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I meant to say thanks to everyone yesterday for the posts in this thread. pickedpeck captured my thinking pretty much and stated it more clearly than I'd have managed. Great posts, cheers.
I think it's ironic that the takeover value of HZM is largely down to the progress through ferronickel Araguaia financing to Stage 1 and on towards Stage 2, but the driver for an early takeover could be the nickel-cobalt Vermelho which contributes so little to the takeover price short term.
In a friendly takeover I'd hope the board would hold out for some recognition of that by raising the asking price, or argue to keep Vermelho off the table and only sell Araguaia, but I suspect the board would prefer a whole company sale and any bidder would insist on Vermelho. I'd love to see a rabbit out of the hat from the board for Vermelho.
Like jamesdean, I am in two minds over a pre-finance bid or letting HZM do some of the heavy lifting. For me it comes down to whether the bidder(s) want to use their own finance and build their own project or wants to follow the HZM routemap. Time will tell.
Takeover won’t be Before financing - any potential suitor will get the execution risk out the way first and see things built - doesn’t mean that value won’t be unlocked beforehand as I fully believe it will and very soon but a full a takeover this year is highly unlikely
Of course very happy to be proven wrong
Thanks pickedpeck really value the input. So financing is as much a derisk to our valuation on sale as it is to getting the mine built. Lets hope we get an update in Nov if not before :) thx again. Wasarunner
Wasa - The NPV on the HZM site is the value post finance, not the current value. Unless the company has the finance in place to build the mine the figure HZM are quoting is the future potential NPV should someone stump up the money. Orion being in and the senior debt announcement obviously make this almost real, but it is not quite yet. That's why closing the finance deal is so important, until then the valuation is based on in the ground resource which is at best severely discounted to NPV of the fully funded or even better producing asset.
At the moment I have 8.65m shares all in tax free shelters , I haven't worked out the average lately but probably somewhere around 4p having bought in lots of smallish blocks between 1.498 and 8.04.
If I was guessing a bid now would come in at about 12p equivalent pre finance. It would be enough for the holders that invested at 10p equivalent to show a return, but give the buyer a stack of upside once the mines are built because they are going to have to find the capex. I say equivalent deliberately as we may get a cash plus equity offer, the buyer preferring to deploy cash as capex. I'm hoping not though as I don't really want to end up with shares in Teck, their 10 year chart tells a story.
I know a lot of people will think that is way low, but the share price today is 7p and that would be considered a hefty premium to the open market valuation. Pre finance I don't believe we will be offered much more. I'd like there to be the possibility of a bidding war, but Teck have an inside track already. I don't believe Glencore would buy, and Orion wouldn't go against Teck. BHP or Vale maybe?
Post finance I'd day we should be looking at 20-25p plus if it was Q1 2021, or 30-40p plus Q4 2022. We discussed the rerate around NPV a couple of days ago. A speculating market may drive the price even higher though, EUA and GGP have shown what can happen when precious commodity fever strikes.
pickedpeck interested what would you be happy with (eventual sale price wise) if it happened sooner rather than later, say H1 next year? And was your holding in the ~8m shares area I can't remember?
I guess you're saying we need finance deal complete to re-rate us prior to the offer to see anything like an NPV based sale valuation. Maybe lets see I'm pretty easy either way (unless we get taken out cheap cheap) because less jam today I can do something with over the 3-5 years I expect to hold the shares minimum in the non sale scenario. I'll still be surprised by an absolute lowball offer tbh because I think some of these big cos have their reputations to maintain you get bad industry press coming in real low (probably to be outbid by other interested parties).
I agree a takeover is likely rather than possible , but I think we may get a much lower ball offer than many of us would like to see. Sadly offers rarely come in at fair value, but at what the current cast of investors and holders will take to hand over their shares
Institutional investors look at offers against their asset's current valuation, so an offer that came in at 50-80% premium to the current market price would get likely the ii's on board. The execs would also likely be given sweeteners as part of any deal so we can assume they would be recommending an offer too. The only way it would get rejected would be if there are enough PIs that won't take it. At our last count up here we had about 15% of the company, we would need at least 50% to vote against a low ball offer.
Until finance is done we are vulnerable to low ball incoming bids. A rerate on finance would make any offer correspondingly higher.
All still to play for, the NPV is effectively part of the for sale sign I suspect though rather than what we will actually ever earn.
Well if an offer is coming, they are keeping it tightly wrapped up!
I for one won’t complain one iota if the offer is in the 30p zone. Nice to not have the dilemma of de risking, dilution, day traders or even Brexit & Trade war issues to consider. Nice!
But not getting carried away just yet.
Good luck all holders.
have to say an offer makes a lot of sense to me. Assuming:
- debt is about to be signed
- Teck are the buyer
- Glen will be the intermediary ( so, they may offtake from Teck)
- Orion will help to finance both mines in exchange for ongoing royalties/revenues etc
The thing that pushes the timescales buttons are:
- Horizonte _will not_ advance Vermelho. So if a buyer wants to hit the sweet spot (and lets face it with Elon jumping up and down that time is sooner than people think) for EV, they'd better be permitting Vermelho soon.
- competition. The sooner Teck seal the deal the relatively cheaper it will be and possibly for them they may be hoping less competition from other buyers
The triumverate of Teck/Glen/Orion sets up a game/set/match scenario for a sale here and I think Vermelho is the thing that might just push on the timescales forward.
But it is just one outcome, I would take 50% discount to eventual sale value, say in 3 years time, if it is done pronto so personally happy with the 25-30p area mainly because I can put the funds to work elsewhere at the moment which long term gets you to the same return that this is worth.
Will we see it? Find out soon I guess. GLA
Saving grace is we arent diluted (yet). If its £500m+ then its 30p min including options. Less than £500m would be a bit derisory for what weve got and how long it took the co to get here (in terms of the work that went into araguaia etc). Lets see! 30p this year or q1 - I would take it..
I think any offer will need to be 500m+ and that's still cheap.
News from the company could land thick and fast if it is all going to be wrapped up by yearend - not so much time left now. I can live with it taking longer but you also wouldn't be surprised now by a string of RNS' landing in short order. It has been good fun speculating what next but of course we'd all rather be debating the pros and cons of the great finance deal they will just have announced! And watching a health re-rate taking place of course. GLA keep the faith.