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If they do at discount but the strategic is not all equity (for eg Glencore, 8p equity $70m + $30 prepay offtake) works, especially if as Craig says they do further market placing same price. That wouldn't take Glencore over 30%. By my calcs pure equity $100m strategic and $0/$50m others assuming same price, I calculated Glencore would need 9p if others took equity and 11p if they didnt, to stay under. Personally I dont see Glencore having a particular issue with 11p. We assume they have to have a discount but that ignores what they are buying for that money - immediately $300m shqre of npv plus of course % of future npv for a2 and v.
Watch this space is all I am sating, I could be 100% wrong. The market is definitely NOT currently pricing Glencore as the strategic and taking less than $100m equity. Therefore there is potential for the deal to significantly outperform market expectation.
Here's a short summary of my thinking.
1/ There will be a public offering, JM has stated that, its a leveller for the PI if there is a discount offered to current price. I think the reason we are "waiting" now is to allow the VWA price to rise.
2/ I estimate GBP100M will be needed in equity/offtake, cornerstone was slated for around USD100M, so this leaves around $40m from offered equity/offtake. To raise this they will go to II via all avenues. Key reason being is the can NEVER come up short. PI will never have the legs for all of it
3/ Considering the cornerstone piece and existing holdings Teck and Glencore can not invest that without taking the whole company as they would hold more than 30%, unless they do a joint investment between them. On balance I still think Orion most likely.
4/ Offtakes an interesting one, a pre payment could be costly in the long run, I would tend to prefer a better price going forward than receiving cash up front. Whilst its non dilutive it can be expensive, short payment terms may be more important to reduce working capital and hence project funding. But lets see
Not long now. GLA.
I think Teck is a good possibility for the Strategic Investor (They do have a representative on our board). However, I feel that as they already hold 12.36% of HZM, it means they would be in danger of exceeding the 30% rule without either having a high strike price for the new shares or allow other parties to also take a portion of the equity raise.
So on the whole you could get Teck (Strategic Investor), Glencore & possibly Orion also taking shares in the equity raise. (Ideally at a high strike price too ??)
Also tend to feel Glencore would be a favourite for heading up on the off take side, as they have the marketing arm of their Biz.
All fun to speculate and am probably completely wrong, lol. Hopefully not long to go for the next news.
Good luck all holders.
Perhaps why not Teck, or are they bluffing....no good opportunities apparently.
https://twitter.com/JekyllCapital/status/1440512388294344704
Picked-"Tranche 2 credit secured with a mix of international providers and at least one Brazilian bank. I doubt we will get much detail of the terms beyond they have the money."I think we will get quite a lot regarding the terms-I hope so they matter.
On Investor or Mining Co as strategic-I am with Wasa on this.Very much hoping for Teck or Glencore (could be another, but unlikely-I think they will keep this pretty tight amongst their existing relationships who they know and trust).Think strike price could be higher with a miner.Anyway all will be revealed very soon.
We debated pros and cons of financier vs miner I think in the past. My thinking on this:
Miner is more immediately sp appreciative as the mining space takes note I think differently. Perhaps with a view to funding/building Vermelho as it could signal intent that the miner wants involvement there as the senior partner even if this isn't openly disclosed at this stage.
A financier being involved means if a major wants a T/O down the line they have to tussle for it with other majors who may counterbid? Whereas one of the majors taking 30% now might make it next to impossible for another major to muscle in.
In a way it is a win-win for us investors as there is probably more immediate appreciation in the former scenario (for example for long term holders here who need some cash out in the short term) and for those who are prepared to wait for production or indeed an eventual T/O offer perhaps better terms at that point if the investor is a financier.
We find out in 6 days or so and we're still under 9p! TO be fair we're in the range I called it at the moment so not so shabby. I think on balance I would rather a miner than a financier, not due to short term time horizon but I think we would get more exposure in financial press, certainly mining press. GLA
I’m going to stick my neck out at Debt/Equity 10p++
Not Long To Wait & either way there will be a Massive Re-Rate
Wasa/Peck
,
I have a positive feeling that the debt/equity piece will be better than anticipated
70/30 or 80/20 at 8p+
Hence minimizing dilution
I see Glencore having the vast majority of the offtake agreements rather than the equity. I suspect Teck would rather take the whole thing. If they want to do that then why all the fancy dancing about debt and ECAs rather than just buy the company for a pittance now and fund it themselves. They would get the company for a 12-15p offer now, sad but likely true the instis would take that premium to their purchase prices and that would be enough to get it.
I only say Glencore because of course they are significant players in the nickel space and I don't know Teck's intents - of course Teck have the bigger existing holding. A surprise to me would be Teck being the cornerstone - but that would be a very interesting scenario because of the existing holding being so high, they would need to take less equity or issue it very high. A win for existing shareholders. Glencore seems more likely but they started with 6-7% or so (forget the exact number post Feb dilution).
Anyway my view is, and hope is, it is a miner not a financier. 6 trading days folks.
I'm not so sure. We don't yet know the volume, if the off takes are large - and they may be - then the equity raise may be smaller than we have been thinking.
I think it could be CIBC. I don't see it being Glencore or Teck as they have had lots of chances, notably the last fund raise, to increase their stakes and haven't. I suspect Orion, CIBC, or An Other we don't know about ahead of either Teck or Glen.
Could obviously be wrong though, hopefully not long to find out.
Wasa, I think II’s will be happy to take your shares at a knock down price of 30p , not only would that be a Bargain for them it is a pittance to them for such a huge future return and a stake in 2 Tier 1 Globally Significant , High Grade Nickle Resources.
Timing is everything in life and HZM has it all :
1. HZM is ideally suited to supply the RIGHT PRODUCT at THE RIGHT TIME into the growing battery market - RIGHT PLACE.
2. HZM OWNS 100% 2 GLOBALLY Significant Nickel Resources.
3. Operating costs sub $6800 a tonne one of the LOWEST in this sector.
Only One Problem ….. You Have To Be In It To Win It
THE FUTURE IS BRIGHT ~ THE FUTURE IS HZM
Incidentally - still makes me think the strategic is Teck or Glencore, with Glencore more likely. I just don't know why either would agree to another strategic investor taking a significant stake in the project at the equity level. Surely as significant shareholders they would have needed to be consulted and if so what would they say 'sure take 30% of this nickel company from under our noses - we can't afford $100m right now'. Come on. It is one or the other. My money is on Glencore!
>>may just go with the strategic, even at a slightly lower strike price or terms.
Thanks pp - I am hoping this also. NO shares to other insti's through the placing, strategic takes it all. Then if insti's want to buy - they can use the market like us poorer folks. They can have a few of my shares for 30p or so, but only say 10% at this stage. I have no doubt Horizonte will have the terms pretty much agreed on all the other aspects when they announce the debt the question is will they announce it at the same time. Hopefully they will, it has been a long time coming!
I really can't see them going to the market for placing now unless it is for literally crumbs then what's the point if the strategic was happy to fund it all? Would it be to appease us, the PIs? I can't see it myself - for us PIs closing the deal and getting on with the build is surely the priority...
I know we had one on a Monday announcing the ECA, but most of the company's last news releases took place on Thursdays. Only two Thursdays left in September now. In fact fully 1/3 of the remaining trading days are Thursdays...
What I am expecting to be announced...
1. Tranche 2 credit secured with a mix of international providers and at least one Brazilian bank. I doubt we will get much detail of the terms beyond they have the money.
2. Structure and timeline of equity process should hopefully be announced at the same time. If it really is underpinned by a strategic investor and is only subject to closure / announcement of the debt then it should be published simultaneously. I can't see them getting the debt without having the structure and nature of the equity raise finalised. Lenders wouldn't lend for someone to buy the front legs of a horse with no knowledge of the funding of the back end.
3. Similarly off takes. They have been in negotiation a long time, and in order to secure the debt and strategic investor funding, and to know the balance necessary to raise, the off take agreements must also be known. I can't see them raising debt without having the off takes in the bag.
4. Either at the same time or immediately afterwards (days or few weeks) the start of the build will be announced, orders placed, ground broken etc. That may come in the Q3 results rather than RNS as it is operational news.
Basically I think it is likely we will get a bigger announcement than most here have been expecting.
What could happen...
The debt and off takes are almost certainly hand in hand, but the equity portion may be known in quantity, the book run by the strategic, but an offer is made for existing holders and new investors to participate in. I'm thinking this is less likely as it means a delay whilst that is executed, and JM said nothing about it in the last interview. I think they probably wanted to do that, but time has pushed on and they don't want to lose any more before cracking on so may just go with the strategic, even at a slightly lower strike price or terms.