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May be the case of simply sliding up that 10day VWA price curve for the equity piece. That's my thinking as HZM cleverly reaffirmed the timing with the tweet last week that its still a Q3 event. Having waited 8 years and planning to hold my stake into the near future and through the build a few days is neither here nor there. However very keen to see the deal on the table though.
Here's a short summary of my thinking.
1/ There will be a public offering, JM has stated that, its a leveller for the PI if there is a discount offered to current price. I think the reason we are "waiting" now is to allow the VWA price to rise.
2/ I estimate GBP100M will be needed in equity/offtake, cornerstone was slated for around USD100M, so this leaves around $40m from offered equity/offtake. To raise this they will go to II via all avenues. Key reason being is the can NEVER come up short. PI will never have the legs for all of it
3/ Considering the cornerstone piece and existing holdings Teck and Glencore can not invest that without taking the whole company as they would hold more than 30%, unless they do a joint investment between them. On balance I still think Orion most likely.
4/ Offtakes an interesting one, a pre payment could be costly in the long run, I would tend to prefer a better price going forward than receiving cash up front. Whilst its non dilutive it can be expensive, short payment terms may be more important to reduce working capital and hence project funding. But lets see
Not long now. GLA.
Not sure I agree with the debt piece being already priced in, no step up was evident on the open from market makers with the ECA debt piece, all the action came from buying- so room for something more there next time round in my view.
Then again with offtake and equity news unlocking the NPV of the Araguaia project and being gateway finance to the rest, these aspects should also move us on. North of 12p is my thinking.
Eventually though when the dust settles it’s going to be the market that decides where the market cap will sit.
But I expect news flow on vermelho to be adding value through the build, potential partners etc.
I understand its a 2 year build with the wet season constraints factored into that timeline
I would imagine traders wont want to be out of this over the coming weekend with an eye on a potential Monday announcement on remaining credit approval.
The bank debt piece will be conditional on the other pieces of equity and offtake, as we have heard these aspects are at an advanced stage. Also the first money to be used for construction will be the existing cash in the bank, then the equity raise money, then the ECA debt, then the bank debt. Thats the cheapest way to construct and also the lowest risk to the lenders. That’s the way it will work.
So it all needs to be in place for the funding to be complete, the banks will release credit approval but it will be conditional. So I expect the final parts to be quickly closed off around the end of Q3 when credit is approved.
I reckon the $146m is only for line 1, they can’t over stretch themselves and it would be a massive shift in the plan. It looks like the major spend items such as furnace etc are being sourced in those ECA territories as packages and may include construction, hence the value. But the debt is longer payback and cheaper thank the banks, , this in itself along with higher Nickel prices will fund line 2 more rapidly from FCF.
Yes. Maybe get trading volumes above 200k Lol.
It’s in the bag Wasa, the statement in the announcement confirming tranche b within Q3 is pretty robust. Not many trading days between now and then. Then the equity and offtake to slot in quickly.
Happy days indeed, being in as deep as we are has been vindicated at last thankfully. Congrats to the HZM team and good luck to the long term supporters.
Yes, indeed.
A good site to view the trends....
http://www.kitcometals.com/charts/nickel_historical_large.html
TDT I think an important point for people to be aware of in the LME Nickel space is the warrants, there is currently 187kT in stock, 66kT is no longer warranted for sale (cancelled warrants i.e already sold) and therefore no longer publicly available, on that basis available stock is around 120kT.
It will be interesting to see the stock v price relationship, many pundits have forecasts but not many align, however they are all relatively well priced against Araguaia base case
I think that's a very safe bet Wasa. I align with you, somewhere between 7 and 8p, funnily enough 7.5p sits smack in the middle and aligns with previous raise in Feb.
We should know anytime now, aside all the broad and varied calculations I always go to the base fact that private equity investors such as Orion seek returns of 3-5 times the investment. A cornerstone punting $100m in at the 7-8p range....I don't think we need to say anymore.
Being paid a good price for them too, someone equally keen on the other side.
Odd to dump a million like that though with 4 quick trades in close succession. It’s not exactly stealth.
Perhaps credit approval is already in the bag and waiting for a straight run into equity. A lull while fund managers are still holidaying would not help the equity process. Find out soon enough I guess.
Depth 10
10:38 PEEL 100,000 7.2
09:34 INV. 100,000 7.1
08:25 CANA 100,000 7
08:26 CFEP 100,000 7
07:52 JBER 100,000 7
08:41 SCAP 100,000 7
07:48 SING 100,000 6.8
09:08 WINS 100,000 6.8
07:59 MREX 100,000 6.6
10:50 130,000 5
9 Depth
7.3 100,000 SING 07:48
7.3 100,000 WINS 09:08
7.4 100,000 SCAP 09:00
7.5 100,000 CFEP 08:26
7.6 100,000 INV. 09:34
7.6 100,000 MREX 07:59
7.6 100,000 PEEL 10:38
7.7 100,000 JBER 07:52
8 100,000 CANA 08:25
It looks like Investec are filling an order as they have been quietly on the bid for over a week now.
I haven't noticed any of my posts being removed but then again I haven't really looked hard to check either.
Juicy numbers Wasa, best thing about them is they are real.
If Nickel does become as tight as is predicted watch the record books be rewritten as the big guns go shopping to acquire advanced projects. HZM are exceptionally well positioned.
Some strength behind the scenes at the moment it seems…
OK I come clean………
I am a massive fan and fortunately not an employee as it would have hindered building my holding.
I am with you there Wasa, having built a stake here since 2013 I am in no hurry to leave in the short term.
I expect some volatility on financing completion before we settle significantly higher and also a strengthening linkage to Nickel price from that point on towards production. I would also anticipate institutional buying linked to various funds that have battery/nickel stocks/mining exposure etc. Some may enter at the equity piece but I would still expect the shareholder book to be far heavier on institutions given the market cap the company is likely to carry going forward. Buying from the institutions could easily obliterate the PI`s selling. It wasn't long ago for example the JP Morgan had to sell their circa 10% holding as the MCAP was below the newly specked GBP200m lower limit for their investments, that was triggered by the Woodford scandal. It would only take 1 or 2 funds taking a position to make a material difference in the market.
Araguaia 1 is the gateway here with Vermelho the main course, given the size of the district a 3rd asset such as Serra Do Tapa could also be possible for its own development. All that said means the biggest value adds by a mile lies ahead.
Sticky fingers here.