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Anyways,article makes the point that there is Chinese capital floating around at least being deployed in Canada
Relevant as I believe Mr Solaris is who Mr Nasr works for.
Chinese capital ?
The whole financial world literally knows about what’s happened now and I imagine that they will be getting both curious and dead interested approaches.
There have to be people out there even in the private capital arena who can see the opportunity here.
Are you ready to get your calculator out again here yet Rover ?
I would suggest that we start from the capex requirement minus the 121 previously committed and promised as our starting point :-)
Better this way round than fail on commissioning which Karim said this is meant to obviate.
Also you don’t really employ a new COO even interim if you think that everything’s going to come to a grinding halt shortly afterwards.
It seems that Graham is the supportive face of the team on explaining how the new cost structure is going to work as costs will also be as key as the capex in presenting the case for the money.
May I suggest that you all re-read the RNS. After the initial revelations and headline figures, and a week of discussion here, some of the interesting content may have faded into the fog.
The key element for me is, other than the headlines, is the engagement of G Mining Services (“GMS”), a specialized mining construction and engineering firm.
They were engaged to undertake the review process, delivering the re-estimated of cost to completion and achievable schedule estimates. They seem to have completed this process using a different programme/project management approach. This has obviously exposed the weaknesses of the previous methodology, leading on to the project execution going forward being implementing with tighter more focused management using better methodologies and tools. GMS employees will be directly employed overseeing this. It seems the previous management suffered from obfuscation by their contractors and staff. They hadn’t got a clue things were going wrong until it was too late. By the new team controlling directly each work stream, with a less aggressive timeline with fewer workers, will let them identify issues earlier and mitigate them.
Using new productivity data has I believe inflated the CTC, but will prove to be a more reliable estimate.
In the long run it will provide a more secure environment to succeed.
As always they do caveat with whether they can raise the money.
Strow, I admire your optimism and I too are hoping that we are at the bottom of the commodity cycle, as I have some investments in PMG companies.
Having seen shares bomb many times over the years you rarely see them recover and if they do it can take many years . That is a fact that i know is a fact.
It is difficult to see the share price getting back to 20p before any announcement on financing solution, but
you live hope.
Only time will tell who turns out to be right, me or you. We willjust have to wait and see.
I think that if you take into account increased Nickel price and a 50% better FX rate than was in BFS Hazbeen then everything is offset and even,although decreasing interest rates and inflation as the year goes on will also begin to add value back in.
FX advantage should more than offset increased opex costs as things stand.
All this nonsense about someone taking it for just the debt is just that.
LM,Orion and Hzm clearly know the value here-we have heard that from Karims interview.
Post debt ie Capex there is $1.5B of NPV cleared in there for the full project over time.
They won’t just hand that cleared value post debt over for literally nothing as they all lose their equity and everything that they have invested if they do.
Worst case is A build goes on care and maintenance whilst they continue to try and get funding to complete and at the same time in parallel complete the Vermelho BFS which adds big value for relatively little outlay.
This will then not only give them further leverage on funding for A but they can also then start independently to take V fowards,perhaps with a partner,perhaps not or even sell it into a foward looking 18 k + Nickel market.
It’s all about creativity and exploring all the options available but lose all their money input so far for no good reason…
Can you see Karim doing that ?
He said that LMs reputation is really important to them and they work hard so that people will pick up the phone to them etc
I would not like to look beyond A1 for now.. The previous figures to build A2 and also using cash flow figures will now be out of date and will be a lot less then previously forecast
The debt interest has increased and so will have the capex for A2.
We are back to using $16k+ Nickel for now , previously we had dreamy prices at $25+ Before all this capex costs and debt increases threw the project into disarray
A1 and A2 alone at 18k is almost $1.5B NPV based on original BFS
so say $ 1.1B after cost overrun
Include 12 years extra mine life…..
Point is big value is there and even on an asset sale LM and Orion will not be letting this go for just the debt.
Apart from anything else,if they did,they would lose everything
Macquarie and Lennon saying on Bloomberg that at current prices 50% of current mines are loss making.
At 15k 75 % loss making and more importantly to us 18k 35% loss making.
Nickel price long term always reverts to 30% loss making level which is currently above 18K.
I would agree and hope that will be the case.
I think that the best way to preserve everyone’s previous equity Rover is slant the whole thing to as much debt as possible and if I was Karim right now that is what I would be looking to do.
Well as little new equity as possible at least.
I’m expecting a highly debt weighted package for all concerned
I think that Horizonte may have already found themselves a new business partner in G Mining as their MO fits to take a share in the company particularly as they have this very long minelife opportunity with both Araguaia and Vermelho to potentially build and operate.
They would have to raise their own finance first to contribute though
As has already been suggested, I think you need to do a bit of homework on the financial state of the company. Your calculations are flawed as dilution is regarding current shares and new shares. Maybe you need to go back school. For a start the amount needed to be raised is the $454 million but with $131 million already raised. That by simple calculation is $323 million. You could assume a similar equity:debt ratio from the original financial package of 1:2. $633 million raised of which $197 million was equity the rest debt, however, that’s unlikely, Maybe more a 2:1. I would suggest $200 million equity raise rest debt. Lets round that to £s for argument sake. There has been plenty of debate on here as to whether that can be done and at what price point. Without some underhand manipulation the raise would need to be done at at least 20p per share. So one billion new shares.
You’ve forgotten about the existing bank debts and secured loan to pay. I hardly think they are mitigated by progress. Plus all the Equipment that is through credit agencies. Plus continuing debt interest and suppliers.
I doubt the banks will lend them anymore but renegotiate , if they do lend they will want to see the majority is new equity.
Sadly strow ? Laurence , billy don’t understand that if this is build with the current listing it will be done at the best price for new investors.
I am sure Karim is quite capable of finishing the mine and getting up and running. He should have a job for life if he wants it.
However, there is the small matter of 454 million dollars or in sterling 360 million.
The problem is a company worth 11 million sterling can not have debt of 360 million sterling .
If half the money was secured by secured loans then the other half of the money would have to come from the existing shareholders, that means 180 million sterling of new shares. Given the distressed situation I suspect any new investors will want shares at a significant discount to the current 4p, most likely at 1p at the very best 2p . You do the maths , but suffice to say the existing shareholders will be significantly diluted.
Can anyone come with a different senerio 🤔
In case it hadn’t also occurred to you John,Hzm would be “out-margining “ Indonesia with its low costs by a really significant amount.
I'm not just doom and gloom.
Obviously the main thing for HZM is to survive the next three months, but you can't ignore it close your eyes to the wider industry.
Anyway to the glass half full crowd
Apologies if already posted
I said that if they push production up then they lower the price that they will get for their production and so then make no profit at all.
It’s simple maths.
There is a floor in the price is also my point and it’s around 16 K.
All the time they are also depleting their reserves and grades
Strow, Indonesians are paid $11,300 per ton of Ni in 10% NPI, their costs $10,000, margin 1,300. Chinese NPI producers are at break even
It’s already an issue and being thought about by both US and EU
I agree it will as in excess of $1.3B NPV (8) at 16.5 K would seem very compelling for anyone with the funds to complete.
This is all nonsense re Indonesia as because unless they can find significant further ways of decreasing production costs then whether they pump out a million tonnes or 2 million tonnes or 3 million tonnes etc,if they are making no or little profit at 16K per tonne that really doesn’t change much with pushing out that extra capacity.
Their limiting factor is costs and pushing up output just keeps pushing your nickel price back towards your costs.
Stabilisation at around the 16K mark will be a self fulfilling prophecy no matter which way they play it.
If they decrease their output on the other hand,this is the best way for them and everyone else to make money.
If the Western view becomes more polarised towards the possibility that China are trying to shut down the Western markets then protectionism is likely to come into play I think like you say Rover for the 2 class clean and dirty.
Indonesia will become a pariah and backfire on itself if it doesn’t catch onto that fairly soon