trade and other payables
—
29,204,371
29,204,371
22,183,337
22,183,337
Contingent consideration
—
6,895,737
6,895,737
6,734,134
6,734,134
Deferred consideration
—
5,758,431
5,758,431
5,443,861
5,443,861
Royalty Finance
—
89,745,255
89,745,255
44,496,504
44,496,504
Convertible loan notes
29,636,887
29,810,633
59,447,520
—
—
Cost overrun facility
—
23,809,827
23,809,827
—
—
Senior debt facility
—
4,328,241
4,328,241
—
—
Lease liability
—
986,970
986,970
—
—
Total
29,636,887
190,539,465
220,176,352
78,857,836
78,857,836
Fair Value
Amortised Cost
Total
Amortised Cost
Total
Company
2022
2022
2022
2021
2021
US$
US$
US$
US$
US$
Trade and other payables
—
3,089,258
3,089,258
16,282,547
16,282,547
Contingent consideration
—
6,895,737
6,895,737
6,734,134
6,734,134
Convertible loan notes
29,636,887
29,810,633
59,447,520
—
—
Loans from subsidiaries
—
498,330
498,330
3,811,572
3,811,572
Total
29,636,887
40,293,958
69,930,845
26,828,253
26,828,253
3.1 Financial risk factors
The main financial risks to which the Group’s activities are exposed are liquidity and fluctuations on foreign currency. The Group’s overall
risk management programme focusses on the unpredictability of financial markets and seeks to minimise potential adverse effects on
the Group’s financial performance.
Risk management is carried out by the Board of Directors under policies approved at the quarterly Board meetings. The Board frequently
discusses principles for overall risk management including policies for specific areas such as foreign exchange.
(a) Liquidity risks
In keeping with similar sized mineral exploration groups, the Group’s continued future operations depend on the ability to raise suffi
cient working capital through the issue of equity share capital or various forms of debt funding. Liquidity risk arises from the Group’s
management of working capital and the finance charges and principal repayments on its debt instruments. At present the settlement of
some of the Group’s liabilities are contingent upon reaching production. There is however a risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to
meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected
requirements for a period of at least 6 months. All cash, with the exception of that required for immediate working capital requirements,
is held on short-term deposit.
The Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances and (as
noted above) the value of the Group’s deposits. At the end of the financial year, these projections indicated that the Group expect
ed to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances. The liquidity risk of each
group entity is managed centrally by the group treasury function. Each operation has a facility with group treasury, the amount of the
facility being based on budgets. The budgets are set locally and agreed by the board in advance, enabling the Group’s cash require
ments to be anticipated.
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The following table sets out the contractual maturities of undiscounted financial liabilities:
Up to 3
Months
Between
3 & 12 Months
Between 1 & 2
Years
Between 2 & 5
Years
Over 5 Years
Group
US$
US$
US$
US$
US$
At 31 December 2022
Trade & other payables
28,481,038
—
723,334
—
—
Royalty financing arrangement
—
—
4,963,148
32,505,373
817,690,046
Contingent consideration
—
—
—
6,000,000
5,000,000
Deferred consideration
950,000
950,000
2,266,667
2,233,333
—
Cost overrun facility
821,528
2,482,639
3,304,167
17,816,211
20,346,517
Senior debt facility
100,125
299,285
398,334
5,097,936
—
Convertible loan notes
—
—
—
60,479,094
69,169,333
Lease liabilities
49,497
154,564
206,085
437,193
—
Total
30,402,188
3,886,488
11,861,735
124,569,140
912,205,896
The cash flows related to the royalty finance represent the estimated future payments in future years as these payments will depend on
production levels and spot commodity prices.
Up to 3
Months
Between
3 & 12
Months
Between
1 & 2 Years
Between
2 & 5 Years
Over 5 Years
US$
US$
US$
US$
US$
At 31 December 2021
Trade & other payables
21,574,362
—
608,976
—
—
Royalty financing arrangement
—
—
3,201,150
24,576,969
227,256,744
Contingent consideration
—
—
—
6,000,000
5,000,000
Deferred consideration
—
950,000
950,000
4,500,000
—
Lease liabilities
21,540
64,620
93,743
279,483
—
Total
21,595,902
1,014,620
4,853,869
35,356,452
232,256,744
The cash flows related to the royalty finance represent the estimated future payments in future years.
Up to 3
Months
Between
3 & 12
Months
Between
1 & 2 Years
Between
2 & 5 Years
Over 5
Years
Company
US$
US$
US$
US$
US$
At 31 December 2022
Trade & other payables
3,089,258
—
—
—
—
Intercompany loans
498,330
—
—
—
—
Contingent consideration
—
—
—
6,000,000
5,000,000
Convertible loan notes
—
—
—
60,479,094
69,169,333
Total
3,587,588
—
—
66,479,094
74,169,333
Up to 3
Months
Between
3 & 12
Months
Between
1 & 2 Years
Between
2 & 5 Years
Over 5
Years
£
£
£
£
£
At 31 December 2021
Trade & other payables
16,282,547
—
—
—
—
Intercompany loans
3,811,572
—
—
—
—
Contingent consideration
—
—
—
6,000,000
5,000,000
Total
20,094,119
—
—
6,000,000
5,000,000
(b) Foreign currency risks
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with re
spect to the Brazilian Real, US Dollar and the Pound Sterling.
Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign
operations that are denominated in a foreign currency. The Group holds a proportion of its cash in US Dollars and Brazilian Reals to
hedge its exposure to foreign currency fluctuations and recognises the profits and losses resulting from currency fluctuations as and
when they arise.
The Group is predominantly exposed to currency risk on its BRL denominated capital expenditure for the development of the Araguaia
Ferronickel Project. With the funding base being primarily US Dollars, the Group and its senior lenders agreed to implement a foreign
exchange hedging strategy that ensures that at least 70% of its BRL denominated capital expenditure is hedged by entering into a series
of non-deliverable forward transactions.
At 31 December 2022, if the Brazilian Real had weakened/strengthened by 5% against US Dollar with all other variables held constant,
post tax loss for the year would have been approximately US$16 million (2021: US$3million) lower/higher mainly as a result of foreign
exchange losses/gains on translation of Brazilian Real assets, liabilities and expenditure. If the USD:GBP rate had increased by 5% the
effect would be US$16 million (2021: US$13 million).
As of 31 December 2022 the Group’s net exposure to foreign exchange risk was as follows:
Functional Currency
Group
USD
2022
USD
2021
GBP
2022
GBP
2021
BRL
2022
BRL
2021
Total
2022
Total
2021
Currency of
net assets/
liabilities
US$
US$
US$
US$
US$
US$
US$
US$
Financial assets/(liabilities)
GBP
(64,581)
(1,258,582)
—
—
—
—
(64,581)
(1,258,582)
USD
—
—
(61,392,389)
121,571,410
46,578,165
(5,475,538)
(14,814,224)
116,095,872
BRL
31,846,773
19,777,981
—
—
—
—
31,846,773
19,777,981
CAD
—
—
340,887
9,416,317
—
—
340,887
9,416,317
EUR
94,392
17,291
—
—
—
—
94,392
17,291
Total net
exposure
31,876,584
18,536,690
(61,051,502)
130,987,727
46,578,165
(5,475,538)
17,403,247
144,048,879
Company
GBP
2022
GBP
2021
Currency of net
US$
US$
Financial assets/(liabilities)
USD
(60,998,423)
108,396,536
CAD
305,219
8,377,760
Total net exposure
(60,693,204)
116,774,296
(c) Interest rate risk
The Group is exposed to interest rate risk on the variable rate on the senior debt facility. As at 31 December 2022 more than 80% of
the Group’s external borrowings are fixed rate borrowings. The Group’s borrowings at variable rate were denominated in US Dollar. The
Group’s interest rate risk also arises from its cash held on short-term deposit for which the Directors use a mixture of fixed and variable
rate deposits. The Group currently does not hedge it exposure interest rate fluctuations. The cost of managing the interest rate fluctua
tions exceeds any potential benefits. The Directors monitor this risk on an ongoing basis and will review this as the Group moves towards
production. Fluctuations in interest rates are not expected to have a significant impact on profit or loss or equity.
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(d) Commodity price risk
The Group is exposed to the price fluctuation of its products from the Araguaia and Vermelho projects, being FerroNickel and Nickel
Cobalt respectively. The Group has royalties over both its project which is denominated as a fixed percentage of the product over a
certain number of tonnes produced. Given the Group is current in the development phase and is not yet producing any revenue, the
costs of managing exposure to commodity price risk exceed any potential benefits. The Directors monitor this risk on an ongoing basis
and will review this as the group moves towards production. The Group’s exposure to commodity prices amounted to the carrying
value of the Araguaia royalty liability of US$48,783,266 (2021: US$44,496,504) and the Vermelho royalty liability of US$40,961,987
(2021: US$0). A 15% adjustment to the long-term commodity prices would result in a royalty liability valuation variance of between
US$6.1million and US$7.5million. In addition the commodity price exposure also impacts the royalty buy-back options valuation, re
sulting in an adjustment to fair value of US$5,007,496 (2021: US$4,950,000) and US$9,481,891 on the Araguaia and Vermelho
derivative assets respectively. A 15% adjustment to the long-term commodity prices would results in valuation variance of between
US$2.7million and US$3.7million.
(e) Credit risk
Credit risk arises from cash and cash equivalents and outstanding receivables including intercompany loan receivable balances. The
Group maintains cash and short-term deposits with a variety of credit worthy financial institutions and considers the credit ratings of
these institutions before investing in order to mitigate against the associated credit risk.
The Group’s exposure to credit risk amounted to US$154,027,967 (2022: US$210,492,280) and represents the Group cash positions.
The Company’s exposure to credit risk amounted to US$393,587,841 (2021: US$292,681,304). Of this amount US$368,980,168 (2021:
US$94,085,540) is due from subsidiary companies and US$24,607,673 represents cash holdings (2021: US$198,595,764). See note 34
for adjustments for provisions for expected credit losses for the intercompany receivables from subsidiary companies.
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide
returns for shareholders and to enable the Group to continue its exploration and evaluation activities. The Group monitors its level of
cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further
funds from time to time.
As indicated above, the Group holds cash reserves on deposit at several banks and in different currencies until they are required and in
order to match where possible with the corresponding liabilities in that currency.
3.3 Fair value estimation
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other paya
bles, contingent and deferred consideration, royalty financing arrangements, convertible loan notes and loans and borrowings.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other paya
bles approximates their fair value.
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
Level 1
Level 2
Level 3
Group
2022
2021
2022
2021
2022
2021
US$
US$
US$
US$
US$
US$
Financial assets and liabilities
Derivative financial assets (fair value
through profit or loss)
—
—
—
—
14,489,387
4,950,000
Derivative financial liabilities (fair value
through profit or loss)
—
—
—
—
(29,636,887)
—
Derivative financial assets
(designated hedge instruments)
—
—
914,704
—
—
—
Total
—
—
914,704
—
(15,147,500)
4,950,000
In 2019 the Group entered into a royalty funding arrangement with Orion Mine Finance securing a gross upfront payment of $25,000,000
before fees in exchange for a royalty over the first 426k tonnes of nickel produced from the Araguaia Ferronickel project. The agreement
includes several prepayment options embedded within the agreement enabling the Group to reduce the royalty rate, these options are
carried at fair value. In 2022 the Group entered into a second royalty funding arrangement with Orion Mine Finance securing a gross
upfront payment of $25,000,000 before fees in exchange for a royalty over the tonnes of nickel cobalt produced over the life of mine
from the Vermelho Nickel Cobalt project. The agreement also includes several prepayment options embedded within the agreement
enabling the Group to reduce the royalty rate, these options are carried at fair value. Details of the agreements are included in note 21.
The future expected nickel and cobalt prices and volatility of the nickel and cobalt prices are key estimates that are critical in the fair value
of the Buy Back Options associated with the Royalty financing.
In 2022 the Group issued $65m convertible loan notes which was secured to finance the construction of the Araguaia project. The con
vertible loan is a hybrid financial instrument, whereby a debt host liability component and an embedded derivative liability component
was determined at initial recognition. The conversion option did not satisfy the fixed for fixed equity criterion (fixed number of shares and
fixed amount of functional currency cash) as the currency of the convertible loan notes is US Dollar and the functional currency of Hori
zonte Minerals Plc and its share price is GBP. For convertible notes with embedded derivative liabilities, the fair value of the embedded
derivative liability is determined first and the residual amount is assigned to the debt host liability. Details of the convertible loan notes
are included in note 22.
The future expected market share price of the Company and the volatility of the share price are the key estimates that are critical in the
determination of the fair value of the embedded derivative and subsequently the debt host liability of the Convertible Loan Notes.
Fair value measurements recognised in the statement of financial position subsequent to initial fair value recognition can be classified
into Levels 1 to 3 based on the degree to which fair value is observable.
Level 1 – Fair value measurements are those derived from quoted prices in active markets for identical assets and liabilities.
Level 2 – Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly, or indirectly.
Level 3 – Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market data.
Information relating to the basis of determination of the level 3 fair value for the buyback options and the convertible loan note embed
ded derivative and consideration of sensitivity to changes in estimates is disclosed in note 21b) and note 22 respectively. Information
relating to the level 2 designated hedge instrument is disclosed in note 14.
There were no transfers between any levels of the fair value hierarchy in the current or prior years.
4 Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with UK adopted international accounting standards requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the end of the reporting period and the reported amount of expenses during the year. Actual results may vary from the
estimates used to produce these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Significant items subject to such estimates and judgements include, but are not limited to:
Estimates
Company – Application of the expected credit loss model prescribed by IFRS 9
IFRS 9 requires the Parent company to make assumptions when implementing the forward-looking expected credit loss model. This
model is required to be used to assess the intercompany loan receivables from the company’s Brazilian subsidiaries for impairment.
Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receiv
ables, the possible credit losses that could arise and the probabilities for these scenarios. The following was considered; the exploration
project risk for Vermelho as well as the potential economics as derived from the PFS, positive NPV of the Araguaia projects as demon
strated by the Feasibility Study, ability to raise the finance to develop the projects, ability to sell the projects, market and technical risks
relating to the project, participation of the subsidiaries in the Araguaia projects. See note 34 for a discussion on the adjustment passed
concerning the impairment loss.
Valuation of derivative financial instruments
Valuing derivatives inherently relies on a series of estimates and assumptions to derive what is deemed to be a fair value estimate for
a financial instrument. The royalty financing arrangement entered into by the Group includes a Buyback option, an embedded deriva
tives which was valued using a Monte Carlo simulation method. This methodology of determining fair value is reliant upon estimations
including the probability of certain scenarios occurring, the estimated production rate and timeline of production from the Araguaia and
Vermelho projects, future nickel prices as well as discount factors. The most important estimates in determining the valuation of the
Buyback option are the future nickel and cobalt prices and their price volatility. The sensitivity of the valuation to these estimates are
considered in note 21b).
The conversion option on convertible loan notes issued by the Group is an embedded derivatives which was valued using a Monte Carlo
simulation method. This methodology of determining fair value is reliant upon estimations including the Company’s future share price
volatility and GBP:USD exchange rate volatility on the conversion price. The sensitivity of the valuation to these estimates are considered
in note 22).
COMPA N Y OV ERV IE W
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HORIZONTE MINERALS 2022 ANNUAL REPORT
Judgements
4.1 Impairment of exploration and evaluation costs and mine development property
Exploration and evaluation costs which relate solely to Vermelho have a carrying value at 31 December 2022 of US$12,834,249
(2021: US$8,018,343). Each exploration project is subject to an annual review by either a consultant or senior company geologist to
determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an
economic discovery. This review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting
and infrastructure. In the event that a project does not represent an economic exploration target and results indicate there is no ad
ditional upside, a decision will be made to discontinue exploration. The judgement exercised by management relates to whether there
is perceived to be an indicator of impairment and that management have concluded that there is not, due to the recovery in the Nickel
prices, favourable economics of the Pre-Feasibility Study as well as the fundamentals of the nickel market and expected supply gap in
the mid-term.
Mine development property which relates solely to Araguaia has a carrying value at 31 December 2022 of US$263,965,415 (2021:
US$59,417,577) and is subject to an annual review by the management together with a consultant or a senior company geologist for
impairment. The review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting, infra
structure and project financing available to continue with the project construction. In the event that the project prospects are unfavour
able or additional funding needs to be secured to complete the project construction a decision may be made to impair the project. The
judgement exercised by management relates to whether there is perceived to be an indicator of impairment and that management have
concluded that there is not, due to the recovery in the Nickel prices, favourable economics of the Feasibility Study, the fundamentals of
the nickel market and expected supply gap in the mid-term and the financing secured for the project construction.
4.2 Contingent and deferred consideration
Contingent consideration has a carrying value of US$6,895,737 (2021: US$6,734,134) and deferred consideration has a carrying value
of US$5,758,431 (2021: US$5,443,861) at 31 December 2022. There are two contingent consideration arrangements in place as at
31 December 2022:
~ Payable to Glencore in respect of the Araguaia acquisition - $5m
~ Payable to Vale in respect of the Vale acquisition - $6m
The deferred contingent consideration arrangement in place as at 31 December 2022 is payable to Companhia Brasileira de Alumino
(CBA) in respect of plant equipment.
In prior years Management judged that the projects had advanced to a stage that it was probable that the consideration would be paid
and so should be recognised in full. This remains the position. In addition, a key estimate in determining the estimated value of the
contingent and deferred consideration for Glencore Vale and CBA is the timing of the assumed date of first commercial production.
Please refer to Note 20 for an analysis of the contingent and deferred consideration.
4.3 Current and deferred taxation
The Group is subject to income taxes in numerous jurisdictions. Judgment is required in determining the worldwide provision for
such taxes. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will affect
the current and deferred income tax assets and liabilities in the period in which such determination is made.
Deferred tax liabilities are recognised in respect of fair value adjustments to the carrying value of intangible assets as a result of the
acquisition of such assets. Deferred tax assets are recognised on tax losses carried forward to the extent that the realisation of the
related tax benefit through future taxable profits is probable. In determining whether a deferred tax asset should be recognised man
agement must make an assessment of the probability that the tax losses will be utilized and a deferred tax asset is only recognised
if it is considered probable that the tax losses will be utilized, this will only be once the operations have achieved nameplate capacity
consistently over an extended period of time.
Other estimates include but are not limited to future cash flows associated with assets, useful lives for depreciation and fair value of
financial instruments.
4.4 Accounting for the Araguaia royalty finance arrangement
The Group has a $25m royalty funding arrangement which was secured in order to advance the Araguaia project towards construc
tion. The royalty pays a fixed percentage of revenue to the holder for production from the first 426k tonnes of nickel produced from
the Araguaia project. The treatment of this financing arrangement as a financial liability, calculated using the effective interest rate
methodology is a key judgement that was made by the Company in the prior year and which was taken following obtaining independ
ent expert advice. The carrying value of the financing liability is driven by the expected future cashflows payable to the holder on the
basis of the production profile of the mine property. It is also sensitive to assumptions regarding the royalty rate, which can vary
based upon the start date for construction of the project and future nickel prices. The contract includes certain embedded derivatives,
including the Buy Back Option which has been separated and carried at fair value through profit and loss.
The future price of nickel and date of commencement of commercial production are key estimates that are critical in the determina
tion of the carrying value of the royalty liability.
The future expected nickel price and, volatility of the nickel prices are key estimates that are critical in the determination of the fair
value of the Buy Back Option associated with the Royalty financing.
Further information relating to the accounting for this liability, the embedded derivative and the sensitivity of the carrying value to
these estimates is provided in note 21a) and 21b).
4.5 Accounting for the Vermelho royalty finance arrangement
The Group has a $25m royalty funding arrangement which was secured in order to advance a feasibility study and permitting work
streams on the Vermelho project. The royalty pays a fixed percentage of revenue to the holder for production on the nickel and cobalt
tonnes produced from the Vermelho project over the life of mine. The treatment of this financing arrangement as a financial liability,
calculated using the effective interest rate methodology is a key judgement that was made by the Company in prior years on the Ara
guaia Royalty and which was taken following obtaining independent expert advice. The carrying value of the financing liability is driven
by the expected future cashflows payable to the holder on the basis of the production profile of the mine property. It is also sensitive to
assumptions regarding the royalty rate, which can vary based upon the start date for construction of the project and future nickel and
cobalt prices. The contract includes certain embedded derivatives, including the Buy Back Option which has been separated and carried
at fair value through profit and loss.
The future prices of nickel and cobalt and the date of commencement of commercial production are key estimates that are critical in the
determination of the carrying value of the royalty liability.
The future expected nickel and cobalt prices and volatility of such prices are key estimates that are critical in the determination of the fair
value of the Buy Back Option associated with the Royalty financing.
Further information relating to the accounting for this liability, the embedded derivative and the sensitivity of the carrying value to these
estimates is provided in note 21a) and 21b).
4.6 Accounting for the Convertible Loan Notes
The Group issued $65m convertible loan notes which was secured to finance the construction of the Araguaia project. The convertible
loan is a hybrid financial instrument, whereby a debt host liability component and an embedded derivative liability component was de
termined at initial recognition. The conversion option did not satisfy the fixed for fixed equity criterion (fixed number of shares and fixed
amount of functional currency cash) as the currency of the convertible loan notes is US Dollar and the functional currency of Horizonte
Minerals Plc and its share price is GBP.
For convertible notes with embedded derivative liabilities, the fair value of the embedded derivative liability is determined first and the
residual amount is assigned to the debt host liability.
The future expected market share price of the Company and the volatility of the share price are the key estimates that are critical in the
determination of the fair value of the embedded derivative and subsequently the debt host liability of the Convertible Loan Notes.
Further information relating to the accounting for this liability, the embedded derivative and the sensitivity of the carrying value to these
estimates is provided in note 22 .
4.7 Determination of commencement of capitalisation of borrowing costs
The date at which the Group commenced capitalisation of borrowing costs was determined to be the point at which the Araguaia Project
moved forwards with undertaking an exercise of value engineering to get the project construction ready. This was deemed by manage
ment to be at the start of 2020.
5 Segmental reporting
The Group operates principally in the UK and Brazil, with operations managed on a project-by-project basis within each geographical
area. Activities in the UK are mainly administrative in nature whilst the activities in Brazil relate to exploration and evaluation work.
The separate subsidiary responsible for the project finance for the Araguaia Project is domiciled in the Netherlands. The operations of
this entity are reported separately and so it is recognised as a new segment. The reports used by the chief operating decision-maker
are based on these geographical segments.
2022
UK
2022
US$
Brazil
2022
US$
Netherlands
2022
US$
Total
2022
US$
Administrative expenses
(9,779,571)
(2,492,228)
(273,057)
(12,544,856)
Charge for share options granted
(1,415,581)
—
—
(1,415,581)
Change in fair value of derivative
6,821,201
—
(308,788)
6,512,413
Profit/(loss) on foreign exchange
7,023,829
380,732
1,077,896
8,482,457
Loss from operations per reportable segment
2,649,878
(2,111,496)
496,051
1,034,433
Net finance costs
544,853
65,163
(6,961,751)
(6,351,735)
Loss before taxation
3,194,731
(2,046,333)
(6,465,700)
(5,317,302)
Depreciation charges
—
80,819
—
80,819
Additions to non-current assets
—
191,479,825
—
191,479,825
Capitalisation of borrowing costs
—
13,175,730
—
13,175,730
Foreign exchange movements to non-current assets
—
7,000,625
—
7,000,625
Reportable segment assets
84,919,521
420,543,962
14,777,455
520,240,938
Reportable segment liabilities
69,432,505
61,582,375
89,796,355
220,811,235
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
90
91
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
2021
UK
2021
US$
Brazil
2021
US$
Netherlands
2021
US$
Total
2021
US$
Administrative expenses
(6,510,997)
(1,119,863)
(180,617)
(7,811,477)
Change in fair value of special warrant liability
(1,616,120)
—
—
(1,616,120)
Change in fair value of derivative
—
—
2,550,000
2,550,000
Profit/(loss) on foreign exchange
(558,161)
36,003
(340,581)
(862,739)
Loss from operations per reportable segment
(8,685,278)
(1,083,860)
2,028,802
(7,740,336)
Net finance costs
1,392,614
(187,800)
(6,834,993)
(5,630,179)
Loss before taxation
(7,292,664)
(1,271,660)
(4,806,191)
(13,370,515)
Depreciation charges
—
22,874
—
22,874
Additions to non-current assets
—
24,762,913
—
24,762,913
Capitalisation of borrowing costs
—
7,073,241
—
7,073,241
Reportable segment assets
212,037,274
91,384,740
5,100,951
308,522,965
Reportable segment liabilities
23,016,684
11,716,740
44,504,894
79,238,318
6 Expenses by nature
2022
2021
Group
US$
US$
Employment related costs
7,487,140
5,252,983
Professional fees
2,195,830
1,539,581
Other
2,861,886
1,018,913
Total administrative expenses
12,544,856
7,811,477
Charge for share options granted
1,415,581
—
The foreign currency exchange gain for the year of US$8,482,457 (US$862,739 loss) arose from the translation of bank accounts
and financing arrangements denominated in currencies other than the functional currency of the Groups' subsidiaries or parent
company. This arose due to the Brazilian Real strengthening against the US Dollar and the Pound Sterling weakening against the
US Dollar during the year.
7 Auditor remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditor
and its associates:
Group
2022
US$
2021
US$
Fees payable to the Company’s auditor and its associates for the audit of the parent company and
consolidated financial statements
201,913
98,958
Fees payable to the Company’s auditor and its associates for other services:
– Audit of subsidiaries
16,973
14,085
– Audit related assurance services
80,463
144,444
–Tax compliance services
116,999
34,298
As of 31 December 2022, the Group met the OEPI (Other Entities of Public Interest) market capitalisation and as a result BDO have
ceased their tax compliance services as of that date.
8 Finance income and costs
Group
2022
US$
2021
US$
Finance income:
– Interest income on cash and short-term bank deposits
7,117,103
500,634
Finance costs:
– Interest on land acquisitions
(127,029)
(168,145)
– Interest on lease liability
(65,097)
—
– Commitment fees on senior debt and cost overrun facilities
(5,314,542)
—
– Other
(68,607)
—
– Gain / (loss) on non-deliverable forward contracts settlements
(556,914)
—
– Contingent and deferred consideration : unwinding of discount
(775,572)
(584,865)
– Contingent and deferred consideration : change in estimate
299,399
1,913,705
– Convertible loan note: unwinding of discount
(5,956,508)
—
– Amortisation of Royalty Finance
(9,799,261)
(4,637,057)
– Royalty finance carrying value adjustment
(1,449,254)
(9,727,692)
– Senior debt facility: unwinding of discount
(31,808)
—
– Cost overrun facility: unwinding of discount
(288,321)
—
– Federal taxes on financing transactions
(1,541,707)
—
Total finance costs
(18,558,118)
(12,703,420)
Less transaction costs capitalised to borrowings
(969,347)
—
Less finance costs capitalised to Araguaia mine development project
13,175,730
7,073,241
Net finance costs
(6,351,735)
(5,630,179)
9 Income Tax
Group
2022
US$
2021
US$
Tax charge:
Current tax charge for the year
—
—
Deferred tax charge for the year
—
—
Tax on loss for the year
—
—
Reconciliation of current tax
Group
2022
US$
2021
US$
Loss before income tax
(5,317,302)
(13,370,515)
Current tax at 19% (2021: 19%)
(1,010,287)
(2,540,398)
Effects of:
Expenses not deducted for tax purposes
1,703,042
1,178,639
Income not taxable for tax purposes
(1,881,136)
—
Expenses deductible for tax purposes
(2,045,884)
—
Tax losses carried forward for which no deferred income tax asset was recognised
4,297,139
1,649,762
Effect of higher overseas tax rates
(1,062,874)
(288,003)
Total tax
—
—
No tax charge or credit arises on the loss for the year.
The corporation tax rate in Brazil is 34%, the Netherlands 25.8% and the United Kingdom 19%. The group incurred expenses in all of these
jurisdictions during the year. The effective tax rate for the year was 0% (2021: 0%).
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
92
93
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
Deferred income tax
An analysis of deferred tax assets and liabilities is set out below.
Group
2022
US$
2021
US$
Deferred tax assets
—
—
Deferred tax liabilities
– Deferred tax liability to be settled after more than 12 months
—
—
Deferred tax liabilities (net)
—
—
Deferred tax assets are recognised on tax losses carried forward to the extent that the realisation of the related tax benefit through
future taxable profits is probable.
Deferred tax liabilities are recognised in respect of fair value adjustments to the carrying value of intangible assets as a result of the
acquisition of such assets.
The Group has tax losses of approximately US$27,030,879 (2021: US$23,356,093) in Brazil and excess management charges of ap
proximately US$20,528,734 (2021: US$5,959,980) in the UK and taxable losses of approximately US$2,920,302 (2021: US$2,647,245)
in the Netherlands available to carry forward against future taxable profits. Potential deferred tax assets of US$9,591,184 (2021:
US$6,103,317) have not been recognised.
Tax losses are available indefinitely.
10 Intangible assets
Intangible assets comprise exploration licenses, exploration and evaluation costs and goodwill. Exploration and evaluation costs com
prise acquired and internally generated assets.
Group
Goodwill
US$
Exploration
Licenses
US$
Exploration
and
evaluation
costs
US$
Software
US$
Total
US$
Cost
At 1 January 2021
215,979
6,831,692
1,442,670
—
8,490,341
Additions
—
103,461
209,246
92,515
405,222
Amortisation for the year
—
—
—
(2,509)
(2,509)
Exchange rate movements
(14,844)
(480,025)
(88,701)
—
(583,570)
Net book amount at 31 December 2021
201,135
6,455,128
1,563,215
90,006
8,309,484
Additions
—
—
4,255,285
93,808
4,349,093
Amortisation for the year
—
—
—
(30,743)
(30,743)
Exchange rate movements
14,081
648,566
(87,945)
6,301
581,003
Net book amount at 31 December 2022
215,216
7,103,694
5,730,555
159,372
13,208,837
(a) Exploration and evaluation assets
The exploration licences and exploration and evaluation costs relate to the Vermelho project. No indicators of impairment were identified
during the year for the Vermelho project.
Vermelho
In January 2018, the acquisition of the Vermelho project was completed, which resulted in a deferred consideration of $1,850,000 being
recognised and accordingly the amount was capitalised to the exploration licences held within intangible assets shown above.
On 17 October 2020 the Group published the results of a Pre-Feasibility Study on the Vermelho Nickel Cobalt Project, which confirms
Vermelho as a large, high-grade resource, with a long mine life and low-cost source of nickel sulphate for the battery industry.
The economic and technical results from the study support further development of the project towards a full Feasibility Study and
included the following:
~ A 38-year mine life estimated to generate total cash flows after taxation of US$7.3billion;
~ An estimated Base Case post-tax Net Present Value1 (‘NPV’) of US$1.7 billion and Internal Rate of Return (‘IRR’) of 26%;
~ At full production capacity the Project is expected to produce an average of 25,000 tonnes of nickel and 1,250 tonnes of cobalt
per annum utilising the High-Pressure Acid Leach process;
~ The base case PFS economics assume a flat nickel price of US$16,400 per tonne (‘/t’) for the 38-year mine life;
~ C1 (Brook Hunt) cash cost of US$8,020/t Ni (US$3.64/lb Ni), defines Vermelho as a low-cost producer; and
~ Initial Capital Cost estimate is US$652 million (AACE class 4).
Nothing has materially deteriorated with the economics of the PFS between the publication date and the date of this report and the
Directors undertook an assessment of impairment through evaluating the results of the PFS along with recent market information relat
ing to capital markets and nickel prices and judged that there are no impairment indicators with regards to the Vermelho Project. Nickel
prices remain higher than they were at the time of the publication of the PFS and overall sentiment towards battery metals and supply
materials have grown more positive over the current year.
(b) Goodwill
Goodwill arose on the acquisition of Lontra Empreendimentos e Participações Ltda in 2010. The Directors have determined the recov
erable amount of goodwill based on the same assumptions used for the assessment of the Lontra exploration project detailed above.
As a result of this assessment, the Directors have concluded that no impairment charge is necessary against the carrying value of goodwill.
11 Property, plant and equipment
Group
Mine
Development
Property
US$
Vehicles and
other field
equipment
US$
Office
equipment
US$
Land
acquisition
US$
Building
improvements
US$
Total
US$
Cost
At 31 December 2020
41,909,101
105,074
78,287
119,090
—
42,211,552
Additions
13,328,811
759,475
69,980
10,199,425
—
24,357,691
Transfers
—
648
(648)
—
—
—
Interest capitalized
7,073,241
—
—
—
—
7,073,241
Disposals
—
—
(1,385)
—
—
(1,385)
Foreign exchange movements
(2,893,576)
(7,204)
(5,368)
(8,186)
—
(2,914,334)
At 31 December 2021
59,417,577
857,993
140,866
10,310,329
—
70,726,765
Additions
184,319,008
—
167,364
2,606,842
37,519
187,130,733
Interest capitalized
13,175,730
—
—
—
—
13,175,730
Transfers
781,069
(813,617)
32,334
—
214
—
Environmental rehabilitation
additions
634,883
—
—
—
—
634,883
Disposals
—
—
(2,828)
—
—
(2,828)
Foreign exchange movements
5,637,148
60,068
9,862
721,831
—
6,428,909
At 31 December 2022
263,965,415
104,444
347,598
13,639,002
37,733
278,094,192
Accumulated depreciation
At 31 December 2020
—
78,036
42,719
—
—
120,755
Charge for the year
—
7,526
12,840
—
—
20,366
Transfers
—
222
(222)
—
—
—
Disposals
—
—
(168)
—
—
(168)
Foreign exchange movements
—
(5,350)
(2,929)
—
—
(8,279)
At 31 December 2021
—
80,434
52,240
—
—
132,674
Charge for the year
—
6,933
42,165
—
978
50,076
Transfers
—
(744)
726
—
18
—
Disposals
—
—
(274)
—
—
(274)
Foreign exchange movements
—
5,631
3,657
—
—
9,288
At 31 December 2022
—
92,254
98,514
—
996
191,764
Net book amount as at
31 December 2022
263,965,415
12,190
249,084
13,639,002
36,737
277,902,428
Net book amount as at
31 December 2021
59,417,577
777,559
88,626
10,310,329
—
70,594,091
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
94
95
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
In December 2018, a Canadian NI 43-101 compliant Feasibility Study (FS) was published by the Company regarding the enlarged Ara
guaia Project which included the Vale dos Sonhos deposit acquired from Glencore. The financial results and conclusions of the FS clearly
indicate the economic viability of the Araguaia Project with an NPV of $401M using a nickel price of $14,000/t Ni. Nothing material had
changed with the economics of the FS between the publication date and the date of this report and the Directors undertook an assess
ment of impairment through evaluating the results of the FS along with recent market information relating to capital markets and nickel
prices and judged that there are no impairment indicators with regards to the Araguaia Project.
Impairment assessments for exploration and evaluation assets are carried out either on a project-by-project basis or by geographical area.
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration sites (the Araguaia Project), together with the Vale dos Sonhos deposit
acquired from Xstrata Brasil Mineração Ltda comprise a resource of a sufficient size and scale to allow the Company to create a signifi
cant single nickel project. For this reason, at the current stage of development, these two projects are viewed and assessed for impair
ment by management as a single cash generating unit.
The mineral concession for the Vale dos Sonhos deposit was acquired from Xstrata Brasil Mineração Ltda, a subsidiary of Glencore Can
ada Corporation, in November 2015.
The NPV has been determined by reference to the FS undertaken on the Araguaia Project. The key inputs and assumptions in deriving the
value in use were, the discount rate of 8%, which is based upon an estimate of the risk adjusted cost of capital for the jurisdiction, capital
costs of $443 million, operating costs of $8,194/t Nickel, a Nickel price of US$14,000/t and a life of mine of 28 years.
During the year further progress was made in the land acquisition process for the Araguaia project. US$1.7million of the land and ‘right
of way’ purchases is included in trade and other payables as at 31 December 2022.
US$105million of the additions for the mine development property are prepayments to suppliers which have been paid in advance of
delivery of mining equipment that is pre-fabricated offsite.
12 Trade and other receivables
Group
Company
2022
US$
2021
US$
2022
US$
2021
US$
Non-current
VAT and other taxes receivable
6,609,779
—
—
—
Prepayments
3,355,811
—
—
—
9,965,590
—
—
—
Current
VAT and other taxes receivable
3,886,402
1,196,648
1,465,745
558,419
Deposits
17,266
10,782
17,266
10,782
Prepayments
2,620,391
—
19,300
—
Other receivables
42,250,088
12,589,198
—
12,589,198
48,774,147
13,796,628
1,502,311
13,158,399
58,739,737
13,796,628
1,502,311
13,158,399
Other receivables relates to transaction costs for the US$633million financing package concluded in for the construction of the
Araguaia Ferronickel Project. These transaction costs relate to the senior debt finance agreements and the transaction costs will be
offset against the debt when it is drawn down.
13 Cash and cash equivalents
Group
Company
2022
US$
2021
US$
2022
US$
2021
US$
Cash at bank and on hand
122,376,147
206,271,198
7,091,717
194,374,682
Short-term deposits
31,651,820
4,221,082
17,515,956
4,221,082
154,027,967
210,492,280
24,607,673
198,595,764
The Group’s cash at bank and short-term deposits are held with institutions with the following credit ratings:
Group
Company
2022
US$
2021
US$
2022
US$
2021
US$
A+
59,589,545
198,537,081
7,236,784
198,527,111
A
16,642,684
115,953
—
—
BB
60,131,801
—
—
—
BB-
—
11,462,045
—
—
BBB+
17,364,568
68,653
17,364,568
68,653
B+
288,068
150,951
—
—
NA
11,301
157,597
6,321
—
154,027,967
210,492,280
24,607,673
198,595,764
The cash deposited with the institution with no credit rating is only held short term and the expected credit loss is not assessed as material.
Access is restricted to cash and cash equivalents of US$29,247,627. These funds have been secured in the case of a cost overrun against
the construction schedule and budget of the Araguaia Project. Refer to note 23 for more details.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
96
97
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
14 Derivative financial assets
Cash flow forward foreign exchange contracts
Total
US$
Derivatives designated as hedging instruments
Non-deliverable forward contracts
914,704
Value as at 31 December 2022
914,704
Current and non-current
Current
852,927
Non-current
61,777
914,704
In January 2022 the Group’s Board approved the budget for the development of the Araguaia Ferronickel Project (Project). With the
funding base being primarily US Dollars, the Project budget includes a significant portion of spend in local currency, the Brazilian Real
(BRL). The Group and its senior lenders agreed to implement a foreign exchange hedging strategy that ensures that at least 70% of its
BRL denominated capital expenditure to be incurred between 14 May 2022 and 31 March 2024 is hedged to reduce the exposure of
future BRL foreign exchange risk.
The Group has therefore entered into a series of monthly non-deliverable forward transactions (“NDFs”) which will lock in a series of
future USD: BRL rates based on the Group’s projected spend profile at the time of entering into those transactions. NDFs by definition
are non-deliverable and so the Group would either pay or receive an amount of BRL to ensure that it ultimately achieves the hedged rate.
The effects of the cash flow non-deliverable forward contract hedging relationship are as follows:
US$
Carrying amount of the derivatives
914,704
Change in fair value of designated hedging instruments
(914,704)
Change in fair value of designated hedged item
914,704
Notional amount
213,683,441
Maturity date
31/01/2023 – 28/03/2024
Hedge ratio
1:1
15 Share capital
Group and Company
2022
Number
2022
US$
2021
Number
(after share
consolidation)
2021
US$
Issued and fully paid
Ordinary shares of 1p each
At 1 January
190,118,279
52,215,236
72,468,864
20,666,053
Issue of ordinary shares
78,295,627
18,117,405
113,246,410
30,335,627
Conversion of special warrants into shares
—
—
4,403,005
1,213,556
At 31 December
268,413,906
70,332,641
190,118,279
52,215,236
Share capital comprises amount subscribed for shares at the nominal value.
2022
On 11 April 2022 the Group issued 6,000,000 new ordinary shares (after share consolidation 300,000 shares) at a price of 4.33 pence
per share in relation to the exercise of options by an employee of the Company.
On 31 May 2022 the Group completed a share consolidation on the basis of 1 new share for every 20 existing shares. As a result of the
share consolidation, the Company’s issued share capital consists of 268,413,906 ordinary shares (as at 31 December 2022) of £0.20
each. The 2021 number of shares has been restated to reflect the share consolidation.
On 6 July 2022 the Group issued 50,000 new ordinary shares at a price of 60 pence per share in relation to the exercise of options by an
employee of the Company.
On 8 November, 77,945,627 were placed with new and existing investors at a price of 90.50 pence per share. The gross proceeds raised
in the placement was US$80,000,000, and issue costs amounted to US$2,499,105.
2021
On 19 February 2021, 162,718,353 new ordinary shares (8,135,917 shares after share consolidation) were placed with new and existing
investors at a price of 7.5 pence per share. The gross proceeds raised in the placement was US$17,112,276 and issue costs amounted
to US$1,037,822.
On 14 April 2021, the 88,060,100 Special Warrants were converted to 88,060,100 ordinary shares of the Company (4,403,005 shares
after share consolidation).
On 23 December 2021, 2,102,209,850 new ordinary shares (105,110,492 shares after share consolidation) were placed with new and
existing investors at a price of 7.0 pence per share. The gross proceeds raised in the placement was US$196,478,769 and issue costs
amounted to US$9,351,649.
16 Share premium
Group and Company
2022
US$
2021
US$
At 1 January
245,388,102
65,355,677
Premium arising on issue of ordinary shares
63,830,692
183,255,417
Issue costs
(2,499,105)
(10,389,470)
Premium arising on conversion of special warrants into shares
—
7,986,413
Special warrants issue costs
—
(819,935)
At 31 December
306,719,689
245,388,102
Share premium comprises the amount subscribed for share capital in excess of nominal value.
17 Share-based payments
The Directors have discretion to grant options to the Group employees to subscribe for Ordinary shares up to a maximum of 10% of
the Company’s issued share capital. One third of options are exercisable at each six months anniversary from the date of grant, such
that all options are exercisable 18 months after the date of grant, other than the options issued on 12 July 2022. Options issued on 12
July 2022 will vest in three tranches on the 12-month, 18-month and 28-month anniversaries after the date of grant (refer below for
further information). All share options lapse on the tenth anniversary of the date of grant or the holder ceasing to be an employee of
the Group. Should holders cease employment then the options remain valid for a period of 3 months after cessation of employment,
following which they will lapse. Neither the Company not the Group has any legal or constructive obligation to settle or repurchase the
options in cash.
Two employees exercised their share options on 11 April 2022 and 6 July 2022 respectively.
On 31 May 2022 the Group completed a share consolidation on the basis of 1 new share for every 20 existing shares. The number of
share options and the exercise prices have been revised following the share consolidation.
The Group awarded new share options on 12 July 2022 (the “Award Date”) over 9,736,250 ordinary shares of £0.20 each in the capital of
the Company to executives (PDMRs) and key personnel in the UK and Brazil. Each share option is exercisable in return for one ordinary
share in the Company and will vest in three tranches on the 12-month, 18-month and 28-month anniversaries of the Award Date at a
ratio of 25%, 25% and 50%, with exercise prices of £1.68, £1.72 and £1.76 for each one third of the Awards.
Movements on number of share options and their related exercise price are as follows:
2022
2021
Number of options
(after share consol
idation)
Weighted
average
exercise price
(after share
consolida
tion)
Number
of options
(after share
consolida
tion)
Weighted
average
exercise price
(after share
consolidation)
Number
of options
(before share
consolidation)
Weighted
average
exercise price
(before share
consolidation)
US$
US$
US$
Outstanding at 1 January
5,715,000
1.02
6,267,500
1.37
125,350,000
0.07
Forfeited
385,000
1.54
-552,500
3.75
-11,050,000
0.19
Exercised
350,000
1.00
0
0.00
0
0
Granted
9,736,250
2.07
0
0.00
0
0
Outstanding at 31 December
14,716,250
1.70
5,715,000
1.145
114,300,000
0.057
Exercisable at 31 December
5,070,000
1.003
5,715,000
1.145
114,300,000
0.057
The options outstanding at 31 December 2022 had a weighted average remaining contractual life of 7.48 years (2021: 4.47 years).
The fair value of the share options issued during the current financial year was determined using the Black-Scholes valuation model.
The expected volatility is based on historical volatility for one year prior to the date of grant. The risk-free rate of return is based on zero
yield government bonds for a term consistent with the option life.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
98
99
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
The parameters used are detailed below:
2022
options
Date of grant
12/07/2022
Weighted average share price £
98.5 pence
Weighted average exercise price £
172 pence
Weighted average fair value at the measurement date £
41.69 pence
Expiry date
11/07/2032
Options granted
9,736,250
Volatility
45.1%
Dividend yield
Nil
Option life
10 years
Annual risk-free interest rate
2.14%
The range of option exercise prices is as follows:
Range of exercise
prices
2022
Weighted
average
exercise
price
(US$)
2022
Number of
shares
2022
Weighted
average
remaining
life
expected
(years)
2022
Weighted
average
remaining
life
contracted
(years)
2021
Weighted
average
exercise price
(adjusted
for share
consolidation)
(US$)
2021
Number of
shares
(adjusted
for share
consolidation)
2021
Weighted
average
remaining
life
expected
(years)
2021
Weighted
average
remaining life
contracted
(years)
0 – 100 pence (£)
0.924
4,582,500
1.1682
1.1682
1.046
5,152,500
4.3855
4.3855
100 – 200 pence (£)
2.055
10,133,750
6.3074
6,3074
2.052
562,500
0.223
0.223
The expense recognised for share options granted during the year was US$1,415,581. The expense will be recognised
over the vesting period until the share options have fully vested.
Group and Company
Share options
reserve
US$
Charge for share options granted
1,415,581
At 31 December 2022
1,415,581
18 Other reserves
Merger
Translation
Other
reserve
reserve
reserve
Total
Group
US$
US$
US$
US$
At 1 January 2021
17,046,353
(38,886,420)
(1,678,968)
(23,519,035)
Currency translation differences
—
258,977
—
258,977
At 31 December 2021
17,046,353
(38,627,443)
(1,678,968)
(23,260,058)
Currency translation differences
—
(6,678,108)
—
(6,678,108)
At 31 December 2022
17,046,353
(45,305,551)
(1,678,968)
(29,938,166)
Company
Translation
reserve US$
Merger
reserve
US$
Total
US$
At 1 January 2021
(9,408,481)
17,046,353
7,637,872
Currency translation differences
2,715,159
—
2,715,159
At 31 December 2021
(6,693,322)
17,046,353
10,353,031
Currency translation differences
(29,785,838)
—
(29,785,838)
At 31 December 2022
(36,479,160)
17,046,353
(19,432,807)
Other reserve
The other reserve arose on consolidation as a result of merger accounting for the acquisition of the entire issued share capital of Hori
zonte Exploration Limited during 2006 and represents the difference between the value of the share capital and premium issued for the
acquisition and that of the acquired share capital and premium of Horizonte Exploration Limited.
Merger Reserve
During the year ended 31 December 2010 the Company acquired 100% of Teck Cominco Brasil S.A and Lontra Empreendimentos e Par
ticipações Ltda. These acquisitions were effected by the issue of shares in Horizonte Minerals plc. These shares qualified for merger relief
under section 612 of the Companies Act 2006. In accordance with section 612 of the Companies Act 2006 the premium on the shares
issued was recognised in a separate reserve within equity called merger reserve.
Currency translation differences relate to the translation of Group entities that have a functional currency different from the presenta
tion currency (refer note 2.8). Movements in the translation reserve are linked to the changes in the value of the Brazilian Real against
the US Dollar: the intangible assets of the Group are located in Brazil, and their functional currency is the Brazilian Real, which decreased
in value against US Dollar during the year.
19 Trade and other payables
Group
Company
2022
2021
2022
2021
US$
US$
US$
US$
Non-current
Trade and other payables
723,333
608,975
—
—
Current
Trade and other payables
25,949,374
4,557,525
1,739,397
—
Social security and other taxes
1,304,201
771,465
178,318
45,565
Accrued expenses
1,211,296
16,245,372
1,171,543
16,236,982
Commitment fees payable
16,167
—
—
—
28,481,038
21,574,362
3,089,258
16,282,547
Total trade and other payables
29,204,371
22,183,337
3,089,258
16,282,547
20. Contingent and deferred consideration
20.1 Contingent Consideration payable to Xstrata Brasil Mineração Ltda
On 28 September 2015 the Company announced that it had reached agreement to indirectly acquire through wholly owned subsidiar
ies in Brazil the advanced high-grade Glencore Araguaia nickel project (GAP) in north central Brazil. GAP is located in the vicinity of the
Company’s Araguaia Project.
Pursuant to a conditional asset purchase agreement (Asset Purchase Agreement) between, amongst others, the Company and Xstrata
Brasil Exploraçâo Mineral Ltda (Xstrata), a wholly-owned subsidiary of Glencore Canada Corporation (Glencore), the Company has agreed
to pay a total consideration of US$8 million to Xstrata, which holds the title to GAP. The consideration is to be paid according the follow
ing schedule;
~ US$2,000,000 in ordinary shares in the capital of the Company which was settled by way of issuing new shares in
the Company as follows: US$660,000 was paid in shares to a subsidiary of Glencore during 2015 and the transfer of the
Serra do Tapa and Pau Preto deposit areas (together: SdT) during 2016 initiated the final completion of the transaction
with a further US$1,340,000 shares in the Company issued.
~ US$1,000,000 after the date of issuance of a joint Feasibility Study for the combined Araguaia & GAP project areas, to be
satisfied in HZM Shares (at the 5 day volume weighted average price taken on the tenth business day after the date of such
issuance) or cash, at the election of the Company. Of this $330,000 is due upon the inclusion of Vale dos Sonhos in a Feasibility
Study and $670,000 for Serra do Tapa, during 2018 a Feasibility Study including Vale dos Sonhos was published and the consid
eration settled by way of issuing 13,855,487 new Shares in the Company occurred during 2019. Serra do Tapa is not included in
the current project plans, therefore management have concluded it’s not currently probable that the consideration for Serra do
Tapa will be paid. This consideration is therefore not included in contingent consideration; and
~ The remaining US$5,000,000 consideration will be paid in cash, as at the date of first commercial production from any of the
resource areas within the Enlarged Project area. Following transfer of the concession for the VdS deposit area to a subsidiary of
the Company, this has been included in contingent consideration payable.
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
100
101
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
The contingent consideration payable to Xstrata Brasil Mineração Ltda for the acquisition of the Araguaia project has a carrying value of
US$2,470,215 at 31 December 2022 (31 December 2021: US$2,308,612). It comprises US$5,000,000 consideration in cash as at the
date of first commercial production of ferronickel product (excluding the commissioning period) from any of the resource areas covered
in the purchase agreement, i.e. Vale dos Sonhos (VDS) and Serra do Tapa (SDT). The key assumptions underlying the treatment of the
contingent consideration of US$5,000,000 is a discount factor of 7.0% along with the estimated date of first commercial production from
the VDS and SDT permits.
During 2020 the Araguaia project entered the development phase and as a result borrowing costs including unwinding of discount on
contingent consideration for qualifying assets are capitalised to the mine development asset.
20.2 Contingent consideration payable to Vale Metais Basicos S.A.
~ On 19 December 2017 the Company announced that it had reached an agreement with Vale S.A (“Vale”) to indirectly acquire
through wholly owned subsidiaries in Brazil, 100% of the advanced Vermelho nickel-cobalt project in Brazil (“Vermelho”).
~ The terms of the Acquisition required Horizonte to pay an initial cash payment of US$150,000 with a further US$1,850,000 in
cash payable on the second anniversary of the signing of the asset purchase agreement. This was paid by the Group in Decem
ber 2019 and is no longer included in deferred consideration.
~ A final payment of US$6,000,000 in cash is payable by Horizonte within 30 days of first commercial sale of product from Ver
melho. Management have assessed that with the publication of the Pre-Feasibility Study during 2019 for the Vermelho project,
there is a reasonable probability that the project will advance through to production and therefore recognised the contingent
consideration within liabilities for the first time in 2019.
The contingent consideration payable to Vale Metais Basicos S.A. for the acquisition of the Vermelho project has a carrying value of
US$4,425,522 at 31 December 2022 (31 December 2021: US$4,425,522). It comprises US$6,000,000 consideration in cash as at the
date of first commercial production from the Vermelho project and was recognised for the first time in December 2019, following the
publication of a PFS on the project. The key assumptions underlying the treatment of the contingent consideration of US$6,000,000 is
a discount factor of 7.0% along with the estimated date of first commercial production. The estimated first date of commercial produc
tion was revised during the year from June 2026 to June 2027. This revision was considered necessary given the expected timelines
for the feasibility study completion and thereafter commence with the Vermelho Project development which includes finance raising.
The finance costs in respect of this contingent consideration are expensed as the Vermelho project has not entered the construction phase.
20.3 Deferred consideration payable to Companhia Brasileiro de Aluminio
On 8 December 2021 the Group’s subsidiary Araguaia Niquel Metais Ltda (ANM) entered into an asset purchase agreement to purchase
certain new and unused ferronickel processing equipment (the “Processing Equipment”) from Companhia Brasileira de Alumínio (“CBA”).
The Processing Equipment comprises the key components of a conventional rotary kiln electric furnace plant (“RKEF”), excluding the
furnace, and is expected to provide meaningful synergies in relation to the development of the Araguaia ferronickel project.
An upfront cost of US$600,000 is payable in cash on signing with a total consideration of up to US$7,000,000, with the balance payable
upon the achievement of future milestones related to the development and operation of Araguaia. As part of the transaction CBA will
continue to perform care and maintenance activities going forward until it is removed from the existing site.
The total consideration of up to US$7 million payable by ANM will be paid according to the following schedule:
~ US$600,000 was paid on execution of the Agreement;
~ US$950,000 is payable upon the removal of 80% of the Processing Equipment from CBA’s Niquelândia operations;
~ US$950,000 is payable upon reaching 50% completion of Araguaia plant construction;
~ US$1,150,000 is payable upon production at Araguaia reaching 90% of nameplate capacity for a period of 60 days, on
average, and with up to 50% of such amount payable in Horizonte shares, at Horizonte’s election; and
~ US$3,350,000 is payable by Horizonte in three equal annual instalments with the first instalment due within 45 days of
the first sale of ferronickel to a third party. Horizonte may choose to pay the outstanding balance of this amount at any
time of its choosing with up to 50% of the total able to be paid in Horizonte’s shares, at Horizonte’s election.
In addition, the contract provides that each component of the Purchase Price shall be deemed immediately due and payable to the
Seller at the long stop date of December 31, 2027. The deferred consideration payable to CBA has a carrying value of US$5,758,431 at
31 December 2022 (31 December 2021: US$5,443,861). The key assumptions underlying the treatment of the deferred consideration
of US$7,000,000 is a discount factor of 7.0% along with the estimated date of completion of the project milestones as outlined above.
The critical assumptions underlying the treatment of the contingent and deferred considerations are set out in note 4.2.
Companhia
Brasileira
de Aluminio
(in respect
of Araguaia
project)
Xstrata Brasil
Mineração
Ltda (in
respect of
Araguaia
project)
Vale Metais
Basicos S.A.
(in respect
of Vermelho
project)
Total
US$
US$
US$
US$
At 1 January 2021
—
3,946,090
4,136,002
8,082,092
Initial recognition
5,424,742
—
—
5,424,742
Unwinding of discount
19,119
276,227
289,520
584,866
Change in estimate
—
(1,913,705)
—
(1,913,705)
At 31 December 2021
5,443,861
2,308,612
4,425,522
12,177,995
Unwinding of discount
314,570
161,603
299,399
775,572
Change in estimate
—
—
(299,399)
(299,399)
At 31 December 2022
5,758,431
2,470,215
4,425,522
12,654,168
Reclassification to current liabilities
(950,000)
—
—
(950,000)
At 31 December 2022
4,808,431
2,470,215
4,425,522
11,704,168
The change in estimate during 2021 relates revisions to the estimated payment date of the Xstrata Brasil Mineração Ltda contingent
consideration as a result of the start date of commercial production at the VDS and SDT areas being delayed.
21 a) Royalty financing liability
21 a.1) Araguaia royalty financing liability
On 29 August 2019 the Group entered into a royalty funding arrangement with Orion Mine Finance (“OMF”) securing a gross upfront
payment of US$25,000,000 before fees in exchange for a royalty, the rate being in a range from 2.25% to 3.00% and determined by the
date of funding and commencement of major construction. The rate has been confirmed to be 2.95%. The royalty is paid over the first
426k tonnes of nickel produced from the Araguaia Ferronickel project. The royalty is linked to production and therefore does not become
payable until the project is constructed and commences commercial production. The agreement contains certain embedded derivatives
which as per IFRS9 have been separately valued and included in the fair value of the financial instrument in note 21 b).
The Royalty liability has initially been recognised using the amortised cost basis with an effective interest rate of 14.5%. When circum
stances arise that lead to payments due under the agreement being revised, the group adjusts the carrying amount of the financial
liability to reflect the revised estimated cash flows. This is achieved by recalculating the present value of estimated cash flows using the
original effective interest rate of 14.5%. Any adjustment to the carrying value is recognised in the income statement.
The carrying value of the royalty reflects assumptions on expected long term nickel price, update headline royalty rate as well as the tim
ing of payments related to expected date of commencement of production and hence payment to be made under the royalty agreement.
The long-term nickel price used in the royalty valuation as at 31 December 2022 is US$18,721/t Ni (2021:US$ 16,945/t Ni).
Management have sensitised the carrying value of the royalty liability for a US$1,000/t Ni increase/decrease in future nickel price the
carrying value would change by US$2,682,547 (2021:US$2,711,505).
COMPA N Y OV ERV IE W
S T R AT EGIC REP OR T
CORP OR AT E GOV ERN A NCE
FIN A NCIA L S TAT EMEN T S
102
103
HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
21 a.2) Vermelho royalty financing liability
On 23 November 2021 the Group entered into a royalty funding arrangement with Orion Mine Finance (“OMF”) securing a gross upfront
payment of US$25,000,000 before fees in exchange for a royalty, at a rate of 2.1%. The royalty rate will increase to 2.25% if substantial
construction of the Vermelho Project has not commenced within 5 years of the closing date, 30 March 2022. The royalty will be paid over
the life of mine of Vermelho. The Royalty agreement has certain provisions to revise the headline royalty rate should there be change in
the mine schedule and production profile prior to construction or if the resource covered in the Vermelho Feasibility Study is depleted.
The royalty is linked to production and therefore does not become payable until the project is constructed and commences commercial
production. The agreement contains certain embedded derivatives which as per IFRS9 have been separately valued and included in the
fair value of the financial instrument in note 21 b). The royalty funds were received on 30 March 2022.
The Royalty liability has initially been recognised using the amortised cost basis with an effective interest rate of 17.66%. When cir
cumstances arise that lead to payments due under the agreement being revised, the group adjusts the carrying amount of the financial
liability to reflect the revised estimated cash flows. This is achieved by recalculating the present value of estimated cash flows using the
original effective interest rate of 17.66%. Any adjustment to the carrying value is recognised in the income statement.
The carrying value of the royalty reflects assumptions on expected long term nickel and cobalt prices, headline royalty rate as well as the
timing of payments related to expected date of commencement of production and hence payment to be made under the royalty agreement.
The assumption influencing the initial valuation of the carrying value of the Vermelho royalty is the long-term nickel price of US$17,756
t/Ni (as at the initial recognition date 30 March 2022), the long-term cobalt price of US$53,355t/Co (as at the initial recognition date 30
March 2022), and the royalty rate of 2.1%. The assumptions influencing the valuation at the period end date is the long-term nickel price
of US$18,721 t/Ni, the long-term cobalt price of US$56,950 t/Co. The royalty rate has remained at 2.1%.
Management have sensitised the carrying value of the royalty liability by a change in the royalty rate to 2.25% and it would be
US$2,925,856 higher and for a US$1,000/t increase/decrease in future nickel price and future cobalt price the carrying value would
change by US$1,981,761.
Vermelho
Royalty
US$
Araguaia Royalty
US$
Total
US$
Net book amount at 1 January 2021
—
30,131,755
30,131,755
Unwinding of discount
—
4,637,057
4,637,057
Change in carrying value
—
9,727,692
9,727,692
Net book amount at 31 December 2021
—
44,496,504
44,496,504
Initial recognition
25,000,000
—
25,000,000
Embedded derivative – initial valuation
9,848,175
—
9,848,175
Transaction costs
(847,939)
—
(847,939)
Unwinding of discount
4,448,595
5,350,666
9,799,261
Change in carrying value
2,513,156
(1,063,902)
1,449,254
Net book amount at 31 December 2022
40,961,987
48,783,268
89,745,255
21 b) Derivative financial asset
21 b.1) Araguaia derivative financial asset
The aforementioned agreement includes several options embedded within the agreement as follows:
~ If there is a change of control of the Group and the start of major construction works (as defined by the expenditure of in excess
of $30m above the expenditure envisaged by the royalty funding) is delayed beyond a certain pre agreed timeframe the follow
ing options exist:
• Call Option – which grants Horizonte the option to buy back between 50 – 100% of the royalty at a valuation that meets
certain minimum economic returns for OMF;
• Make Whole Option – which grants Horizonte the option to make payment as if the project had started commercial produc
tion and the royalty payment were due; and
• Put Option – should Horizonte not elect for either of the above options, this put option grants OMF the right to sell between
50 – 100% of the Royalty back to Horizonte at a valuation that meets certain minimum economic returns for OMF.
~ Buy Back Option - At any time from the date of commercial production, provided that neither the Call Option, Make Whole
Option or the Put Option have been actioned, Horizonte has the right to buy back up to 50% of the Royalty at a valuation that
meets certain minimum economic returns for OMF.
The directors have undertaken a review of the fair value of all of the embedded derivatives and are of the opinion that the Call Option,
Make Whole Option and Put Option currently have immaterial values as the probability of both a change of control and project delay are
currently considered to be remote. There is considered to be a higher probability that the Group could in the future exercise the Buy Back
Option and therefore has undertaken a fair value exercise on this option.
The initial recognition of the Buy Back Option has been recognised as an asset on the balance sheet with any changes to the fair value
of the derivative recognised in the income statement. It been fair valued using a Monte Carlo simulation which runs a high number of
scenarios in order to derive an estimated valuation.
The assumptions for the valuation of the Buy Back Option are the future nickel price of US$18,721/t Ni (2021:US$16,941/t Ni), the start
date of commercial production in March 2024 (2021: May 2023), the prevailing royalty rate of 2.95% (2021: 2.95%), the inflation rate of
2.22% (2021: 1.76%), and volatility of nickel prices of 39.7% (2021: 22.1%).
Sensitivity analysis
The valuation of the Buyback option is most sensitive to future nickel price estimates and nickel price volatility.
A 15% adjustment to the estimated future nickel price would result in a variance between US$2.7million and US$3million in the valuation.
21 b.2) Vermelho derivative financial assets
Horizonte has the right to buy back 50% of the royalty on the first four anniversaries of closing (or on any direct or indirect change of
control in respect of Vermelho up until the fourth anniversary of closing).
After the 4th anniversary, Horizonte has the right to buy back 50% of the royalty on any direct or indirect change of control in respect of
Vermelho at a valuation that meets certain minimum economic returns for OMF.
The initial recognition of the Buy Back Option has been recognised as an asset on the balance sheet with any changes to the fair value of
the derivative recognised in the income statement. It has been fair valued using a Monte Carlo simulation which runs a high number of
scenarios in order to derive an estimated valuation.
The assumptions for the valuation of the Buy Back Option are the future nickel price (US$18,721/t Ni), the future cobalt price (US$56,950/t
Co), the production profile from 2027 to 2065, the expected royalty rate (2.1%), the inflation rate (2.22%), volatility of nickel prices (22.1%)
and volatility of cobalt prices (28.0%).
Sensitivity analysis
The valuation of the Buyback option is sensitive to estimates for nickel and cobalt prices and their respective volatilities.
A 15% adjustment to the estimated future nickel and cobalt prices would result in a variance of US$3.7 million in the valuation.
Refer to the table below for the summary of the derivative financial assets valuation:
Vermelho
Royalty
US$
Araguaia
Royalty
US$
Total
US$
Value as at 1 January 2021
—
2,400,000
2,400,000
Change in fair value
—
2,550,000
2,550,000
Value as at 31 December 2021
—
4,950,000
4,950,000
Initial recognition
9,848,175
—
9,848,175
Change in fair value
(366,284)
57,496
(308,788)
Value as at 31 December 2022
9,481,891
5,007,496
14,489,387
22 Convertible loan notes
On 29 March 2022 the Company issued convertible loan notes to the value of US$65 million at an interest rate of 11.75% with interest
accruing quarterly in arrears. The convertible loan notes were issued at a discount of 5.75%. The maturity date of the instruments is
15 October 2032.
The convertible loan notes are unsecured and the noteholders will be repaid as follows:
~ Interest shall be capitalised until the Araguaia Project Completion date, estimated to be 31 December 2025 (subject to various
technical operating tests being passed)
~ After Project Completion Date, interest shall be paid quarterly only if there is available cash (after the company meets its senior
debt and other senior obligations)
~ After Project Completion Date, principal repayments (including accrued capitalized interest) shall be paid quarterly subject to
available cash for distribution. In addition, a cash sweep of 85% of excess cash will apply on each interest payment date
~ Any amount outstanding on the CLN on the maturity date 15 October 2032, Horizonte is obliged to settle in full on
the maturity date.
At any time until the Maturity Date, the Noteholder may, at its option, convert the notes, partially or wholly, into a number of ordinary
shares up to the total amount outstanding under the Convertible Note divided by the Conversion Price. The Conversion Price is 125% of
the Subscription Price of 0.07 pence (after share consolidation 1.40 pence converted to US$ at a rate of 1.3493). The Conversion Price
is therefore US$1.89. After the equity fundraise that was completed on 8 November 2022 (refer to note 14) the conversion price was
revised to £1.268 /US$1.71.
COMPA N Y OV ERV IE W
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CORP OR AT E GOV ERN A NCE
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HORIZONTE MINERALS 2022 ANNUAL REPORT
The convertible loan is a hybrid financial instrument, whereby a debt host liability component and an embedded derivative liability
component was determined at initial recognition. The conversion option did not satisfy the fixed for fixed equity criterion (fixed number
of shares and fixed amount of functional currency cash) as the currency of the convertible loan notes is US Dollar and the functional
currency of Horizonte Minerals Plc and its share price is GBP.
For convertible notes with embedded derivative liabilities, the fair value of the embedded derivative liability is determined first and the
residual amount is assigned to the debt host liability.
The initial recognition of the embedded derivative conversion feature has been recognised as a liability on the balance sheet with any
changes to the fair value of the derivative recognised in the income statement. It has been fair valued using a Monte Carlo simulation
which runs a high number of scenarios in order to derive an estimated valuation. The Monte Carlo simulation was performed at the
transaction date 29 March 2022 and at the year-end date 31 December 2022.
The assumptions for the valuation of the conversion feature (per the Monte Carlo simulation) at initial recognition are the Horizonte
Minerals Plc future share price volatility (60.3%), GBP: USD exchange rate volatility (11.1%) on the conversion price. At the year end date
the share price volatility assumption was 42.9% and the GBP: USD exchange rate volatility assumption 10%.
At 29 March 2022 the fair value of the conversion feature was calculated (per the Monte Carlo simulation) as US$36,458,088. The pro
ceeds received was US$ 61,262,500 and thus the residual allocated to the debt host liability was US$24,804,412.
The debt host liability will be accounted for using the amortised cost basis with an effective interest rate of 34%. The effective interest
rate is recalculated after adjusting for the transaction costs and the discount of 5.75%. The Group will recognise the unwinding of the
discount at the effective interest rate, until the maturity date, the carrying amount at the maturity date will equal the cash payment
required to be made.
The directly attributable transaction costs amounted to US$2,347,041 which was allocated proportionately to the embedded derivative
(US$1,396,754) and the convertible loan notes liability (US$ 950,287). The embedded derivative transaction costs were recognised in
profit and loss, whereas the convertible loan liability transaction costs were deducted from the financial liability carrying amount.
After the fifth anniversary of the closing date, Horizonte shall have a one-time right to redeem the Convertible Notes, in whole, at 105%
of the par value plus accrued and unpaid interest in cash if:
1. The thirty-business day VWAP of Horizonte shares exceeds 200% of the Conversion Price and the average daily liquidity of the Com
pany’s shares (across all relevant exchanges) exceeds US$2.5 million per trading day over the prior 30 trading days; or
2. There is a change of control.
Management have assessed the likelihood of the above events occurring is highly improbable and thus the value of the redemption right
is immaterial and was thus not considered in the valuation of the instrument.
Sensitivity analysis – Conversion feature derivative
The valuation of the conversion feature derivative is sensitive to the Company’s equity price and share price volatility. A 15% adjustment
on the Company’s equity price results in a variance of between US$7.6million and US$8.3million in the valuation. A 30% adjustment on
the equity volatility results in a variance of US4.9million.
Embedded
derivative
Convertible
loan notes
liability
Total
US$
US$
US$
Initial recognition (after discount on issue)
36,458,088
24,804,412
61,262,500
Transaction costs
—
(950,287)
(950,287)
Unwinding of discount
—
5,956,508
5,956,508
Change in fair value
(6,821,201)
—
(6,821,201)
Value as at 31 December 2022
29,636,887
29,810,633
59,447,520
23 Cost overrun facility
On 30 November 2022, the Group satisfied all conditions precedent in relation to the cost overrun facility (COF) and had received all COF
funds from Orion. The COF benefits from the same security package as the senior debt facility but will be subordinated to the senior
debt facility. Access to the COF funds is restricted and will only be available in the case of a cost overrun against the Araguaia Project
construction schedule and budget, subject to certain conditions including:
1. 90% of the funding from the Equity Fundraise and Convertible loan notes have been invested in the construction
of the Araguaia Project
2. A gearing ratio of 70:30 being met
The COF is US$25million with an interest rate of 13% and a maturity date of 15 October 2032. Interest will be calculated quarterly and be
payable in arrears at the end of each interest period – March 31, June 30, September 30 and December 31. The first interest period was
30 November to 31 December 2022. The initial principal repayment date is 31 March 2025. 3.23% of the outstanding principal amount
will be paid at each quarter end date starting from 31 March 2025.
The COF will be accounted for using the amortised cost basis with an effective interest rate of 15%. The effective interest rate is recalcu
lated after adjusting for the transaction costs. The Group will recognise the unwinding of the discount at the effective interest rate, until
the maturity date, the carrying amount at the maturity date will equal the cash payment required to be made.
Total
US$
Initial recognition
25,000,000
Transaction costs
(1,198,634)
Unwinding of discount
288,321
Interest repayments
(279,860)
Value as at 31 December 2022
23,809,827
24 Senior debt facility
On 15 March 2022 the Group entered into legally binding documentation including a comprehensive intercreditor agreement and
loan agreements with two export credit agencies in relation to its senior secured project finance debt facility of US$346.2 mil
lion. The senior debt facility was executed between Araguaia Niquel Metais LTDA, and a syndicate of international financial institu
tions, being BNP Paribas, BNP Paribas Fortis, ING Capital LLC, ING Bank N.V., Natixis, New York Branch, Société Générale and SEK
(Swedish Export Credit Corporation).
The senior debt facility includes the following:
~ Commercial senior facility of US$200,000,000 provided by the Senior Lenders;
~ ECA facility of US$74,562,000 guaranteed by EKF (Denmark’s Export Credit Agency);
~ ECA facility of US$71,638,000 guaranteed by Finnvera plc (Finland’s Export Credit Agency);
On 7 December 2022, the Group satisfied all conditions precedent for the first utilisation under the senior debt facility of US$346.2 mil
lion. The first utilisation was for US$5million.
The interest rate on the ECA facility is calculated according to this formula : Margin + Term SOFR (Secured Overnight Financing Rate) +
Baseline Credit Adjustment Spread (CAS). The ECA Facility margin is 1.8%. The Term SOFR was the first interest period was 4.21714% and
the Baseline CAS 0.11448%. The ECA facility interest rate was therefore 6.13162% at 31 December 2022.
The interest rate on the Commercial facility is calculated according to this formula : Margin + Term SOFR (Secured Overnight Financing
Rate) + Baseline Credit Adjustment Spread (CAS). The Commercial Facility margin is 4.75%. The Term SOFR was the first interest period
was 4.21714% and the Baseline CAS 0.11448%. The ECA facility interest rate was therefore 9.08162% at 31 December 2022.
Interest will be calculated quarterly and be payable in arrears at the end of each interest period – March 31, June 30, September 30 and
December 31. The first interest period was 7 to 31 December 2022. The initial principal repayment date is 31 March 2025. The outstand
ing principal amount will be paid according to the repayment schedule at each quarter end date starting from 31 March 2025.
The final maturity date on the Commercial Facility is 15 July 2030. The final maturity date on the ECA Facility is 15 July 2032.
COMPA N Y OV ERV IE W
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HORIZONTE MINERALS 2022 ANNUAL REPORT
The ECA and Commercial Facilities will be accounted for using the amortised cost basis with effective interest rates of 12.25% and 11.57%
respectively. The effective interest rate is recalculated after adjusting for the transaction costs. The Group will recognise the unwinding
of the discount at the effective interest rate, until the maturity date, the carrying amount at the maturity date will equal the cash pay
ment required to be made.
The Senior Debt Facility is secured via a comprehensive security package which includes:
~ Pledge of shares in the Araguaia Níquel Metais Ltda. (the “Borrower”);
~ Pledge of shares of the guarantors (other than Horizonte Minerals plc);
~ First ranking security over all of the Araguaia Project’s assets (including its mineral rights);
~ Assignment of insurance policies;
~ Assignment of material project contracts (including rights under hedge agreements);
~ Charge over certain bank accounts of the Borrower (including the debt service bank account, the cost overrun account and the
insurance proceeds account); and
~ Assignment of credit related to intercompany loans (by the Group borrowing entity) and subordination of the debt related to
inter-company loans (by the Group lending entity).
ECA Facility
Commercial
Facility
Total
US$
US$
US$
Initial recognition
2,111,496
2,888,504
5,000,000
Transaction costs
(446,399)
(232,137)
(678,536)
Unwinding of discount
12,660
19,148
31,808
Interest repayments
(8,271)
(16,760)
(25,031)
Value as at 31 December 2022
1,669,486
2,658,755
4,328,241
As at 31 December 2022 the drawn vs undrawn balance on the senior debt facility was as follows:
Drawn
Undrawn
Total
Commercial Facility
2,888,504
343,311,496
346,200,000
EKF ECA Facility
1,076,863
73,485,137
74,562,000
Finnvera ECA Facility
1,034,633
70,603,367
71,638,000
25 Environmental rehabilitation provision
Environmental rehabilitation provision relates to the estimated cost of returning the Araguaia Project mining property to its original
state at the end of the life of mine in accordance with the Brazilian legislation. The cost is recognised as part of the Mine Development
Asset and will be depreciated over the life of the mine. The main uncertainty relates to estimating the cost that will be incurred at the
end of the life of mine. The costs have been estimated based on a mine closure report prepared by a third party expert taking into con
sideration the environmental disturbance to date. The cost was inflation adjusted over the life of mine using inflation projections from
reputable Brazilian financial institution and then discounted to its present value at 8%.
Total
US$
Additions
634,883
Value as at 31 December 2022
634,883
26 Right of use assets and lease liability
In December 2021, Araguaia Niquel Metais Ltda entered into a commercial lease agreement for an office property in Belo Horizonte.
The duration of the lease will be for 5 years. The instalments in the first year will be BRL 40,000 (US$7,666) per month and in years 2 to
5 the monthly instalment will be BRL 43,520 (US$8,340).
In June 2022, Araguaia Niquel Metais Ltda entered into a lease agreement to lease 17 L200 vehicles. The duration of the lease will be
for 26 months with a monthly cost of BRL 107,735 (US$20,648). As at 31 December 2022, only 10 vehicles are being leased to date.
The right of use asset and lease liability was recognised in December 2021 at inception of the lease.
Office building
Vehicles
Total
US$
US$
US$
Right of use asset
Initial recognition
380,482
—
380,482
Value as at 31 December 2021
380,482
—
380,482
Initial recognition
—
291,290
291,290
Additions
431,773
—
431,773
Amortisation
(138,694)
(33,610)
(172,304)
Foreign exchange movements
26,637
—
26,637
Value as at 31 December 2022
700,198
257,680
957,878
Office building
Vehicles
Total
US$
US$
US$
Lease liability
Initial recognition
380,482
—
380,482
Value as at 31 December 2021
380,482
—
380,482
Initial recognition
—
291,290
291,290
Additions
431,773
—
431,773
Unwinding of discount
50,240
14,857
65,097
Lease payments
(165,407)
(42,145)
(207,552)
Foreign exchange movements
25,880
—
25,880
Value as at 31 December 2022
772,968
264,002
986,970
Reclassified to current liabilities
143,330
128,350
271,680
Non-current lease liability
579,638
135,652
715,290
27 Note to statement of cash flows
Below is a reconciliation of borrowings from financial transactions:
Senior Debt
Facility
Cost Overrun
Facility
Convertible
Loan Notes
Liability
Royalty
Financing
Derivative
asset
Total
US$
US$
US$
US$
US$
US$
As at 1 January 2021
—
—
—
30,131,755
(2,400,000)
27,731,755
Non cash flow adjustments:
Unwinding of discount
—
—
—
4,637,057
—
4,637,057
Change in carrying value /fair value
—
—
—
9,727,692
(2,550,000)
7,177,692
Total non-current borrowings
31 December 2021
—
—
—
44,496,504
(4,950,000)
39,546,504
Cash flow adjustments:
Initial recognition
5,000,000
25,000,000
61,262,500
25,000,000
—
116,262,500
Transaction costs
(678,536)
(1,198,634)
(950,287)
(847,939)
—
(3,675,396)
Interest payments
(25,031)
(279,860)
—
—
—
(304,891)
Non cash flow adjustments:
Embedded derivative – initial
valuation
—
—
—
9,848,175
(9,848,175)
—
Unwinding of discount
31,808
288,321
5,956,508
9,799,261
—
16,075,898
Change in carrying value /fair value
—
—
(6,821,201)
1,449,254
308,788
(5,063,159)
Total non-current borrowings
31 December 2022
4,328,241
23,809,827
59,447,520
89,745,255
(14,489,387)
162,841,456
28 Dividends
No dividend has been declared or paid by the Company during the year ended 31 December 2022 (2021: nil).
COMPA N Y OV ERV IE W
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CORP OR AT E GOV ERN A NCE
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HORIZONTE MINERALS 2022 ANNUAL REPORT
29 Earnings per share
(a) Basic
The basic loss per share of 2.634p loss per share (2021 loss per share: 15.698p) is calculated by dividing the loss attributable to own
ers of the parent by the weighted average number of ordinary shares in issue during the year.
2022
2021
Group
US$
US$
Loss attributable to owners of the parent
(5,317,302)
(13,370,515)
Weighted average number of ordinary shares in issue
201,892,290
85,175,681
(b) Diluted
The basic and diluted loss per share for the years ended 31 December 2022 and 31 December 2021 are the same as the current year
result for the year was a loss, the options and warrants outstanding would be anti-dilutive. Therefore, the dilutive loss per share is con
sidered as the same as the basic loss per shares.
Details of share transactions are set out in note 15 and share options that could potentially dilute earnings per share in future periods
are set out in note17.
30 Related party transactions
Vincent Benoit is the elected board representative for La Mancha Resource Capital who have a shareholding of 23.21% in the Group as
at 31 December 2022. For the year ended 31 December 2022, Vincent received director's remuneration of £59,229 which was paid in
full in the year.
The following transactions took place with subsidiaries in the year:
Amounts totalling US$ 284,405,473 (2021: US$6,937,622) were lent to Horizonte Nickel IOM Ltd and Champol IOM Ltd to finance
exploration work during 2022, by Horizonte Minerals Plc. Amounts totalling US$912,521 were lent to Nickel Production Services B.V.
and Battery Material Services B.V. to finance operating expenses. No interest is charged on balances outstanding during the year.
The amounts are repayable on demand.
See note 34 for balances with subsidiaries at the year end.
All Group transactions were eliminated on consolidation.
31 Ultimate controlling party
The Directors believe there to be no ultimate controlling party.
32 Employee benefit expense (including Directors and Key Management)
Group
Company
2022
2021
2022
2021
Group
US$
US$
US$
US$
Wages and salaries
12,170,854
7,461,987
3,745,332
5,504,925
Social security costs
3,749,120
866,676
1,944,212
532,926
Indemnity for loss of office
68,934
11,626
—
—
Share options granted to Directors and employees
1,415,581
—
1,415,581
—
17,404,489
8,340,289
7,105,125
6,037,851
Management
27
12
9
8
Field staff
119
38
6
3
146
50
15
11
Average number of employees including Directors and
Key Management
129
50
14
11
Employee benefit expenses includes US$ 6,941,222 (2021: US$3,183,923) of costs capitalised and included within intangible assets and
mine development property.
Directors and key management remuneration for the year is outlined in the table below.
2022
2021
US$
US$
Directors’ emoluments
1,099,573
886,656
Amounts receivable under the long-term incentive plan
1,354,284
2,479,756
Other emoluments (performance related bonuses)
528,491
365,551
Company contributions to defined contribution pension schemes
21,103
43,106
Total emoluments
3,003,451
3,775,069
Social security costs
591,073
480,812
Share-based payment charge (non-cash)
1,038,126
—
Total cost to company
4,632,650
4,255,881
As at 31 December 2022 there were 5 directors. For details of changes in the board of directors during the year refer to the Board
Report on pages 48 to 49.
Emoluments of the highest paid director was US$1.3million (2021: US$1.6million), this includes an amount of US$553,518
(2021:US$964,395) received under the long-term incentive plan.
33 Investments in subsidiaries
2022
2021
Company
US$
US$
Shares in Group undertakings
At 1 January
3,164,591
3,204,979
Effects of foreign exchange
(337,561)
(40,388)
At 31 December
2,827,030
3,164,591
Investments in Group undertakings are stated at cost.
On 23 March 2006 the Company acquired the entire issued share capital of Horizonte Exploration Limited by means of a share for share
exchange; the consideration for the acquisition was 21,841,000 ordinary shares of 1 penny each, issued at a premium of 9 pence per
share. The difference between the total consideration and the assets acquired has been credited to other reserves.
34 Loans to and from subsidiaries
Balances with subsidiaries at the year-end were:
2022
2021
Assets/(Liabilities)
Assets/(Liabilities)
Company
US$
US$
Loans to subsidiaries
HM Brazil (IOM) Ltd
7,582,115
8,487,762
Horizonte Nickel (IOM) Ltd
353,108,653
78,829,052
Champol (IOM) Ltd
7,199,478
6,427,750
Horizonte Minerals (IOM) Ltd
304,592
340,974
Nickel Production Services B.V.
64,581
—
Battery Material Services B.V.
720,749
—
Total
368,980,168
94,085,538
Loans from subsidiaries
HM Exploration Ltd
(498,330)
(557,853)
Nickel Production Services B.V.
—
(3,253,720)
Total
(498,330)
(3,811,572)
COMPA N Y OV ERV IE W
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CORP OR AT E GOV ERN A NCE
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HORIZONTE MINERALS 2022 ANNUAL REPORT
HORIZONTE MINERALS 2022 ANNUAL REPORT
The loans to Group undertakings are repayable on demand and currently carry no interest, however there is currently no expectation
of repayment within the next twelve months and therefore loans are treated as non-current.
1 January
2021
Amounts
advanced
during
year
Expect
ed credit
loss
Foreign
Currency
translation
reserve
2021
Amounts
advanced
during year
Expected
credit loss
Foreign
Currency
translation
reserve
2022
Company
US$
US$
US$
US$
US$
US$
US$
US$
US$
HM Brazil
(IOM) Ltd
8,596,087
—
—
(108,325)
8,487,762
—
—
(905,647)
7,582,115
Horizonte Nickel
(IOM) Ltd
73,063,506
6,686,267
—
(920,721) 78,829,052
290,866,381
— (16,586,780) 353,108,653
Horizonte Min
erals (IOM) Ltd
345,325
—
—
(4,351)
340,974
—
—
(36,381)
304,593
Champol
(IOM) Ltd
6,293,405
251,355
(37,703)
(79,307)
6,427,750
1,869,764
(257,218)
(840,818)
7,199,478
Nickel Produc
tion Services B.V. (16,027,177) 12,571,488
—
201,969
(3,253,720)
3,317,537
—
764
64,581
Battery Material
Services B.V.
—
—
—
—
—
847,939
(127,191)
—
720,748
Total
72,271,146 19,509,110
(37,703)
(910,735) 90,831,818
296,901,621
(384,409) (18,368,862) 368,980,168
The Gross and net intercompany loan position following the expected credit loss as each year end is set out below:
2022
2021
Gross loan
Expected
credit loss
Net loan
Gross loan
Expected
credit loss
Net loan
Company
US$
US$
US$
US$
US$
US$
HM Brazil (IOM) Ltd
10,831,593
(3,249,478)
7,582,115
12,125,374
(3,637,612)
8,487,762
Horizonte Nickel (IOM) Ltd
353,108,653
—
353,108,653
78,829,052
—
78,829,052
Horizonte Minerals (IOM) Ltd
304,593
—
304,593
340,974
—
340,974
Champol (IOM) Ltd
8,469,974
(1,270,496)
7,199,478
7,562,059
(1,134,309)
6,427,750
Nickel Production Services B.V.
64,581
—
64,581
—
—
—
Battery Material Services B.V.
847,939
(127,191)
720,748
—
—
—
Total
373,627,333
(4,647,165)
368,980,168
98,857,459
(4,771,921)
94,085,538
Impairment provisions for receivables and loans to related parties are recognised based on using the general approach to determine if
there has been a significant increase in credit risk since initial recognition and whether the receivables and loans are credit impaired in
accordance with IFRS9.
The loan to the subsidiary companies, are classified as repayable on demand. IFRS 9 requires consideration of the expected credit risk
associated with the loans.
As part of the assessment of expected credit losses of the intercompany loan receivable, the Directors have assessed the cash flows
associated with a number of different recovery scenarios. This included consideration of the:
~ Exploration and development project risk,
~ positive NPV of the Araguaia project as demonstrated by the Feasibility Study
~ positive NPV of the Vermelho Nickel Cobalt Project demonstrated by the Pre-Feasibility Study
~ ability to raise the finance to develop the projects
~ ability to sell the projects
~ market and technical risks relating to the projects
~ participation of the subsidiaries in the Araguaia project
The directors have concluded that certain amounts may not be fully recovered giving rise to the expected credit loss adjustment.
After taking into consideration all of the above factors the rate of expected credit loss varies from 30% (2021:30%) for the receivables
from HM Brazil and 15% (2021:15%) for the Vermelho Project. The loss on default on receivables related to the Araguaia Project is min
imal, which is consistent with the view taken in the prior year. The expected credit loss assessment for HM Brazil considers Araguaia’s
construction progress and improving prospects for Vermelho. The credit loss allowance was assessed at the date of 31 December
2022. The expected credit loss for Champol (IOM) Ltd was adjusted to US$1,270,496 (2021: US$1,134,309) and an expected credit loss
allowance was recognised for Battery Material Services B.V. of US$127,191. The expected credit loss allowance for HM Brazil (IOM) Ltd
remained unchanged. The change in the allowance is due to the USD currency translation.
35 Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
2022
2021
Group
US$
US$
Mine development property
399,900,000
—
Capital commitments relate to contractual commitments for the Araguaia Project construction. Once incurred these costs will be capi
talised as mine development property additions.
36 Contingent Liabilities
Other Contingencies
The Group believes that there are no substantive financial claims and legal proceedings against it as at 31 December 2022. As a result,
no provision and no disclosure has been made in these financial statements for the year ended 31 December 2022.
37 Parent Company Guarantee
Horizonte Minerals plc has, together with other group companies, provided a parent guarantee on the following funding arrangements:
1. To Orion Mine Finance related to the $25 Million Royalty Financing arrangements granted by Nickel Production Services B.V. in
respect of the project owned by Araguaia Níquel Metais Ltda.
2. To Orion Mine Finance related to the $25 Million Royalty Financing arrangements granted by Battery Materials Services B.V. in
respect of the project owned by Trias Brasil Mineração Ltda
3. To Orion Mine Finance related to the $25 Million cost overrun facility (COF) granted to Araguaia Níquel Metais Ltda (Borrower)
4. To the Senior Lenders (BNP Paribas, BNP Paribas Fortis, ING Capital LLC, ING Bank N.V., Natixis, New York Branch, Société
Générale and SEK(Swedish Export Credit Corporation)) related to the $346.2 Million senior debt facility granted to Araguaia
Níquel Metais Ltda (Borrower)
The royalty payments are conditional upon entering into commercial production and therefore cannot become due until this is achieved.
Interest on the loan facilities (COF and Senior Debt) will be calculated quarterly and be payable in arrears at the end of each interest period
– March 31, June 30, September 30 and December 31. The end of the first interest period for both facilities was due 31 December 2022.
The initial principal repayment date is 31 March 2025. The outstanding principal amounts will be paid according to the repayment sched
ules at each quarter end date starting from 31 March 2025.
Horizonte Mineral Plc's obligation to pay under the guarantee only arises if the grantors of the royalties, the borrower in the loan facil
ities or any of the other provider of a parent guarantee fails to make any payment under the agreements. The Company also entered
into a comprehensive intercreditor agreement, which establishes how the Senior Lenders and Orion (as the COF Lender and Royalty
Holder) will consult with each other before exercising rights and remedies available to them under their respective security and finance
documents. The Company considers the probability of such scenarios to be minimal at the current stage of the business’ development
and therefore any fair value assessment of such potential financial liability has been deemed to be immaterial.
38 Events after the reporting date
Non-adjusting events after the reporting date
On 27 February 2023, the Group announced that it had drawn down US$50million from it senior secured project finance debt facility
of US$346.2million.
Horizonte Minerals Plc, Rex House, 4-12 Regents Street, London SW1Y 4RG, United Kingdom
T. +44 (0)203 356 2901
E. info@horizonteminerals.com
www.horizonteminerals.com
STATUTORY INFORMATION
Directors
William Fisher (Interim Non-Executive Chair)
Jeremy Martin (Chief Executive Officer)
Owen Bavinton (Non-Executive Director)
Gillian Davidson (Non-Executive Director)
Vincent Benoit (Non-Executive Director)
Company Number
05676866
Registered Office
Horizonte Minerals Plc
Rex House
4-12 Regents Street
London SW1Y 4RG
United Kingdom
Nominated Adviser and Broker
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
United Kingdom
Joint Broker
BMO Capital Markets Limited
95 Queen Victoria St
London EC4V 4HG
United Kingdom
Independent Auditor
BDO LLP
55 Baker Street
Marylebone
London W1U 7EU
United Kingdom
Solicitors to the Company
As to English law:
Norton Rose Fulbright LLP
3 More London Riverside
London
SE1 2AQ
Gowling WLG (UK) LLP
4 More London Riverside
London,
SE1 2AU
As to Canadian law:
Cassels Brock and Blackwell LLP
2100 Scotia Plaza
Toronto ON
M5H 3C2
Canada
As to Brazilian law:
Freitas Ferraz Advogados
Rua Santa Rita Durao, 1143,
7 Andar Savassi,
CEP 30.140-118
Brazil
Registrar
For shares listed on the London Stock Exchange:
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Ireland
For shares listed on the Toronto Stock Exchange:
Computershare Investor Services Inc.
100 University Avenue
8th Floor
Toronto ON
M5J 2Y1
Canada
112
HORIZONTE MINERALS 2022 ANNUAL REPORT
NOTES
Horizonte Minerals Plc, Rex House, 4-12 Regents Street, London, SW1Y 4RG, United Kingdom
+44 (0)203 356 2901 • info@horizonteminerals.com • www.horizonteminerals.com