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It could be a general financial instrument for use in the forthcoming equity piece. If that’s the case though it has plenty of latitude built in. The USD $100m catches the eye though. Very Interesting.
I checked Orion confirming they are head quartered in New York, likely have subsidiaries globally to manage tax and the likes though.
It’s another piece of the jigsaw puzzle falling into place by the look of it, not much longer I would think for the big picture….surely.
I agree PP, this is about getting it done, a squabble over a 1p here or there on the share price is insignificant in the long term.
What is significant for the long term is getting the deal done at a reasonable price in the near future and starting construction. Gateway finance to the rest of the asset base value unlocking process is the single biggest priority.
I understand from research that there will be significant detail to be worked through between the consortium of debt banks and the cornerstone at this time, hopefully this wont take overly long.
Good to see Nickel flying high, but we don't want that overly high in the short term as the risk is mothballed capacity springing into life. I think $19k to $22k could be the sweet spot.
Lots said already, I would just add…
We are so well placed it’s just a matter of being patient and the value will out one way or another.
Bear in mind HZM have a Nickel district and new development assets could also emerge, additionally as the market hots up consolidation is inevitable. It’s not every company or project that gets $340m of debt finance and a $100m cornerstone investor. The short term ceiling on SP is short term, value appreciation lies just ahead.
I estimate by around 3-4 weeks we see the next financing announcement to enable completion of equity before the Christmas shutdown begins. That must be front and centre of HZM management thinking.
A depth of 9 at the moment.
Step up HZM with Vermelho
I think the excellent debt terms with longer payback and lower rates across bank and export credit provides for a much better cash flow than the base case thus funding A2 from cash flow. Another transformational step when it comes and likely earlier than was anticipated due to the strong nickel market.
This then opens up the financing of Vermelho, all together a very robust business plan which ever way you look at it.
My thinking is we will have one equity raising event made up of a number of parts. with two types of participants.
Cornerstone - they will be the price setters in conjunction with the agreed term sheet
Everyone else - will be price takers but match the equity price of the cornerstone
1/ Existing shareholders invited to join, Private investors, II, Teck, Glencore etc
2/ Both current Brokers will be working their socks off to place with institutions and funds
3/ Cornerstone investor takes the balance up to a specific max amount. (Cornerstone could also be a consortium)
In the end they cant be short so need to aim high and clip back on the allocations when its oversubscribed. Tough to balance all the issues around equity pricing, current share price/VWAP etc, discount or premium, NPV of projects, future risk, the need to get this going. Interesting challenge for HZM to get right.
All IMHO of course.
That's useful info Ivor thanks, the -7m movement in RBC will likely be the large trade we saw last week or the week before I cant remember for sure, soundbuy posted it. It will be interesting to see if they participate in the next equity piece.
Worth a quick look at Vermelho for those that don't yet know of its quality and size. It is much larger than Araguaia and carries little to no current value in the SP once would argue. Araguaia finance begins the value unlocking process.
Looking against the Mining.com article it lies just a smidgen outside the top 10 Nickel deposits globally.
https://www.mining.com/featured-article/ranked-worlds-top-10-nickel-projects/
https://horizonteminerals.com/uk/en/vermelho_project/
Yes this part of the deal will be interesting, I think the most important thing is the total value package rather than any cash up front element of it. No value add doing that if you then get nailed on your offtake deal pricing for years and years, unless of course you require upfront cash to fund the project which I don't feel is yet the case with HZM.
Another important element will be in the payment terms which dramatically impact working capital - there could be some real value in there, perhaps more than an upfront pre payment. If you're in with the big guys say Glencore for example you may be able to access supply chain finance via them and achieve immediate payment for your product sales at very low interest rates which sit much lower then your debt funding and average cost of capital. That can mean up to 2 -3 months of working capital is immediately funded with minimal cost. Lets see what the deal looks like, hopefully soon...
Great post pp.
A couple of points I would add.
1/Track record and credibility of the team
2/Lower capital investment than is typical due to the existing infrastructure
3/Vermelho which is one of the biggest global deposits carries little to zero value at the moment, it’s a game changer when permitting and a partner arrives. Given it had all the permitting approved before that process is already derisked to a certain extent
All IMHO.
C.
Looks like someone in a hurry to leave for their own reasons I guess. We are seeing overall market weakness and high volatility across the main markets. Some people are getting spooked and it will make any nervous holders sell. I think the main uncertainty here now is the equity price and that's what people really want to see, until we clear that event I think the celling we hit with the SP of around the 9-9.5p mark will remain no matter the strength of any news. The clock is ticking and time is money in this case, so I would imagine the pressure is on to move the offtake and equity piece forward urgently to allow the build to begin, on that basis I would expect news imminently - ie days/weeks. Offtake deal confirmed 1st then equity terms and process with cornerstone announced.
Level 2 snap shot for info.
Depth 9
16:51 CANA 0 7.8
16:50 INV. 0 7.8
16:51 JBER 0 7.8
16:45 MREX 0 7.8
16:50 SING 0 7.8
16:57 WINS 0 7.8
16:55 PEEL 0 7.75
16:51 CFEP 0 7.7
16:50 SCAP 0 7.7
9 Depth
8 0 PEEL 16:55
8.2 0 CFEP 16:51
8.2 0 SING 16:50
8.3 0 WINS 16:57
8.4 0 SCAP 16:50
8.5 0 INV. 16:50
8.7 0 JBER 16:51
8.8 0 CANA 16:51
8.8 0 MREX 16:45
Just imagine the terms in a $200m mortgage, bound to be a few right.
Normal business jargon for meeting loan conditions, eg the equity and off-take elements which are already advanced. Nothing to be concerned about.
Thanks, I did, sippping a glass of red now.
I will save the Moët for the offtake and equity conclusion.
Enjoying an evening beer Wasa. Cheers.
With the equity piece don't forget to add in $20m or so for Vermelho DFS and permitting.
Ditto that Wasa, well done the HZM team, outperforming most investors expectations (again)
There were plenty doubters but those who know how this company goes about things were always resolute in support.
Its a great day for the long and medium termers of HZM and a good day for traders if they got in recently.
I was pleased to see no massive lift at the open, it was actually peel that held it back as I was watching on level 2. Better to have an orderly increase over a week or so than the boom and bust.
Like you Wasa this confirms hanging up the boots early. Happy days.
Conviction buying and opportunity shopping Wasa and fortune favours the brave, does that take you to 23m now?
I disagree the risk has increased, I think it has actually reduced.
Last time the deadline slipped from H2 to Q3 HZM advised the market 2 weeks ahead of time.
https://horizonteminerals.com/uk/en/press-releases/2021/araguaia-project-financing-update/
With a day to go in Q3, my humble opinion is there's no way JM isn't keeping to his word and the very recently stated timeline of Q3. I would expect they already broadly have it, perhaps a few minor points to address while the VWAP lifts.
I expect an announcement by end Q3.