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Which costs? Because in the RNS on July 13th they state they now have more material certainty on costs on capex. So is it capex or opex you refer to? On capex there is whopping contingency in the financing raise, however, we may see that get eaten up now we have double digit inflation. It only matters if they don't have enough money for the build but they are pretty shrewd and raised a lot more than absolutely needed - probably at the insistence of the banks.
As somebody else pointed out next question is where is the money. They raise in £ (at least equity, debt may be $ denominated) convert to $ and hopefully hedge some in Real. What prices/rates they did that means they are hopefully insulated from ongoing FX changes.
"The successful completion of these contract awards is a significant de-risking event for the Project. Importantly it provides more certainty on costs for a material portion of the overall capital expenditure and builds confidence in the Project schedule by gaining commitments for the delivery of key equipment on site in the timeframe required."
It's a question ant no I don't no and I'm sure u don't, but I'm assuming costs have risen
They buy late, once up n running coz it don't matter to them, it's all a tax right of anyway
wasarunner
Echo that. Furthermore big mining companies do not like risk. They're happy to wait until risk has been mitigated or removed altogether. If that means they have to pay significantly more for the asset that's what they do. Vale waited until Inco had Voisey's Bay up and running and paid $13B for the privilege . They could have moved to acquire the project at an earlier stage in its development and paid an awful lot less but they didn't (interestingly they abandoned progressing Vermelho at around about the same time).
I don't see anybody making a move to acquire Horizonte until well after Araguaia 1 has been built and has worked at nameplate without incident for at least a year.
TDT
Agreed and to state yet further obvious - I'd rather 20p+ with a working mine in 2024/25 than 10p next year. I hope we can hold out till at least we get value in the sale price for a. a working mine b. a (financed?) and DFS ready expansion of A2 and c. a proper solid DFS for Vemelho. If we can get to that point I don't think any of us will be disappointed with the sale price....
wasa: yeah I wasn’t suggesting a takeover at anything like these prices. I consider lowball still 10p+ and for the reasons you say, I’d say that’s a non starter below that, I’d just never rule out an opportunist trying it on - offering the major holders a guaranteed quick win.
Lowball T/O won't succeed because Glen+Orion+La Mancha own 45% and to state the obvious paid 7p+. So any offer will need to be materially above this and if it doesn't come from Glen they are likely to counterbid anyway I would have thought. I have no worries now that this will be bought cheap cheap, perhaps 15p in old money might be absolute lowest but again most of us investing here are hoping for higher obviously.
On cost - some will be variable (both in capex and opex, like diesel) but some are relatively fixed - like hydro, I believe they have done a deal to fix electricity cost which is a really big input cost. Furthermore being lowest quartile on price (and in relative terms your position with respect to other producers improves if you can fix your input costs - indonesian producers will be paying more for coal as coal price rises for electricity) protects us from not being able to pay bills like interest payments.
Finally with respect to financing A2 I can't see how that interferes too much with cost because to state the obvious - if you can't afford it you don't build it. It is fully optional at the moment whether we build A2 and at what point though we do have the option on the plant they purchased for the job. If economic circumstances aren't right in 2024/25 to finance/progress it you simply don't and proceed with A1 standalone.
Main risk here is the build of A1 going wrong that I can see. After that it all becomes moot because we get bought anyway. I added £50k here in the last 2 weeks with new money, surprised in a way we are down here at 5p in old money but I don't think we will be in a year+ time. GLA
You could argue the timing here has been perfect with financing agreed pre rate rises and financing squeeze. With costs rising and commodity supplies dwindling. There will undoubtedly be some, but relatively limited, cost rises. With big chunks of the project already agreed in various big lump deals.
So much of it they’ll probably ride out whilst not yet in production and then come into production as costs are likely falling.
What’s the unknown is the share price in the intervening period.
Frankly it’s so low already that it makes a takeover attempt increasingly likely for a world class/scale nickel resource about to be in production within a year and a half.
For me this means it’s a hold whatever the price, and any meaningful dip makes it tempting to go further overweight, but which I’m trying hard not to do despite the obvious value, purely for prudence’ sake.
Shipping costs must if gone up, labour, diesel etc, with inflation so high there will be some extra costing involved, its ok HZM does have it covered, but surely some costs would of incresed without being able to stop it, not the end of the world, ahold be expected really
I don't think we'll see a balanced view from him, I know full well what his intentions are. Would be fun to see his maths but he won't bother.
That's one half of the equation Steven.
The other side is the price of nickel.
(Also it's quite speculative to assume the fed won't have pivoted by 2024 or 2023 for that matter, although ya never know).
Steven, show me your calculations please?
Higher energy costs, debt repayments, higher energy costs, and financing of second project will all affect when goes into operation.