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Pub,
You don't understand how the funds work at all. You're thinking of them as individual entities spending their own money, they are clearly not. They invest on behalf of LLPs in specific funds. For example the Orion fund used here has 54 investors I believe. Orion administer the fund, the LLPs provide the money under their guidance. As long as Orion and La Mancha remain credible as long term investment managers they won't run out of money. LLPs put money in to either open ended or fixed term funds. This one is open ended I believe. Returns are not calculated daily, they are five or ten year calculations. Because the way the funds work they don't need to sell, they can wait out any storm as log as they remain convinced of long term value.
As for Glencore wanting this to happen, that's paranoid claptrap. Glen sold the Xstrata nickel assets in Para to Horizonte. Glen however could make an offer for the lot that's true. Whether Glen at that point would be the only bidder is debatable, Vale would definitely be interested, so would the Chinese amongst others. We may get a bidding war., wouldn't that be fun.
Money dwindling. A week ago you were saying it was gone and they couldn't draw down any more. The latest update says they have $122m cash and have continued to draw down debt as construction on many parts of the mine nears completion. The update contradicts your facts from last week.
Last week you also said it wasn't a mine, in the update they said they had mined and stockpiled 138,000 tons of wet ore with 1.9% contained Ni. I think that makes it a mine now. The processing plant isn't finished.
I not even going to address the sirius comment other than to say it's irrelevant. I understand its one of your three miners you know much about.
You also still haven't learned how to do the equity sums. You keep saying things like 'massive dilution' and 'reload equity' with no actual clue how that could happen or how the money could or couldn't work. Explain it with some maths or leave it alone.
If you want to pick on what I am actually worried about and the things I am looking out for you are going to have to read back a bit. I am not repeating myself. You haven't even touched on them though.
The absolute worst case scenario is that they say they have not been able to raise the funds required and are putting part or all of Araguaia opco up for sale. Even in that context the current price is way below the distressed asset net value so even in the worst case there is something of a safety net.
Calling me a gambler is quite entertaining. If you are so sure of your 'facts' why don't you put a big short on? I would guess three weeks until we know the outcome. I guess you prefer to sit on the sidelines pontificating though.
Https://horizonteminerals.com/uk/en/press-releases/2022/appointment-of-non-executive-directors/
Vincent has been on the Board of HZM since March 2022, hence La Mancha knew what was happening and any challenges being discussed.
With reference to future demand
1.9 million cyber trucks currently on order made of 300 grade stainless steel, 6 to 20% of which is nickel. Elons going to want that coming from clean environmentally sound sources
https://www.google.co.uk/search?q=why+is+the+cybertruck+made+of+stainless+steel&ie=UTF-8&oe=UTF-8&hl=en-gb&client=safari
https://www.pennstainless.com/resources/product-information/stainless-grades/300-series/
Toyota is the world's biggest car manufacturer and has so far only dabbled with EVs, sticking instead to a range of hybrids. However it is getting closer to going all electric with solid state batteries with muhc higher range and shorter charging times, not to mention a better safety record.
Toyota make millions (~9m) of cars a year, and by 2028 they will likely pretty much all be electric.
It seems like the solid state batteries it intends to use need higher and purer Ni content to deliver the performance Toyota is aiming for.
You can go ogle loads of news on this, but here is a starter article or two:
https://electrek.co/2023/06/13/toyota-claims-solid-state-ev-battery-tech-breakthrough/
Talks a bit about the chemistry:
https://www.ft.com/content/6224f235-568c-4e2f-8247-e7dacf0ef20c
Talking about ramping up production :
Toyota nears mass production of solid-state batteries - https://www.ft.com/content/6224f235-568c-4e2f-8247-e7dacf0ef20c
Even if only half of Toyota production goes electric in the next five years, that's 225,000 tons of class 1 Ni demand a year that doesn't exist now.
Just to change the subject and invite discussion I note a number of posts mentioning a possible future glut of nickel, however, I wonder what impact the current conflicts in Ukraine and Israel will have on future stocks. From my own limited research I have learned that nickel is a component of most artillery shells and tank ammunition and is used in armour plating, etc. A standard 155mm Nato shell weighs 48kg and a standard Russian 152mm is about 50kg. Although the percentage of nickel in the composition of these may be relatively low it is the amount of shells used on a daily basis that makes its use significant. At its peak Russia was going through 60,000 shells per day with Ukraine using around 8,000 and in addition most military 7.6mm ammunition is nickel coated and millions of these rounds have already been expended.
America has very recently awarded contracts to increase production of 155mm shells by a factor of 6 and Germany and some other countries are planning to double/triple production. Clearly demand for nickel by the military will ramp up and I wonder what impact this will have on future stock levels?
Torn,
Please continue to comment. All comments provided stimulate debate and increased knowledge.
Rover62 I take your points on board. I will take a break from HZM board until fate is known here.
As you know, any board member will not be allowed to buy as the RNS effectively created a closed period.
Also there will be a restriction on what can be said.
I suspect we are way beyond the point at which a supportive statement form the board will influence the shareholders opinion of the performance so far.
I have worked with many companies during my life creating new products. Many CEOs have told me if they knew all the complexities that could arise at the start, they may not have taken on the original challenge. The resilience to come back from set backs can be a real test of character. Several mentioned the support I gave them and finding additional financial resources helped considerably when a road block was put in front of them. The outcomes and successes they achieved impact many of our citizens today. The reward in delivering new jobs, supporting the local communities, generating a product the world needs is hugely rewarding. Not all projects succeed. I still want to see the Chairman giving a signal whether it is a modest share buy or an RNS to say that the Board is heavily involved in the current process and has full confidence in the CEO and CFO. It means a lot for Fisher to do something like that.
Harkin100, you beat me to it. Here's my take anyway.
Interesting history at Angola American's nickel operations in Brazil.
https://www.angloamerican.com/our-stories/innovation-and-technology/mine-profile-barro-alto
Older plant and numerous re-designs and upgrades to improve output it doesn't look to me like what's going on at Araguaia is out of the ordinary and certainly not something that's going to cause the "Big Boys" to pick the ball and say "it's my ball and I'm going home".
TDT
Not me :-)
It was Headder
Has been if you’re going to draw attention to Barro alto for comparison perhaps mention the $1.9 billion it cost to build in 2011 to produce 34,000 tonnes. Even with the latest cost increase it puts what Hzm are doing into perspective
"Who do you mean by the big boys? The 'a big boy did it and ran away' type?"
Classic. That brightened up my morning.
TDT
Yesterday’s RNS update was absolutely positive but many like to talk this SP down. It was trading at £1.70 not so long ago and a poorly worded RNS spooked the market. Regardless of everyone’s calculations, I estimate an additional £65m (tops) funding requirement which will be forthcoming. Based on the value in the two mines, do people honestly feel the additional enhancements to the project scoping is bad costs management? The cornerstone investors and major institutions will want to see the SP rally to a true valuation for their current funding via share placements and loan guarantees of £500m so the additional funding requirement is minor considering the life and billions to be made over 3 decades. Expect these to rise significantly…yesterday was a nonsense trading day and didn’t reflect the progress and positive content in the latest RNS….. should have risen yesterday to mid 30s imho. Gla …this will come good….eventually
NPI mine which Anglo American owns in Brazil. Seems to be mining 1.4% ore & is a rkef operation, 40kt, costing 1.9Bn$.
Production cost of 12320/t Nickel on a pre royalty basis.
https://miningdataonline.com/property/550/Barro-Alto-Mine.aspx#Reserves
30% wind powered effectively;
https://www.windpowermonthly.com/article/1687861/mining-giant-signs-record-deal-brazilian-wind-power
Crude calculation; HZM having 20% higher grade, being 20% lower costs = 9856$/t
https://www.londonstockexchange.com/news-article/AAL/anglo-american-q3-production-report/16178779
But whether we have a surplus beyond 2024/25 is another story
Things can change very quickly
But I will add to supply glut story , even a surplus is being forecast
Producers will need to see at least 16k Nickel in the high cost climate
But I s asm reading the surplus supply is also coming for other metals and not just Nickel
PP,
Really good post below .
Looks like al options listed are not great here .
And there is a another risk that investors maybe considering , the issue of a Nickel glut is coming because of Indonesia , then the company will be struggle meeting all its financial payments and project costs for A2 onwards if Nickel prices
Lower than down .
I know this has LOM and investors look beyond a few years but it just adds to short term risks
Who do you mean by the big boys? The 'a big boy did it and ran away' type?
For the cornerstones to pump in money via equity they dilute their own positionsnfor little gain. I just don't see the rationale for why they would even consider that.
There are a variety of opinions on where Indonesia will go.
Firstly the smelted nickel all goes to China, Tsingshan in particular. Nickel from Brazil may not end in the same products.
Secondly Indonesia has been hitting it's high grade resources hard. I saw an article a while back that claimed Indonesia only had 5-6 years of high grade resource available and that would start to play out and tail off quickly.
In August Indonesian smelters started importing lower grade ore from the Philippines as a cheaper option than local supply. Interesting phenomenon.
https://www.reuters.com/markets/commodities/indonesian-nickel-smelters-turn-philippines-ore-local-supply-tightens-2023-08-30/
Indonesian Nickel is also notoriously dirty, both in mining and energy supply. Coal powered power stations are no longer the flavour of the month anywhere, even China is thinking twice about them. Coal is also a much more expensive power source than hydro, hence HZM lowest quartile production cost profile.
You never answered the post that broke down the opex structure as it undermined (pun absolutely intended) your argument for inflated AISC.
to be honest i saw the shares go from expensive to what i thought were stupidly cheap and just thought i had to buy some. now, after a week of research, i can see the indonesian government is funding nickel projects @ 2 & 3% and banning raw ore exports to gain jobs, with possibly a glut in the market coming. now, looking back to 2015, the bear market, prices went as low as the average cost of production, losing loads of companies like vale, bhp and glencore loads of money and making tenshing no money.
i was hoping to see other investors actually do cashflow analyses about the actual viability of operations and the like but most can't get past ******** about funding. what can i say? the asset looks good although for a long term investment i need to believe the company can address it's long term debt which starts at 22.5m$ a qtr in q2 2025. again, most people can't get passed the near term funding stage. is that part of the 'code' or something?
Just 'based on my research' means something you plucked out of your ****. Just saying. You inflated opex by $3k/t. Why. Over lifetime of debt aggresively calling that 6yrs that's $261m. Where did that money go? What's your agenda? Yo me evrything you said is bull**** so - what do you want?
Just nothing you say make any sense....
Headder we see you :) you weren't here, now the company has problems, wonder what your agenda is (well I don't wonder it at all tbh). Are you a holder? Or are you considering investing? Or are you here to warn us how bad our investment is (which is why djryan is here ableit he doesn't know it).....
Just wondering.