Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
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Cgequity has kindly posted more.
If developed the mines will be the eighth largest nickel mines in the world, both in the lowest quartile in cost.
The Orion money gives them the luxury of not being in a rush to raise equity, they will choose the best way forward.
They have the expertise on the board to build the project, plus plenty of expertise in Brazil as they are near Vale.
Plenty of interest in the mines regarding financing.
Further notes from cgequityinvest from advfn from yesterdays preso by HZM:
"yes there was some feedback re personnel at Arag but i can't remember the detail! I asked whether they felt they had the expertise to take Arag forward all the way thro production rather than selling it as an oven ready investment opportunity to a major. The response was that the board had strong operating experience (Owen Bavington and the Teck Operating VP guy Alexander Christopher were mentioned). At the same time they mentioned the recruitment process going on in Brazil which is well under way - some figs were mentioned but i can't remember the details.
Some other points while i remember :
1/ I had not realised how close the Vale operations were to Araguaia - they are just to the north - the inference being their is a pool of local expertise available and secondly the infrastructure is largely in place.
2/ The scale of the opportunity - if both A and V are developed and are producing the combined output will make it the 8th largest nickel mine in the world.
3/ Both mines are in the lower quartile in terms of costs - we already knew this.
JM stressed that the Orion money gives them the luxury of being able to take time to ensure they pick the right financing route/build shareholder value - they are not under pressure to raise any more equity and are in a stronger negotiating position re offtakes/JV's/private equity funding etc etc.
I came away significantly more confident than i have been that both mines are attracting strong interest from third parties and are seen as attractive assets in the market. There are a number of moving parts that make estimating the end value tricky ... but its a lot further north than their current £55m market cap."
All you need to know is how Orion operates.
I have worked with them on a copper mine and they are thorough and brutal - so the $25m royalty agreement is the biggest green light you can get on a co at this stage - they do not part with their cash lightly
They have only fooked up once - WTI - and that was due to a natural problem occurring - total flood out of the mine if memory serves me.
Anyway, check the RSP for over 1m
ah ok, no worries
you would have to ask cgequityinvest on advfn as I was only posting his/her notes
Good question though!
Hi D220,
Did anyone ask question about who seller is? during Q&A
regards
Just musing further, if it doesn't sell the real value is down the line. But there will be an exit point at some multiples in the near term when the deals are done. I guess that might be a decision point for most PIs, I'll be sticking around for the longer term but wonder what others think? What's a reasonable exit what are people hoping for if this goes onto produce but people can't wait 2-5 years - 20p? More? Depending on the deals mcap of £300m I would think is achievable if both Vermelho and Araguaia have concrete plans to get to production, even in the mid term (obviously and hopefully higher by the time production is reached?)
Notes in full. Thanks to cgequityinvest on advfn:
"Some further feedback from yesterday's presentation at Mello.
Most of the background is known so i won't repeat that. Most of the additional insights came from Q & A plus talking to Jeremy Martin and Simon Retter after the main presentation.
In no partic order and based on my notes/interpretation:
1/ They are frustrated with the lack of recognition within the market place for the significant progress made/potential and confirmed that the equity markets are tough. Jeremy reiterated the desire to get the market cap up to £100m asap but some fund managers are "watching and waiting" rather than committing due to a combination of Brexit, trade war, issues with illiquid stocks (Woodford) etc. The fund managers are effectively waiting for evidence of offtake agreements and delivery of debt.
2/ There were asked about Teck being a more major investor/acquiror. JM's feeling is that they are unlikely to want to acquire HZM as they are not a primary nickel producer but they could be interested in a more strategic role/stake.
3/ Simon Retter advised that his and Jeremy's short term focus is to explore all the fundraising options/avenues and determine the optimum route that maximises shareholder value.
4/ Since the Vermelho PFS they have had significant interest from private equity groups and EV manufacturers and have effectively put together a data room of information. One of these interested parties mentioned is Tesla (I got the impression their private equity arm).
5/ JM was asked about the possibility of selling the business now - his response was its not for sale as mgment believe they can generate much more shareholder value by progressing both projects.
6/ Orion's royalty has provided credibility - partic with the banking for Araguaia. Some of the banks will effectively piggyback on the DD completed by Orion. I got the impression that they are looking for Orion to take a significant stake in the debt/equity for Araguaia - with JM suggesting that the overall size of the deal is not far from their average investment. So my interpretation is that the Orion royalty is very much a starter position and they will be a cornerstone/majority funder on Arag going forward.
6/ As part of the financing package for A - they also see interest from stainless steel producers - i guess this is the offtake element.
I asked whether how confident they are about getting the financing in place - the response was robust - it being more a case of determining the optimum route. The team are very busy at the moment meeting interested parties and working through all the options to determine the best way forward.
Apart from the above I asked about the market premium attached to nickel sulphate for the EV market. JM said that the premium of $2000 a year ago has now turned into a deficit of $1000 - i.e. producers have ramped up production before the market has really started to motor."
That last one is the most interesting one for me. When/if that becomes nailed on (it isn't getting sold) I wonder if some churn happens at that point by investors who were only in for the sale. I guess that point also coincides with the other steps being announced - JV / financing news which will raise the shareprice potentially (hopefully).
So are we a few months/half year away from finding out definitively that HZM will be a nickel producer, and not an explorer, and will this mean some PIs will cycle out and some IIs will cycle into the investment?
Plus 'HZM not for sale, we can do better for investors by progressing it.'
Post at 11.23 on Adfvn, notes taken by an investor on HZM at the Mello Investor event.
Worth a read, Orion are interested in more investment in Araguia.
Interest in Vermelho including Tesla in some form and many others.