Monday, October 25, 2010

Teck Resources (NYSE:TCK) Investment in Horizonte About to Pay Off?

In July Teck Resources (NYSE:TCK) sold its Araguaia nickel mine in Brazil to Horizonte in return for a 50 percent stake in the company. Now Horizonte is preparing a share sale in Toronto to raise capital to fund the project.

Other financing options include offtake agreements with nickel refiners and bank financing.

The Araguaia project has an initial resource of 60 to 70 million tons, and should produce a minimum annual volume of about 25,000 tons.

Nickel demand has shot up recently, with supply not being able to meet demand for the first time in five months, according to the International Nickel Study Group. The mine should be ready to produce in about 4 years. Drilling began on October 18.

Official numbers concerning actual resources will be determined in 2011, where at that time production costs and more accurate volumes will be known.

Once Horizonte has Araguaia ready for construction, Teck has an option to acquire the remaining shares in the company.

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