Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Sitting tight. ...asset is good quality, FS is good quality and derisks the project...economics will be significantly enhanced by 2nd rkef...boils down to nickel market sentiment and actual spot Ni price....any further depletion in stocks and improvement in China US trade dispute will c ni price sharply higher imo.
Of course financing is an issue - always is .... but it's unlikely Hzm will take this to production....they have to talk about financing and doing it themselves but it's not likely. This is perfectly normal.
What it boils down to is the quality of the asset, the 'believability' of the FS, how compelling the proposition is and importantly if there is competition/high demand for the assets.
$400m capex + another $120m(?) or so for a second RKEF line is not huge for the bigger miners ...I imagine a few will be interested in a 29,000t+ state of the art / low production cost asset in Brazil that's going to knock out $400m+ of revenue pa in 3 years time. After all .... mining it's what they do ... they need future production. AND they also get the opportunity of further development through Vermehlo.
Hard to with the experience on the Hzm BoD and with the their major shareholders that they have got to here without knowing they have significant interest.....and nothing has effectively changed in the project ... if anything upside is greater.
All comes down to belief in the ni price.. but I hope hzm don't delay in making it clear what the financials look like at $14 - $16k ni with 2 rkef lines.... I reckon that's well over $200m pa profit at top end....
...they really should have relaxed the PEA with the FS imo. The FS was adjusted specifically for this 2nd PEA..... need to get it out pronto.
It's an interesting article but not sure it is the/a problem....these plants are still expensive .....so even if it works and uses more readily available class 2 nickel....it needs price over $14,000 (at least)... and it doesn't increase overall nickel supply for stainless steel market....if anything it reduces it... might have impact on economics of Vermehlo and the long term incentive price for battery grade nickel.
Imo nickel price, metals prices being influenced by strong us$ and China us trade dispute.
Share price will recover significantly on
1) increase in spot nickel price... not really relevant given when 1st production is.... but nevertheless important for sentiment
2) PEA for 2nd production line which will be huge up lift in NPV if in from start....key for major looking for scale.
DYOR.
They've got a point but they miss the big upside and key point in the strategy imo.
The plan is to make hzm attractive to a strategic partner/ major miner... by putting in a 2nd production line from the start....PEA in q4 for this.... this will result in large NPV and IRR increases.... 2x revenue but less than half additional capex and I imagine even lower c1 costs. I imagine will put irr over 30% and make it a scale that's attractive to a major nickel miner.
Not feasible for Hzm to finance from start.... but for a major mining company no problem.
The reasons this has current market cap are:-
1) Previous disappointments (was meant to be b/even cash flow in July).
2) Output not been demonstrated to be at level required to generate positive cash flow - due to breakdowns
3) Combined with 2 - ore quality
4) Significant debt - leaves doubt about going concern basis.
1 - 4 meant large holders sold down / exited.
Positive news on operating sustainably above b/even cash flow deals with all 4 issues and will see the share price re-rate....3p+?
Actually perform for a sustained period and get towards nameplate capacity then 5 - 10p?
Finance and build a DMS to double nameplate capacity and will be much higher still.
Let's see.....Kevin has a lot at stake!
Proactive investors interview with JM is v good.
Disappointing SP move today - probably due to
1) Spot nickel price
2) Economics pitched at $14,000 Ni price (was $12,000 in the PEA)
3) Lack of patience of a lot of traders who bought in for the FS result
4) Size of investment required $400m to build
5) No specific financing news
However, imo huge opportunity from here. What I like about the opportunity right now is the likelihood of a strategic partner (or buyer).
JM has emphasized in every interview the scale-ability and the possibility to extend mine life - this is what the majors require. He talks of a company producing over 50,000t pa. He's definitely selling this to the bigger players .....that's the strategy and it's why the FS was delayed.....emphasis on scale-ability. Next news dovetail with that strategy...... following on pretty quickly is PEA of 2nd production line (revenue x 2 for Araguaia, big NPV uplift) and Vermehlo PEA .... scale!
If the big players think nickel is heading significantly higher then one will snap this up before financing is finalised imo. They'll put in 2 production lines doubling revenue and then bring Vermehlo online - my guess is that's a huge potential total NPV fom HZM ... well over $1bn - not too many projects where they can get that.
They are almost in a place to make that decision....
- FS for Araguaia now published
- PEA for the second production line (q4 2018)
- Final construction permit for Araguaia q1 2019
- Vermehlo PEA early 2019.
My guess is this is bought out once construction license is granted somewhere in the 8p - 15p range.....may not have to wait too long.
DYOR.
Anything wrong with this?
Boepd is c. 11,000 (without Arran)
Cash per boepd at $76 price is c. $32 (cost boepd, pre decommissioning c. $44?)
RRE generating c. 11,000 x $32 x 365 = $128m pa =c. £100m
Set aside 25% for decommissioning/down time? =say £75mpa
Some capex spend to come off - but that's probably more growth
vs current m.cap of £87m (of which significant chunk is cash anyway)
Shares worth 1600+ , i.e 3x current market cap NOW?? Then add in Arran / other growth / deals?
Wouldn't be surprised to see this bought out given level of resource and current market cap.... another miner with expertise and financing capacity for the DMS could snap this up and make substantial returns v quickly....could be generating $10m+ revenue per month with dms.... note recent board appointment brought in corporate transaction expertise too.....
Mr Golding has over 20 years' of corporate and project finance experience during which time he has advised on in excess of 50 transactions in the mining industry.
https://cube.investments/rockrose-energy-if-carlsburg-did-acquisition-updates/
Agree with this, got to be worth £10 per share in short order
Broker target 15p... that was with nickel bit higher than current price....BUT Vermehlo only at cost.... Vermehlo potentially huge.
Bids are going to come ....!
A penny here off there on this stock is useful but not the big picture. If the 2 trinidad test wells flow at 300 bopd or more on the estimated co2 volume and at current or higher wit oil price then thus is worth multiples..... 6 or 7p average won't matter.
What's the view on Ireland and what the most likely news flow will be next and what value it will present?
BFS in Oct shortly to be followed by offtake agreements and financing.....SP will quickly follow.. 10p by Dec....OR v likely to be bought out by one of large shareholders post BFS...or large increase in stake.....BFS gives them their licence to buy. They'll also do it soon....or pay more later if higher nickel prices. SP x2 by Dec one way or the other!
Debate (and vote!) has been had. CW is CEO....doesn't matter how much you go on about it. Down to CW and PA now to work a plan over the coming days, weeks ....legals, get better/more technical operational expertise into the business, prioritise the assets, sort out the contractors....etc. 4 properties, multiple opportunities, potentislly v.significant oil reserves, some yet to be announced?.... lot to play for at a lowly market cap.
Positive news on route to break even bopd got to be worth 0.6p at least given further potential.
BoD have stated no need of placing given cash and option to sell investments if necessary.
I'd like to think that if the Board have anything about them at all and assuming they survive, they will make it their mission to prove me and all those criticising them wrong by getting the value of this business back up towards 1p per share in short order by working v hard and critically v smart.
I also hope that they will start tomorrow by providing robust confidence in the finances (confirming no placing required...with reasons) and the quality and potential of the assets.
Funny coincidence... polls said Remain were at about 53% on eve of Brexit vote...in the end the vote was out....
If it's remain I do hope the CEO takes the chance to redeem his reputation
Look what we need here is a competent BoD with an experienced oil industry CEO to take Mayan forwards. Shareholders must make up their own minds if they can see any hard evidence or prior performance that suggest the current BoD are able to deliver.