Horizonte Minerals said on Monday that is holding talks with major shareholders and lenders to solve the current funding gap for the company’s Araguaia nickel project in northern Brazil.

The company, which began building the mine in May last year, warned earlier this month the project costs had increased by more than a third. It also delayed first production to the third quarter of 2024.

Chief executive officer Jeremy Martin said that construction has continued as planned, with milestones including the installation of rotary kiln sections on support piers, the completion of the furnace shell, and roof installation in progress.

As of September 30, Horizonte had spent $429 million on Araguaia, with $346 million drawn down from the senior secured project finance debt facility, it said.

The company has total liquidity sources of $253 million, comprising $131 million undrawn on the debt facility and cash of $122 million.

The project had, by the end of last month, stockpiled 138,000 tonnes of ore averaging 1.92% nickel. The miner said that commissioning a 126-kilometre, 230-kilovolt power transmission line was underway.

“Notwithstanding the expected increase in capital, the Araguaia project remains a Tier 1 nickel project with lower quartile C1 cash cost and a long mine life of 28 years, producing a high-grade, low impurity iron/nickel project,” Martin said.

The executive noted the company had retained Reta Engenharia to conduct a detailed capital cost and schedule analysis, set to be completed by the middle of the fourth quarter this year.

An independent technical advisor, nominated by senior lenders, would then review the updated costs.

Horizonte Minerals expects the Araguaia operation, which includes an open pit and a processing plant, to produce 29,000 tonnes of nickel a year, mostly destined to supply the stainless steel market.