Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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"I’m lost now who to believe as there are too many comparisons being made with absolutely no real comparison....."
You believe your own research, if you've done any. If you don't known and can't make a useful contribution perhaps the best thing do is say nothing. After all its better to remain quiet and be thought a fool than to open your mouth and remove all doubt.
TDT
I’ve got a friend who’s Aunties mothers uncle’s Son in Law who is an engineer, well he looked at the recent photos and thought they were Amazing and everything looked , specially from the Aerial Photography, well advanced for this type of project 🤷♀️
I’m lost now who to believe as there are too many comparisons being made with absolutely no real comparison …… mind boggling, anyway we should all know soon enough but at sub 1p old money I think the only way is up, that is my personal opinion and Not a recommendation to buy!
Theorist
I remember the post you are referring to. If I recall the chaps mate worked in the O&G sector as a project manager. He seemed to think that things were nowhere near as advanced at Araguaia as the percentage claimed and highlighted the extent of cable pulling needed as an example. The EI&T content in an offshore topside is far greater than anything that would be needed at Araguaia. Every bulkhead you penetrate needs to be sealed, there's redundancy you will not need at Araguaia and instrumentation that has no comparable requirement in a land based project. The control room on an offshore platform alone probably requires as many cable terminations as the whole of Araguaia. The working environment in an offshore topside is far more restrictive as well.
The comparison was not a like for like.
TDT
Yep lots of work and negotiations to do and we're not privy to all the info nor will we ever be - cornerstone investors and lenders will have their red lines and there's likely various clauses covering access to existing funding to factor in.
Management will be all over this - strategising and negotiating will be going on in earnest - all is not lost and a deal will be done at the end of the day, unfortunately all shareholders will have to take a hit but thats the nature of business and investing! long-term theres value to be had, particularly at current prices, but at the end of the day someone has to stick their hand in their pocket and the hope is that there are folk out there with the appetite to do so without putting the company and us over a barrel. I havent given up hope, but only time will tell
Agreed, more cash is required just to release the remainder of the existing debt. After the independent estimate of costs there will be discussions with the lenders about any flexibility with the existing loan terms and the possibility of added loan amounts. Then the required cash will be known.
Where I disagree with pickedpeck is - I don't think the banks will lend unless the total financing picture is clear and all money is available. I don't think they would put up $50m - $100m or whatever and say 'yeah just find the equity around March time' not going to happen. The debt needs to see the equity and the equity needs to see the debt - and the other financing options like CLNs et al may bridge the gap but here my knowledge ends so I don't know what mechanisms exist. Obviously royalty type deals would be one of the most desirable outcomes for a significant % of what's needed.
The shareprice won't go up before the next RNS because there isn't enough info in the public domain a. What precisely the deficit is and b. What are the options for financing. In the absence of this info and with the credibility of mgt shot with many former investors who have sold, I don't see where the buying presuure will come from unless the news on the deal or likely deal leaks, which I suspect it can't and won't.
That means the shareprice will stay at around this (IMO mispriced) value and it's actually the rns' thrmselves which will need to shift it. Quantifying thr ampunt won't help much if the $ value is large UNLESS that rns also hints or provides info on what the likely financing mix is, that it isn't all equity at current price, and hints at how cerrain the finance deal is. So I am not seeing that as a price catalyst.
The best price catalyst would be an rns with a tranche of financing secured which isn't equity, like pickedpeck has said many times a staged approach, each stage reducing total $ required by equity and each stage making it much more likely finance will be complete. Whether we get that or a big bang finance complete rns in due course time will tell. I really do 't expect price to rise much until there is good news here, in the absence of good news in this market the shareprice action imo is understandable, if not justified.
Theorist I think your post took quite a dramatic turn there!
My understanding is they’ve not been able to provide perfect information on costs and timescales because they were required to update the market via RNS as soon as they’d established a material issue with the project.
Rough estimates of time and cost overrun were provided in this update, however they made it clear that there’s a need to figure out exactly what is required and what they need to achieve it - at which point they’ll then will figure out the precise financial and time costs.
The new operations manager will be leading on this and an independent report will also be provided to reassure investors and potential debtors.
The latest update with plenty of photos and explanatory notes demonstrates how far the project has moved on. Previous photos available were no where near as detailed as those, so if any mining expert can share their views on this report then they would be appreciated, but I don’t place much value on speculation placed based in those previous images.
Let’s not get paranoid here, give it a few weeks and the project report will be available and we can start to make progress on sourcing the finance required to finish the job.
Everything is moving in the right direction other than the SP. As the positive announcement re funding and cost estimates for enhancing and more importantly providing and implementing appropriate risk measures to protect the long term goals for the company and investors, we will see significant value return and and surge in the SP. Whether equity is issued (there should be an element (but I suspect an underwritten rights offer) plus secured loans, the priority will be to finish the physical elements on the ground, get the safety certificates and start producing. The feasibility report for the 2nd mine will no doubt interest cornerstone and institutional investors but for now phase 1 is where the revenues will repay debt and enhance equity values. THE NEXT RNS I ESTIMATE WILL BE FORTHCOMING BY 22 NOVEMBER…. GLA…expect the shares to rise to 30p pre RNS as equity pricing needs this to be the case….
PP, interested in your reply. The rainy season hasn’t started, in fact October has been much drier in Araguaia than historically, 14 day forecast today shows little rain which is surprising as November should be the first of the really wet months. Certainly there has not been anything unexpected in the weather, if anything it has been much drier that the company could have hoped for. On the other hand if they have made some serious miscalculation re the water you are not going to want to be digging holes between November and March. What is so bad here is that everyone is floundering around trying to determine what has gone wrong and what it will take in time and money to fix because the information put out by the company is so totally inadequate. Perhaps management doesn’t know themselves?! An even more worrying thought. Or could this even be a Ponzi scheme? One poster, I cannot remember who, wrote that he had shown some Araguaia photos to a mining expert mate who determined that they were way way behind where they said they were in terms of completion etc. It seemed a pretty credible post. Maybe the guys in London thought everything was going great when it wasn’t, eventually smelled a rat, changed the operations manager and bang, the truth was out! RNS’s reflect the fact they still don’t really know what they have left to do and how long it will take. This would seem to me quite a plausible take on where we are at?
Theorist,
I agree on the time line of when this was suspected if not known. There seems to have been a turning point in early August in the share price.
I also think the nature of the delay has the rainy season superimposed on it. The original schedule was hard up against the start of the rainy season to start commissioning, with lower productivity and access problems particularly working on water systems it's easy to see why a 3 or 4 month delay can turn into 6 months which is what we have. Contingency planning should have accounted for time impact as well as budget, it looks like it didn't.
That extra duration will have an impact on the money needed, they have recruited and staffed up for production only to find a hefty amount of thumb twiddling may be in the new starter's job descriptions. Its not easy to stand a workforce down for a few months whilst project time lines catch up with each other.
Regarding trade volumes - I suspect most have taken their positions in or out and are waiting for the company's next move before committing change either way.
One thing I have been wondering is if the company has had left field in bound interest, if they had would they share that any offers are in progress rather than just announcing the finance deal. The big defensive three would have to agree an offer, or at least two of them would.
The issue/ risk was hidden in the 17 Aug 2023 Results in the "Going Concern" section.
"a risk that cost increases in the remaining part of its $532m construction budget (62% spent so far) linked to several of the major construction packages including labour, materials and productivity, could result in future drawdowns on the senior debt facility not being permitted and require the Group to pursue alternative sources of funding to meet its commitments.”
This was spotted by John Cornford - https://masterinvestor.co.uk/commodities/mining-doldrums/
Hi Mumbles, agree with your post, indeed I posted a very similar oservation a couple of weeks ago. What worries me is that I could understand a glitch that caused a couple of months delay or a cost overrun of $20, 30 even $40m however it beggars belief that management could have been so in the dark that they did not see this coming even a month prior. Assuming they were being open and honest with their previous RNS and with their investor presentation. The sp trickled down from 160p to 125p in the three weeks or so prior to the bombshell, undoubtedly in my mind because someone was in the know. But what that means in terms of a time line is that this bombshell knowledge was there at least in part at the time of the previous RNS and if that were to be the case management are in some serious bother. I think confidence in management has been shredded and I would think this is the single biggest obstacle to financing the delay and the overruns. No doubt Orion and La Mancha will have appointed someone to conduct a forensic examination of the data and the costings, soon enough we will no the outcome of that. I expect they are leaning heavily on the expertise of Glencor, trouble is are Glencor friend or foe? They are after all the giant vampire squid of this industry, to borrow the phrase.
Trade count today suggests the interest is lost here for the time being.
Hi Mumbles - my thoughts also is that it is no coincidence that some issues have come to light following the appointment of Mr Marino. Hopefully the first RNS re this represented a worst case scenario and an in-depth analysis and identification of cost savings might mitigate some of the cost overrun but only time will tell.
As for me, I don't mind being labelled a gambler by some on this board. Life is full of choices each of which could be considered a gamble. Choice of partner, career, where you live, and how to spend your money, are just some risk laden examples. My choice is to continue to hold my shares in HZM. I was planning to top up my holding when the shares were £1.25 and was just waiting for the RNS so, despite the risks, I am actually pleased to be able to top up and average down at current prices. If the price goes lower I shall buy even more.
Good morning Theo, my thoughts are that the events have unfolded since the recent appointment of Fernando Marino as operations director. He comes with very good credentials. Smelling something not quite right and not unsurprisingly not revealing the extent of the issues until he was sure of the facts. Considering he was appointed End of August, getting to the bottom of the issues, getting them verified and then producing a cost estimate of the impact of the project within 6 weeks. The board maybe deliberating for another week before releasing the RNS. This is not an unreasonable time frame. To me, there are questions as to how they got there in the first place, but the actions taken to appoint Fernando points to an appreciation that they need more oversight than was previously being provided, and a timely issuance of an RNS when a event with very significant materiality was realised.
I do not understand quite what Contrarian and Publican seek to achieve but in any event their posts are of no interest and contribute nothing to what is often a quite interesting debate. There is no doubt it was an incredible achievement for an independent to attract funding for a project of this scale. And of course to attract cornerstone investments from Orion and La Mancha. I would imagine that nearly everyone here invested on the back of that achievement and for a long time there was a steady and encouraging flow of information from management. Of course the RNS came right out of left field and caught the market pretty much unawares and still we don’t really know exactly what went so wrong apparently so quickly. The banks will be searching desperately for the assurances and confidence that they will not be throwing good money after bad and there will be a lot of horse trading with Orion, La Mancha and Glencor. The banks are bound to look for some equity contribution. My guess it will be in the form of a rights issue or a placing coupled with an open offer and the price on new equity will be 20p. In fact the price is almost irrelevant although it will naturally hurt shareholders who do not participate. Importantly any successful financing will keep the company in the game and raise hopes for some measure of a recovery, although the recovery could take a very long time to manifest itself.
In gambling there is the house and the punters. Orion La Mancha and Glencore are the house here. PI's are the drunken punters hoping for a payday. Remember I was warning you long before anyone else here did. Repeatedly to the point of being ridiculed. All it would take I was saying was one piece of bad news. For months I was puzzled everything was going so swimmingly well.
Publican's communications are repetitive and hence the LSE do give a green filter button when it gets too much (yellow card hit to Publican). We are all aware that we invest on what we can afford to lose and get returns on winning investments elsewhere is part of the game in recovering where an investment has blown out. The reality is that the reserves and resources in this project are such that it is possible for this overrun to be managed and that project gets across the line in Q3 next year hopefully without any more overruns or issues. There is no second chance here for HZM if that event occurred. The reality is whether line 2 can follow on later on and both lines get into operation a few years from now. If it does HZM can pay off all the debts and the share price can get back to 160p again. It will take time and those who do take the risk need to be aware a number of elephant traps need to be avoided and something being possible is no guarantee it will arise.
I should comment some of the majors like Rio Tinto have lost fortunes building new mines. Fresnillo also had a painful experience with its new mine, but it will soon hit nameplate production. 44% of all new mine constructions above $500M have HZM problems (complexity of the project and need for engineering adaptations and recovering lost labour resources). Delays of 6 months on the timeline also fit with this profile. I hope publican is proved wrong on how small investors do get treated in the coming weeks.
Tony
La Mancha, Orion & Glencore are Definitely NOT Gamblers so by accusing investors here of being gamblers is the same as accusing the 3 Institutional Investors as being Gamblers?
Strange!
Publican.
You must admit its a bit strange that you have posted (at great length) 102 times about HZM in the last 30 days, when you have no interest in this share at all.
Publican.
Again, its not that i dont want to hear negative posts, i just dont want to hear you say the same negative post again and again and again etc. Particularly when its clear there are many holes in your hypothesis.
I am confident this view is shared by the vast majority of those using this board, so rather than us all filter out your posts i think it'd be best if you just filter yourself. That way this board can actually be used what its meant for - to share news and different ideas.
Please be assured, everyone investing in this stock (and those considering it) will understand that there are different outcomes that COULD play out with this stock, including the negative picture that you like to paint. They have now heard MANY TIMES what you think will happen... they do not need to hear it again.
For the avoidance of doubt, i can confirm you've definitely had your fair share of time in the limelight sharing your "expertise" - now allow the board to have easy access to other people's ideas without having to wade through your spam.
(P.S. You seem to enjoy using inflammatory language and pointing the finger calling people "gamblers". It has been eloquently explained to you previously that there is risk involved in any investment and yes that is similar to gambling. There is more risk associated with small caps and junior miners - particularly those which require additional finance - and therefore yes HZM is more of "a gamble" than investing in a diversified blue chip mining company that is cashflow positive - but there is more potential reward too. Again, i expect anyone who is investing in these kinds of stocks understands this - believe it or not they do not need you to hang around stating the obvious every other day.
You're not clever for calling people gamblers here, quite the opposite - you just lose any scrap of credibility you might have had.
Please now pipe down for a bit. Cheers.
Its not that i dont want you to post - i just dont appreciate repetitive posts which are akin to spam. As you're clearly unable to identify that your guilty of this, i think silence is the best policy for you!
I hate to pick sides but i feel like PP is making some valid points and pointing out (in a very kind and generous manner) where you're naivety is preventing you from make sound hypotheses
its quite painful and distracting seeing you flounder for so long, so i've been unable to remain quiet - please just quit with your rehashing of the same narrative for a bit and - like the rest of us - wait and see how this plays out over the next few weeks until there is something new to say.
Publican you're going on like a broken record.
i don't understand why over the last week you've spurted post upon post, ending with something along the lines of "anyway i've made my point clear (that i think small shareholders will be shafted by the big investors and be left with next to nothing). i will now leave this board and wish you all good luck" - only to come back later/the same day and repeat yourself!
you've been very ...generous with your opinions but its getting a bit old now, i'm exhausted watching this discussion go around in circles - i dont know how you've got the stamina for it! ...equally not quite sure how its benefiting you... as you're certainly not impressing me.
anyway, i think i speak for many on this board when i say... please can we have some peace from your repetitive posts? at least for a couple of weeks? please!!
Good post peck.