Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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The presentation referenced 5 commercial banks prepared to lend $65-85m each. I assumed this was the 5x Tier 1 International banks (as there are 5 of these on the same slide).
Taking the lowest amount they were prepared to lend gives me $325m which is 73% of $443m required for the project. And that doesn't factor in the Brazilian banks or Export Credit Agencies.
I know it is in practice more complicated than this (it will be syndicated and with a lead or whatever) but I took the fact that individually, sum of parts debt being easily above the 60-65% total debt ratio as being a very positive sign. Hopefully, the BOD are busy making this number as big as possible so the equity can be as small as possible.
I think that's the key point, ihowells. It's about what the finance will allow HZM to do.
At the moment we're valued as a low % of the NPV for Stage 1 Araguaia because we need the finance to deliver it. The rest of Araguaia and all of Vermelho are probably given very little weight in the SP for all their potential value. With the finance everything changes. The market will see Stage 1 as likely to happen and might even start to see that as a door into the rest of the assets. As djryan has said, things could change very quickly once the finance is in place.
I fully expect dilution here but for it to finance minebuild and be part of its funding package. Sadly that wasn't the case elsewhere much outgoing to fund its everyday running costs. I guess what I was trying to highlight is to always expect the unexpected and if it goes to plan then even better.
Like everyone else, I expect dilution as the Araguia funding is likely to be based on 60-65% Debt to 35-40% Equity. Assuming it goes to plan we will be a lot higher in our overall Mcap after finance deal is done and funders/institutional players are on board.
I suppose to me it’s how we deal with Vermelho. As at today’s price Vermelho is worth zilch. (We had a bigger MCap before we had Vermelho). So any new equity player will get that thrown in for free if we see dilution at the current SP. So I expect the raise to be at least in the range of 7-10p. Ideally some news or way to not give away Vermelho on the cheap is sorted in the funding deal. Maybe as has been said if Vermelho is involved the equity raise may well be 10-20p. But we are just going to have to wait on that it seems. (All very frustrating, but maybe Elon’s comments have juiced the appeal for Vermelho).
yeah I was hoping for 1% of co post dilution but that would involve around 2.3bn shares, I probably don't have enough - maybe Craigieboy will end up with 1%+. But not fussed, 0.8 or 0.9% of $3bn NPV is still really nice and that's how people should see it - this has still easily 5-10x upside from current value but the only way to unlock that value is to raise capital to build the mines which will be at least part financed by new equity.
I still like the fact that the combined risk appetite in the last presentation of banks was around 80-85% of to total finance cost required. There is a good chance here that more can be raised as debt than envisaged, and I also think parties will be willing to take on other forms of financing (royalty/streaming) so with fingers crossed the equity will protect existing holders and not dilute _too_ much. Everyone has their preferred threshold. I will be really really happy with less than 2.5bn shares in issue. GLA
Dilution is about the % of the company you own before and after the finance. Unless there is no equity raise, or we are offered the right to maintain our % by participating in the raise, then there will be dilution.
In the perfect solution of a relatively small number of new shares at a premium to the SP then our holdings might rapidly become more valuable but we will own a smaller % of the company.
DRJ - I agree, but dilution is dilution. I don't see it as a bad thing, I would happily accept a share issue to raise the equity for the mine build. I am guessing it would be done in multiple stages though rather than one big bang, we may see staged payments and dilution through the mine build. Would be much easier just to get bought by Teck though :)
Absolutely. I can tolerate a 50% dilution (double the shares) sits comfortably as we have $3bn NPV across Araguaia+Vermelho at Nickel $16.5k/t
https://horizonteminerals.com/uk/en/araguaia_project/
https://horizonteminerals.com/uk/en/vermelho_project/
Some dilution and a pile of debt still gives lots and lots of upside to $3bn NPV, which is what we are all here for. From £50m mcap area presently. GLA
There is absolutely expected to be dilution here, the question is how much the raise is at not if it will happen. Most are invested here expecting dilution and significant debt to be put up.
... you could be invested in another mining stock like myself. CEO of unnamed company says recently that there will be no share dilution to advance mining production plans. Today a share raise at 25% deduction to its SP and dilution of approx 18%. Let's hope that never happens here.