George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Well, just having a beer here in Ozz on Friday eve.
You would think by the share price reaction that the equity raise had failed, but on the contrary it’s been an outstanding success. Mining industry big hitters investing $200m of their funds at 7p.
Emotional reaction and some big sellers whoever they are are creating some short term concern by selling. We have seen it before with City finance and JPM as distressed sellers and we will see it again I am sure. Investors sell for their own reasons and this alone and if big enough can create a related wave of selling.
Bear in mind the quality and diligence of the equity investors and you make your own choice on whether the sellers or the new investors have it right.
But funnily enough if we are still trading at this price when the new equity shares arrive in the market it will lift the price as they join at 7p value which I think is quite ironic. At that point we will have around $250m cash in the bank and a debt facility of $346m , with access to convertible loans if required and an additional emergency overspend of $25m.
Additionally a $25m injection on royalty for Vermelho DFS and a 10y offtake with the biggest name in the game for shifting commodities into the market, they are also a key stakeholder in the company.
Yup, I think the investors have it well and truly right.
Make your own choices but I sit tight on my 28m, very happy with the outlook and value add ahead.
Harry, I think that approach is a sound one and I am very aligned to your thinking.
I would think and hope the BOD will take some shares in the open offer. Not large amounts if its 1/20th of holding though.
Yes the Teck story has more to it I am sure.
Interesting that Teck are conspicuous by their absence in the equity piece. I wonder what the story is there. Maybe they are keeping their powder dry for the forth coming Vermelho development?
Maybe JM can clarify at some point in the near future but likely not as it’s probably a confidential area.
Yup, follow the lead of the specialist mining investors.
Just matching UK , traders and short term holders exiting I guess
https://www.mining.com/horizonte-fully-funds-construction-of-araguaia-nickel-mine/
Ditto that.
Yes, a busy day for sure. Interestingly we have major investors clearly keen to the point they invest $200m at 7p as they see significant returns ahead from this point. On that basis when the disturbance from the equity piece settles I would expect the SP to track higher and reflect better the asset value. Short term its going to be volatile.
For the record, still holding all of mine, no plans to sell.
Given HZM need for such a significant amount of cash between the debt and equity this is an outstanding deal, with big names on the RNS- that's important for next developments of A2 and V.
Plenty of crying about the 7.5P price I see, but I never ever thought it would be at a premium and its in my range of 7.5-8.5p, albeit at the bottom. Its gateway financing for the entire district, that needs to be borne in mind. $25m for Vermelho development sitting quietly in there too.
It looks like they are aiming high on the equity to fund cash flow and can adjust the La Mancha between $60-75m, so overall the total is higher than expected, so what, a bit more dilution, its worth it for certainty
I really don't understand the negativity- I mean really guys, financing is a competitive arena and you don't just rock up and borrow $346m and get a $200m equity deal. There has to be serious returns for those stakes.
Don't forget Orion and the likes look for 3-5 times there investment, if its at 7.5p just do the maths.
Personally I am delighted.
Yes, its going to be interesting to see how it all plays out. Typically HZM have outperformed expectation on project value delivery with the exception of the time delays. Lets see what they have landed on the equity piece, I feel its very close now.
I was wondering if the new equity will be listed in Canada or the UK market as by the looks of the earlier financial preparation announcement its being focussed on and led in Canada which will pull in the USA investment crowd as well. So I was wondering where the shares will be lodged. UK on AIM or Canadian TSX?
Fairplay, that was quite funny.
Agreed soundbuy, they live with risk but nowadays try to minimise it, much less gungho than years gone by and where possible looking for certainty as Dividends are too important these days.
But that comes at a price too.
Araguaia is essentially de-risked to a mining acquirer, but not yet to the general market until, funding is complete.
To a miners risk appetite this is as good as it gets, even the banks have agreed to lend $346m, its in a mining district, fully permitted, shallow pit, simple build, lowest quartile costs with good ESG credentials, some roads and power to chuck in which is routine = job done.
Therefore HZM will be on the radar, it simply has to be but perhaps the shareholder register is commanding some respect with Teck and Glencore in attendance.
Yes TDT, I watch this regularly also. At approx 50kt/ week consumption we are getting towards a tight market scenario with around 10days free stock available. Interesting to see how it plays out in the months ahead.
so...for the record, I am not trading, buying or selling, still sat at 28m.
Interesting research PP. Hopefully we find out this week/next week.
Most up to date information from the company is it’s 2y construction. During construction the fresh news flow should be about Vermelho and potential development of the rest of the Nickel region they own. Lots of value add to come from the other assets.
Ditto, not that fussed, all are first class partners with something different to offer. We will find out soon enough.
Sticking with my long term hunch that Orion are cornerstone, Glencore offtake, equity at about this price range 8p +/- 0.5p but of course would love it to be higher as I would like to be near 1% holding when its all completed.
My theory has always been the equity partner needs to see 3-5 times return, hence I think that's why we are kind of capped at this trading range. if there is a discount to market you will need to be an existing shareholder to benefit from it if your not a institutional investor.
However once the deal is done its off to the races I would think.
Why would Teck agree to a much higher price than now when investing such a large amount. That doesn’t make sense to me, the finance world doesn’t work like that.
I am not a fan of that theory at this point.
Jeff, this appears to be a process step that allows HZM to raise up to C $125m. So it’s a preparation step that is needed by the Canadian regulator there I imagine. So it’s not confirmation that they have this raised, it’s saying that the are ready to do so up to C$125m
With this in mind it appears that the lions share of the equity will come from the Canadian market. So the guessing game is who is the cornerstone, alternatively it could be a general fund raising kitty that keeps their options open for the equity.
If you recall they appointed a broker for this territory recently, BMO by memory. Hence my po8nt it’s another jigsaw piece falling into place ahead of the equity piece.