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"Progressing Vermelho through to a construction ready status will significantly de-risk the Project and we believe this will be increasingly reflected in the value attributed to the Project by the market."

I think Bwana is right to highlight this para too. When we've discussed lowball offers for HZM those would be bids based almost wholly on Araguaia's development. The current SP is also entirely geared to the upcoming financing for Araguaia. There is nothing in the SP for Vermelho. This RNS shows HZM recognise that too and will not be throwing in Vermelho for free.

The timing of awarding that contract was entirely within HZM's control. It could have been delayed to next week. Makes me think they do have something else they want to say ahead of the webinar.

Lombard have reduced to under 5% (looks like they have recovered the whole cost of their contribution to refinancing and probably de-risked their original investment too). The other big debt for equity holders, CE Mining III and Aether, are still locked in although they don't seem to have sold their earlier unlocked holdings so may be in no hurry here. Overall we haven't seen many TR1s from these people.

Nothing against SP Angel but I very much doubt they were looking for sticky holders. However, I suspect much of the last placing was flipped quite early, helping to keep the SP low.

Really I think a lot of what we are seeing now is just PI trading. There are huge volumes trading on these popular stocks with many people buying and "losing down the back of the sofa" multiple times per day. It mounts up very quickly. The acid test will be if any TR1s come out following these high volume days.

I'm also expecting to hear about recent and upcoming drilling. The company has said it was looking to advance its summer drill program. After the mention of Little Deer in the recent RNS I'm expecting it to be named as one of the targets.

Brisk,
Again, as I understand it.
Paradigm/underwriters were purchasing the Special Warrants at 7.5p so, subject to whatever other conditions set out in the Deal Letter, HZM would receive the money before the warrants were converted into shares. The point being that there was no additional financial consideration due at conversion.

Brisk
As I understand it, the dates are connected to the Canadian part of the placing. To work within the Canadian regulatory system, HZM used this convoluted approach of issuing special warrants instead of shares for the Canadian investors. The dates are about converting those special warrants into shares.

The aim is to convert the warrants into shares as soon as possible without any further action from the warrant holder. If it hasn't happened earlier then it will happen on 10th July at the latest. If it happens after 28th April then the warrant holders will get 1.1 shares for each warrant they hold.

Reading between the lines, the company probably wanted Lombard to lock in with the others to June. Hence the orderly selling process with SP Angel. Sorting out the share holdings from the restructuring is the other big factor in this recovery play. The SP will find it easier to hold on to gains once the lock ins end in June and the big holders have settled on the holdings they want to keep.

It will certainly help to see production returning to full capacity. The other half of that equation is seeing high average grades. I think there is a potential boost from the results of the infill drilling which they mentioned is underway. Good drill results from the infill drilling and later this year from exploration will help re-rate the SP too.

testpack
What a company says in an RNS is the company position until a new RNS changes it. Any communication with a PI must reflect that. Contacting the company isn't going to change that.

Can I also point out that six months after the Jun 19 RNS, HL said "In June, we announced that we had been approached by a large European commercial bank with an indicative offer for debt financing for Khemisset. The indication was based on highly conservative assumptions applied by the bank, including a delivered potash price in Brazil of US$235/tonne, a 40% discount to the spot price at the time. Despite these conservative assumptions, the bank indicated the Project could comfortably sustain leverage of US$230 million, or approximately 60% of the total project capital cost. We strongly believe that, with negotiation, this number can be significantly improved."

I think that was and still is the company's updated position with the bank - that the package could be significantly improved. I think we all expect the finance to be a combination of debt and equity. Everything that has happened since surely fits with looking at different versions of the development and the finance it needs and I suspect most people would expect the debt discussions to remain confidential until it's settled. Equally I don't see a development finance package without a bank debt so I think that remains the current position.

Lastly, the finance package is likely to include off take elements so the original Heads of Terms is likely to be superseded by a more formal arrangement. Obviously that will fit in with the scale of development that is financed.

Fair enough, any PI would have liked more.
BUT
- IIs were asked to commit a chunk of the remaining equity ahead of the rest of the package. That comes with a risk cost.
- None of them invested hoping to get just 7.8p back, lol.
- It may not be appreciated yet but it's a big step to institutions dominating the share register. Then the SP will move on fundamentals and not on PI sentiment. And if Ni performs as we hope then at last HZM will reflect a true value.

I'm most interested to see Orion's contribution to the package because I think it will reveal more about their view of the real value of HZM than any PR statement.

Their original £25m was the game changer for HZM. It was much more clever and potentially much more rewarding than buying shares - forget the "10p equivalent" nonsense, that was a complete red herring and utterly irrelevant to now. The royalty deal recognised and sidestepped the necessary equity stage we're at now, and it predicted the high Ni prices we're starting to see, and most importantly it said to us all they thought HZM would get to production. Brilliant stuff and potentially very rewarding to Orion.

So whatever Orion do now is going to be calculated to do the same as before. It will be looking to protect their investment, to help HZM deliver their return, and to make that a big return on their investment. I remember an interview where Orion said they look for 5-6 × return on investments. A simple share purchase might mean they see a 5-6 × increase in SP (say 40p on shares at 7.5p). Or might they be more ambitious again and sidestep dilution with a new royalty agreement on Phase 2? Could even be Verm though I think it will be a separate story.

Many thanks for making this call and sharing so promptly, BwanaMakubwa. Much appreciated.

Delighted to see confirmation they plan to provide updates and news on Vermelho this half. Even better if they only plan to issue significant RNS. :)

I also feel we're not at the stage of writing off Togo but it is hugely frustrating to still not have a "pathway to final permitting at Nayega" after repeated visits and numerous meetings.

There is much speculation and annoyance directed against the Togo government but I suspect there is more to it than politics or government share. Togo does want to move forward. It feels to me now like they are trying to find a way round an obstacle. Perhaps Jim is on the right track. Hopefully his questioning will encourage KRS to be more open with us.

Can anyone say that RL really expects to get the licence on this trip? He has talked about the government meetings "as we progress towards the conclusion of the project permitting process". This sounds like they are working through a review process.

It all seems pretty amicable and photos wouldn't be issued if it was going pear-shaped. The licence may even be in sight but realistically it doesn't say anything about where they've reached and what else remains to discuss and agree. I think Keras would not have phrased it as "look forward to working together as we advance #Nayéga towards commercial production" if it was just about finding a suitable date in the President's diary.

The package needs debt and equity components. The debt people aren't going to finance the whole show and they'll want to know the equity part is ready before they agree their part. Likewise, the equity people need to know just how much of the mandate is coming from the debt side before they can agree their part. Add in the possibility of offtake agreements and other curveballs and it should be clear it's a very complex process. It's like a jigsaw where the number and size of the pieces are not fixed until the very end when it all comes together to make a complete picture.

I agree, but if he is legally viewed as an insider director then we should have had a different RNS today.

The RNS treats him like any other shareholder (who, by the way, should be on the significant shareholder list regardless of whether he's expected to sell out).

Either way, not a great endorsement of the plc's prospects from a director of the wholly owned subsidiary!

Soup
Technically isn't Alan a director of the subsidiary Nuformix Technologies but not of the listed plc (which I assume is why we see a TR-1 today rather than a director dealing RNS). So I wouldn't expect him to be constrained by the plc rules.

I meant to say thanks to everyone yesterday for the posts in this thread. pickedpeck captured my thinking pretty much and stated it more clearly than I'd have managed. Great posts, cheers.

I think it's ironic that the takeover value of HZM is largely down to the progress through ferronickel Araguaia financing to Stage 1 and on towards Stage 2, but the driver for an early takeover could be the nickel-cobalt Vermelho which contributes so little to the takeover price short term.

In a friendly takeover I'd hope the board would hold out for some recognition of that by raising the asking price, or argue to keep Vermelho off the table and only sell Araguaia, but I suspect the board would prefer a whole company sale and any bidder would insist on Vermelho. I'd love to see a rabbit out of the hat from the board for Vermelho.

Like jamesdean, I am in two minds over a pre-finance bid or letting HZM do some of the heavy lifting. For me it comes down to whether the bidder(s) want to use their own finance and build their own project or wants to follow the HZM routemap. Time will tell.

Cheers WryYidTickTock
HZM has suffered from big sellers that frustrated many of us with their lack of transparency. Anything that helps us confirm where they'd reached or if they'd fully exited is worth pursuing. Thanks.

WryYidTickTock
Thinking about it a bit more and I wonder if you are referring to Investment Trusts which I agree can be much more open about what they hold compared to my oeics and unit trusts. Off hand I don't know where JPM held HZM but if it was an Investment Trust then, yes, the Annual Report for the period could well spell out what they've done and if they had exited completely at the period end date. Maybe someone here knows, though like you I expect them to have exited completely in line with the new manager's strategy.

WryYidTickTock
Not sure if I've ever seen that level of detail. I worked for a FTSE100 fund manager for twenty odd years and we went to great lengths not to reveal what we held below declaration levels and what and when we were trading. I don't remember us ever making that level of granularity available other than to auditors. It was always a more complicated picture than you might expect.

I may be misunderstanding you. Do you have an example?