The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Now that both Cu and Ni seem to be on an upward curve in the markets, I wonder if some of the 150 potential investors will re-visit HZM. There must surely now be a rethink from the cornerstones as well. There is still a lot of profitability in the mine and with Glencore committed to 1st ten year offtake, then why don`t they seize the opportunity. Beggars belief to me.
Just looking at friday sells and it is over 2mil. Extrapolate this out for a month and it becomes over 60mil. We know that some big players such as Helikon got rid of about 4% min. of their holding so tells me that someone is stacking up seriously. Is this the three cornerstones or is it just traders looking for a fast buck. If it is the cornerstones, then they would now own about 75% of the company.
The shares are cheap so why not do it.
Orion are now cash rich ( $400m for sale in copper mine)
Glencoe now saving $300m on a lossmaking copper mine.
Both LM and Glencore offering $100m each for another mine, but lenders could not agree terms.
Is it not possible that they could fund continuation at HZM. They are heavily invested so why not see the mine built. In 2026, the nickel price will have risen, and global stocks will have started to decrease as unprofitable mines close and China takes up almost all of Indonesian T2 nickel. The western world will begin to look out for free nickel. HZM fits that bill .
I could be just making pie in the sky here, but surely, with the returns possible, then is it not in their best interests, after they have exhausted all other possible avenues, to seriously consider a further big investment here. If they announced it, then the sp would rocket back up to around £1 per share, making their holdings worth a lot of money.
Just my thoughts, usuually way off the mark though.
Lots of sells again, but who on earth is snapping them all up?
Is it possible that the cornerstones are buying more ownership or are the traders stocking up in case of some form of a rescue?
Too late to sell my shares as a few hundred pounds is neither here nor there.
I might as well hang on to them and either watch them go down like the Titanic, or rise like a phoenix from the ashes.
I think I know which way this is going however.
Got to agree with you , but doesnt it strike you as odd that all 3 cornerstones ended up here in an unholy mess. Where was the due diligence? One just doesn`t and cannot hide the facts about the shortfall here. Were the 3 amigos off playing golf somewhere whilst costs escalated here. There must have been plenty of meetings with the BoD. Yes, the CEO hid a lot, but to suggest that this build would cost $500m, when other professionals suggested that $ 1b would be required tells me that the 3C`s had too many plates in the air and did not really scrutinise the numbers properly.
The CEO should be hounded out of any management control with any other companies. In fact, he should be taken to court by the lenders and the cornerstones.
As for whether this can be made into a profitable mine now only depends on the price of nickel.
Care and maintenance would be my preferred route until such times as nickel begins to become more valuable again. Probably 2-3 years minimum
This is an old hat story. Glencore had pumped over £300m into this working operation each year for ten years, but nickel prices and high production costs coupled to a low nickel yield did its undoing. Orion also sold a large stake in a Canadian copper operation for just under $400m recently.
These guys are cash rich but seem unwilling to go the extra mile here. It may cost $40-50m to go into a care and maintenance mode, but HZM mine is higher graded than a lot of other nickel mines. and surely for a couple of years wait, they can assess future nickel prices.
China will take up the bulk of Indonesian nickel going forward and there is the high probability that Ni required by the Western world will start to become more difficult to get. Ni prices will therefore rise within 2-3 years time making HXM a much better cost effective project.
It is a shame that short sightedness is prevailing here. The three cornerstones have had their fingers burnt elsewhere. Maybe now they are being overly cautious here as it will take another 2 years to get HZM into production, by which time futures Ni demand will be much stronger and inevitably, Ni prices will have rebounded.
Not many positives to come out of the board statement, but there may still be ways forward. A couple of options are that LM and Glencore finally have to ptovide funds to either keep the project moving forward, or provide sufficient funds to suspend the project on a care and maintainance basis until such times as and when the nickel price begins to climb back up again, probably in 2027.
China wants to get growth at no less than 5% for 2024 and if they succeed, then more nickel from Indonesia will be used, bearing in mind that most of the nickel produced from Indonesia has already been offtaken by some majors around the world so there is not that much free nickel left.
USA and Europe are already imposing massive import taxes on Chinese / Indonesian nickel so this means that other sources will be required.
My thoughts are that the current nickel surplus will begin to evaporate by 2027, and couple to this the fact that some nickel producers have ceased production, then there is the prospect of a shortage in around 3 years time. If LM and Glencore provide C and M for a year, then it may be possible to attract new investors as the nickel surplus begins to fall. Who knows??
Doing a jeremy Cl, I would give the following response.
"I really haven`t got a clue, but here is what I think.
This is now a 2 year project. $600m needed to finish is therefore $300m per year. Both Glencore and LM lost out in another Brazilian operation where they had intended to put another $100m each to get the operation going. Therefore, they have cash. The financial year end has been and gone so why cannot both these Companies now use that $100m each to fund the 1`st of the 2 year requirement. Ensure the banks release their $135m plus, and Orion to dip in with $30m and we have $350 m to take the build programme to almost piloting stage. Commit to ensure that any remaining monetory needs will be met for year two. Tablets of stone agreed by ALL lenders.
Immediately, the shares will rocket.
Speed up the completion date by 6 months and you cut $50m from year 2 requirement. As we enter year 2,and as the shares are now trading at about £! , decide that a share issue will take place at say 80p per share. Glencore, LM and Orion will want to maintain their dominance, so of the 250 m new shares, they will take up 51%. Existing shareholders will be given first option to buy the 120m remaining shares, after which time, the book will be opened to sell on the balance. Any tiny shortfall to be taken up by the big three. The end result is that the mine is finally built and begins production, the above ground asset value is roughly the same as the revised book value. 500m+ shares at 80p and the Company begins to finally pay back the lenders, quicker when line 2 becomes operational. The sp begins to rise again and nobody loses. Everybody is happy, but what do I know? I am only Mr. Clksn"
Wise man our Jeremy. Haha
You have a serious problem publican and so does your left hand when posting as contrarian.
Why don`t you just go and give it a rest. You are not a shareholder of HZM so stop criticizng genuine stock holders.
Your negative ramblings are so boring. FFS !!!
You are personal with wassaper. Why don`t you just get a life that is meaningful.
You remind me so much of trader465, another poster from Thailand, or have I caught you out? Must be a very, very, close friend of yours.
This was an announcement made back in February.
Glencore have wasted over $300m per year for a number of years.
Processing costs were far too high as Ni quality was rather low per tonne processed.
They will provide final $200m over the next 6 months until a new buyer is sourced.
No doubt during this six month period, they will be looking for new investment opportunities. If they can spend $300m per annum on a loss making company, then Hzm is prime to take to production within 18 months and then into profit.
HZM is of higher quality and concentration per tonne is also higher.
If Glencore believe that this will eventually be a profitable mine over a very long period of time, then Imo, they may want to put big bucks into getting the mine into production.
There are ways and means of putting funds into this operation and if Glencore want a majority here then they will have to certainly go a long way to funding the project. This could include a mix of issueing new shares and cornerstone/ lender finance.
We shall just have to wait for the ink to dry on what I perceive to be a joint approach by both lenders and cornerstones.
Remember, the project has been stretched out to roughly 2 years before production.
My scenario as follows.
All lenders and cornerstones commit to total funding over 2 years.
Plans made to reduce timescale down to 18 months max.
Huge savings made by doing this.
Lenders release the remaining $135m immediately.
Cornerstones agree on creating 100m new shares at £1 each generating more funds. Cornerstones buying up 51%, remaining share to go on open sale, but Glencore buy them to increase their shareholding %
First year project requirement now sorted, and shares rise back up to £1
Year 2, lenders put in another $50m and company raises another 150m shares at £1. same scenario, but Glencore buys bulk of new issue to take almost a controlling stake in the company. Project shortfall now funded by loan from Glencore.
Project gets completed and in production within 18 months.Sp rises to £2.
I sell my shares.
Oh what a lovely dream I had. Reality brought me back down to earth sadly. {big sigh}
Most new large scale mining operations cost in excess of $1b and are profitable.
HZM has a massive life span and payback in later years will be huge.
Add line 2 and the Vermelho project and this will be a world beater.
This is just the type of operation that Glencore would be interested in.
It would surprise me if they are not controlling HZM destiny in current discussions.
We wait to find out, probably within a week what the future of this project will be.
Administration is the worst of all options for both lenders and cornerstones.
Glencore have been known to "miss the meaning of non action" Just look at the litigation in Australia and Brazil because they were not on the ball.
Couple that to the withdrawal from that massive loss making mine that they were ploughing $300m a year into.
So who is in a position to benefit here? Must be Glencore. If they mow have $300m that can be invested annually "savings from there pull out of that mining venture", they firstly will not want administration, noe will either the lenders or cornerstones.
They are big enough to offer a cheap share price. Even at 10p, it will only cost them £20m..
Pay back the 2x$5m to Orion and la mancha and the cost is £35m. How will O and LM react to an offer like that? who knows, but if they then own the company, then they can work with the lenders to get the release of the remaining funds by committing $200m for 2 years to get HZM into production. Total, about $1b. LOM 28-40 years producing 27000 tons of NI at $18k per ton gives a turnover of about $500m per annum.
This makes the $1b pale into insignificance. Then add on line 2 and the other HZM site and this is a steal.
I used the figure of 10p as an example. It could be 1p or 50p?
At what price O and LM will be satisfied is anybodys guess but Glencore hold all the aces.
This is just my thought so I am open to ridicule here. Pull me to bits if you want. At this late stage of the day, we are in the lap of the gods. Alternative solutions welcome here.
I think you will find that govts are already looking at ways in which to stem the flood of cheap nickel pig iron getting into the Western markets. Some countries have already introduced import tariffs and others no doubt will follow suit.
The days of cheap NPI from Indonesia are numbered.
Their coal fired furnaces are belching out CO2 to produce "dirty NI", and clean nickel may well be sold at a premium.
HZM is a clean nickel operation and is well placed to supply clean nickel if the market introduces some measures to reward clean NI operations, whilst penalising the dirty Ni producesr.
It is probably an opinion.
We all know that the price collapsed when the massive overspend was finally admitted, so no surprise there.
The sp has remained largely at 3.5to4p since that news.
The price will rise massively once a workable solution is announced that benefits app parties