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Vermelho can probably command bigger overall numbers than Araguaia (hence worth more than 30p/50p overall) but because I don't believe we can develop it all ourselves it is pointless speculating on what we make out of it. I'd be over the moon if we could keep an 'Araguaia sized' portion of Vermelho as current shareholders. Assuming Vermelho could be twice as big (allowing for a bigger mine to be built by a major) that would imply 50% ownership.
>>So are you thinking 30-40p for just stage 1 of Araguaia or the whole project ?
This is sitting on the fence but the 'inbetween' case. When both stages are pumping out $29k/t and stage 1 capex has been paid back clearly the project has a different current value than stage 1 is complete, producing, and company are looking around for funding. It will also be heavily dependent on nickel price of course.
Stage 1 up and running for me I'd be very happy with 25p. Stage 2 up and running 50p. So 30p-40p seems reasonable for the inbetween stage. I'm hoping the inbetween stage lands quickly after Stage 1 is up and running because all the parties to the equation want Stage 2 as quick as possible. If nickel is anywhere near $26k/t when you finish building Stage 1 and start running material through, surely all parties will want Stage 2 yesterday?!
All of the above is also affected by shares in issue. Of course on this last point we should have absolute clarity and if the company guidance is still correct, in at most 4 months + 2 trading days.
You know.....the one with the 12p price tag......not 7.5p
Right rabbit from the right hat important....
Thanks again for the reply Wasa
Also agree about the right range so will be interesting to see what the share price catalysts are that JM alluded to in the BRR interview last week and if they can break us out
JM has shown that he can pull the rabbit out of the hat as he did in 2019 with the Orion royalty so I’m hoping later on we will realise that this was another of those moments when we have more certainty around the final finance deal
Thanks wasarunner
So are you thinking 30-40p for just stage 1 of Araguaia or the whole project ?
bb yeah I use rounding liberally :) called it 1bn.
>>So assuming we end up with ~2.5bn shares and Nickel is as forecasts predict where do we see the market cap in 5 years ?
Still think it'll be sold in 5 years so slightly moot but £700m-£1bn could be commanded by Araguaia alone - 30-40p, assuming a clear pathway can be seen to Stage 2 build - financing in the bag or can be secured. I'd hope to be building Stage 2 if we're still independent having secured funds sooner than from FCF.
It's impossible to price anything for Vermelho at the moment because we don't know the terms. Very unlikely Horizonte will develop it alone - for both the capex and the hpal risk I think they will bring in an engineering partner/heavy hitter. So all upside from Vermelho is ignored in the above.
worst case (but I don't expect it to happen) for my calcs was $100m extra to find at 7.5p ~1bn shares on top of the 1.8bn already (including options). I'd assumed the other banks/eca might fall in the overall debt package.
But that's worst case and ignored offtake. I'd really like to find out if we can get prepay on the offtake and the attractive thing about it (from a de-risk and sp perspective is) that is probably the one bit of news we might get earlier than debt/equity. That might then give us confidence the equity can be done for less $. We probably won't get a hint about what actual equity price will be - can't see it myself.
If we had serious sp appreciation - lets say 15p in April. What would cause that? ofttake announcement? It would be hard to issue equity at 7.5p if the prevailing price was 15p.
But we don't know and my only concern (short term) was after this raise it might set a tight range - call it 7.5p-10p where the SP can't break out of because people aren't confident on the final number to drive it higher. Offtake might fix that though. Or, another thing that would fix it, is if these supposed 'a list' insti's we've now added by carefully selecting them onto the register start buying up all our free float. And they haven't flipped the lot already. JP Morgan was an 'a lister' and they sold out last year. GLA
So assuming we end up with ~2.5bn shares and Nickel is as forecasts predict where do we see the market cap in 5 years ?
Really......hmmm....need greater clarity reporting going fwd....
Thank you for clarifying Bwana
FPN2... $32m from Amazonia is included in the $325 m debt. Confirmed by the company.
Wasa,
To bring up Ivor’s post from Sunday...
“$463m needed
$325m debt
$39m cash in the bank
$32m banco da Amazonia
$67m left to raise.
Orion mine finance $m?
3 Tier One Off Takers $m?
ECA $m?”
I remember over the weekend there was some questions around the Banco Da Amazonia being part of the $325 package of senior debt mandate or addition. I read that as an addition and couldn’t find that this has been disproved. I believe an email asked the company directly but I didn’t see if this was posted on this board
So if we use Ivor’s numbers, would there be any reason why we would be at 2.5 billion shares at worst case?
Using the benchmark that the latest fundraise at 7.5p was 240m shares for $25m so roughly 10m shares per $1m raised = 670m new shares
Again rounding up 1.8 billion shares plus 700 million new shares = 2.5 billion
Obviously this would be reduced if: 1)the next equity piece is at a higher price than 7.5p 2) off takes 3)ECA
I also see the bull case.
All thats happening is some people have been rattled by the raise at 7.5p.
Some people might even think it could go to that (I personally don't).
And there's likely another raise coming as part of the final funding package, at what price I don't know, but what I do know is I won't be invited to take part in it, so give or take a few % the price today is likely the best price I'll see. Hence I topped up today.
Webba, I kept doing the calcs when we were 2p and 3p and argued the same. Whichever way you turn it. You have to assume people are scared by the equity not to rate us higher. They can't be scared it won't get financed - a vanishing probability now I would suggest (particularly with where the nickel price is right now). So it has to be the equity element - being the unknown - that scares people.
It will be between 1.8bn - 3bn shares. I know that's a huge range but the point is - at 3bn shares and even very modest £450m mcap, 15p. So where's the downside at 7.8p? I don't know.
I genuinely see the bull case. I’m struggling to understand what is required to start to move the SP from this low. Decent RNS to enable production, nickel at 19.5k . Am I missing something fundamental here? I’m still toying with pumping more in whilst at this level.
...contd
It might be easier to consider economics of Araguaia, in case V isn't included this year in anything. Ignoring V, I would like a 'deal' that gives clarity on where A1+A2 can get financed. My ideal is obviously minimal shares in issue, but a structure which suggests (or even confirms) how funding for A2 could be arrived at. We want to unlock that potential sooner than later and we want the market to rate us on it.
Each stage has to be done step at a time but by 2025 I expect Araguaia to be a monster - with a bit of luck we will be building Stage 2 having financed it. It won't escape the notice of the current round of financiers that if they play their cards right, they can get a slice of not just $14.5k/t of production but $29kt/yr. And they might just have readup on Woodmac.
So all to play for here. Vermelho is the icing but I'm completely discounting it from my (personal) financial modelling as my belief now is it won't enter the equation this year. Will be pleasantly surprised if it does.
GLA
I'm trying to keep periscope very much on the bull case here.
Woodmac long term incentive price $26k+/t gives us around $20k/t gross profit above C1 cost (keeping maths simple)
Stage1+Stage2 production ignore V for now gives us gross profit rounded down $500m+/yr
That's a lot of gross profit. Really, a lot. You can pay back a lot of capex/tax with that and have significant left over to divvi out (see what I did there).
Really for me its all about trying to stay 1% shareholder - a goal I had in latter year. I don't know if I can do it - out of my hands. Going to be close they will have to come in at 2.3-2.4bn shares all told so around another 500m-600m lets see where it lands.
I'm hanging around for my share of $500m/yr though. If it's less, can live with it. Hopefully we also get something from V, lets hope so. GLA