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It’s hard to fathom what Mavens plans are with this short, initially I suspected they were in the equity book and short sold some or all of their placement shares purchased at 7p for say 8p on the day the equity deal was announced. However they have since significantly increased the short selling at values down to around the 6p level, maybe this further extension is an insurance play to ensure the close out with no risk. Time will tell whether they clear some or all tomorrow or have a longer play in mind. As you say it has been quite successful so far and they have successfully created downward pressure resulting in concern and confusion over the equity deal and largely flushing out private investors as the price drops. Interesting to note how and when they close it out.
It’s a brave move in the face of Orion and La Mancha who bought plenty at 7p and have the balance sheets to create their own short squeeze if they felt obligated to make a point of not messing with the big money. That would be very nice to watch!
Wise words.
My understanding of this is the new shares are not issued until approved. Therefore anything short sold right now has been borrowed from the market. However if Maven were on the equity raise book they may have forward sold all or part of their investment as a short sell above 7p and may close it out when they receive their shares from the raise. Pretty nasty game to play if that’s the case but that’s the investment world I guess. However balancing that is the fact they increased the short on 7th Dec at well below 7p, so time will tell I guess. All IMHO.
Sensible words, and the deal is done subject to general meeting approval.
I much prefer the deal we have at 7p delivering a confirmed build with what looks like a significant amount of money left over, ideally this fast tracks A2, last weeks equipment purchase news adds to that theme.
I certainly wouldn’t want to see a failed deal, it would have been a major set back. Either a major delay or selling assets you failed to develop, not a good spot to be in.
The short sell has flipped the SP by about 1.5-2p by my reckoning at a time when we expected a gain, so this is disappointing in the short term but will wash out in due course, as we have seen before.
$200m invested at 7p by the likes of Orion and La Mancha is a major statement of their faith in the future earnings of HZM. That’s good enough for me to continue to hold my quota.
As you say time to move on and watch the news flow on the A1 build, plains for A2 and the development of the world class Vermelho project.
Interesting deal. Looks a bit like an agreed merger at around market price to strengthen both companies forward position. Perhaps to prevent either of them being picked off cheaply. The Nickel space is definitely hotting up.
Yes, interesting, who knows what limitations are in the placing, there maybe a requirement to close before the new shares arrive.
Fully agree JD. Hopefully Maven get their fingers burnt with the short sell in the meantime.
Furnace can be bought on ECA as per line 1. Maybe they have one of those lined up too from idled projects….
Great news today, anyone doubting the company’s management capabilities to drive value from the assets may be thinking again.
I see this as a clear sign line 2 will be pulled substantially forward and perhaps the surprise that came with the higher funding than was expected is now understandable. Maybe line 2 is doable with the existing raise.
Hopefully the short position taken starts to come under pressure and gets closed, that would be nice to see as it has undermined confidence in many PIs.
Very happy here with the forward view though.
A key thing to bear in mind when considering the current SP is that there is a 19m short in play, that’s around 4 to 5 days normal trading volume so it is significant. Whether that gets closed in trading or with the new issue of shares I am not sure. But none the less 19m share is worth around 1 to 1.5p on the current price. We would all be happy at 8p right?
All looking good going forward in my view therefore I am very much sat on my 28m holding.
$200m invested by the industry specialists at 7p is a major endorsement of the value add that’s coming. Yes the raise was more than anticipated but all the risk is off the table, just imagine the diligence done by the banks, Orion etc.. no need to second guess that.
I am an investor not a trader and therefore am not concerned by the current dip in SP, we have seen bigger dips before and will see them again, that’s the market we play in, and it’s a buying opportunity right now.
Also bear in mind that when the new shares arrive at 7p, that will average up the current price if we are below 7p at that time.
Additionally the value of the company will go beyond £200m with the placing, that opens many doors to fund managers that have a floor set at that level following the Woodford scandal. Eg JP Morgan who had to sell their 10% HZM holding on the back of the Woodford aftermath.
Time to sit tight in my humble opinion.
Yes, it’s intriguing. Some largish 500k buys yesterday and today, I wonder if they are closing out the short. Time will tell.
It’s a reasonably balanced article and agrees values of 10p to 15p being easily achievable for A1.
Key drivers will be those potential additional shares if the loan notes get utilised, these may have been insisted upon by the debt syndicate on top of the over spend kitty. Clearly then the quality of the DFS and pre engineering work and the project execution will be crucial to coming in on budget, I recall there was already a $60m+ contingency. Additionally higher Nickel prices if they persist are another overlay above the authors analysis.
Some kind of fast track on A2 and any deal on Vermelho add value, and of course any bid for the whole lot. I would not be surprised to see a 3rd asset spring to life given the size of the district they have the rights to.
He does not mention FX and accordingly OPEX could be significantly lower than DFS on the basis of the Brazilian Real against the USD, while the CAPEX has gone higher for reasons stated.
Yes, agreed. They should also participate in the open offer whatever the share price is at the time for good form.
Anything double digit I think would be reasonable.
The report date for that short position update was Friday 26th, the price dipped marginally that day.
Interesting to track it through the days and weeks ahead.
Don't forget the line 1 Araguaia royalty to Orion, I also cant remember the full definition of C1 costs, does it include all fixed, variable and freight costs?
More so, other than the construction risk it is completely derisked, and it’s a relatively low risk build.
Permitted, financed, etc. My view of course.
Interesting to see what happens this week given the revelation the stock has been shorted and no doubt some reflection from both PI`s and II`s on the deal that has been done.
Plenty of positive commentary in the professional space on the deal, but as we know its the market that decides so its game on for another week.
A friend of a friend told me the banks stress tested the debt piece with Nickel at $13/t. It’s a very strong investment case, hence the debt and equity completion. Good times ahead despite the current blip. Thanks for the technicals RL.
That’s a great find watcher, it explains the drama. It will correct itself as buyers wise up to the opportunity