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Mr flibbles, They are trying to raise between $440 and 465m against a market cap of currently £140m to build Araguaia Phase 1 and probably fund the Vermelho FS. Seems improbable at first glance, but they have made solid progress towards it with investments from Orion Mine Finance, and a recent relatively small raise. Export Credit Agencies and a Brazilian bank are likely joining the $325m debt syndicate announced last year. With off takes also making up part of the mix and a cornerstone equity investor for up to $100m secured (not yet known who but possibly Orion again) they seem right in the edge of securing the full finance deal to build the mine. They also have good takeover defence in the form of Teck and Glencore on the register so are unlikely to be taken out in the cheap. So whilst the numbers seem improbable they also seem about to actually happen.
haha I was trying not to read anything too literal into the pie slices! I'm sure the final numbers and ratios are still a bit up for grabs though you'd hope they are narrowing it down around now. 7.5 weeks of the half year left!
Not sure they will over raise. Remember there is a fairly hefty contingency in all the figures and the guy in charge of the project has been hired on a CV of completing large projects early and under budget. But agree that cash flows demonstrate no requirement for further raise for A1 or 2
Just on the raise that's why I think they will raise with a cushion - to both develop V to full feaso and A to production with _guaranteed_ no more raise. Both projects can have overrun and you can have contingency in the plan then add some. The last thing they want to do is break whatever agreement they have with the cornerstone - you can guarantee it will be punitive. The cornerstone will be focussed on not just the deliverable (mine) but also probably a timescale. Note that Orion had a timescale in their original $25m contract by which Horizonte had to start the build. There is a cost to PE to tying up their capital, you can bet bottom $ there will be a timescale it has to start delivering returns.
That's why I think there will be $500m, perhaps a bit more raised. They simply can't afford a cost overrun to go cap in hand back to market. And it is also why I think this will be the last ever raise.
I don't think they will raise again - in fact I think this next round may be the last (ever?) raise in Horizonte's lifetime. The pitch to the cornerstone (and to institutional investors is), if you buy shares at xp today, we will deliver a working mine in return for that. As such the expectation will be no more dilution. This is for Araguaia only but Stage 2 can almost certainly be funded from cash flow+debt - no more equity required.
Vermelho is an entirely different beast but if Horizonte don't go it alone they won't be raising equity to finance it, the partner will bring finance I think.
So I don't see future dilution - and with the cornerstone being a 'mining inverstor' (probably Orion?) looking for around a 5x ROI they will be wanting 30p+ from their 7.5p shares (just guesstimates) so they won't want to dilute down the line.
I think once you get your head around the fact that this is the last, but necessary, dilution in the lifetime of this company it is not such a bitter pill to swallow - it unlocks $bn's in value. GLA
325 debt + 25 feb raise + 100 cornerstone + 50 public offering is already 500. I don't know then where offtake would fall. Maybe they end up taking less debt or, they end up with less to the cornerston 100 may just be an indicative figure. I still think they will raise 500m(+?) - why have any risk at all going into such a big project when the market appetite for financing is right? If they don't need all the cash - great - got that downpayment to start A2.
I think the earlier equity raise gives them a good feel for what will be easy to raise in the market. I believe they had subscriptions for just under $60m so they probably believe something like $50m will be easy (+ cornerstone). Will they need that much? Depends on the offtake we don't really know how much that might contribute to the upfront capex yet. My feeling is the public offering will be to appease the market/shareholders and insitutions they invited the first time around, it is probably marginal, though of course, the cornerstone may have insisted on it anyway.
Interestingly if Orion is the cornerstone and take $100m depends on the sp they pay of course but they would then hold a decent chunk. Enough to block a lowball hostile bid? With Teck & Glencore also aligned, probably. I think having Orion+Teck+Glencore on the shareholder register and in enough size will almost certainly protect us from being sold cheap, unless of course the three above were to work together to do a deal but I can't see that personally.
Morning all. Forgot I took a screenshot of the Pie charts showing the debt equity raise. Not able/Don’t know how to post the picture and it didn’t have any % on the charts. But from it I have assumed the following:
First Pie Chart shows $461 for Capex and Contingency. With a smaller wedge for cost overrun and fees. Say overall $500m roughly.
Second Pie chart shows $325m for Debt and wedges for Offtake, Cornerstone (Equity) and Equity in the Market. Say Debt is 65% (325/500), the offtake looks to be say 5-7% and then 28-30% between the Cornerstone/Equity bit.