Member Info for pickedpeck

Just a reminder - 16th Mar 2021 2464p , post pandemic. I see pretty much no reason once the inflation shock is priced in why this should not go to at least back there by March again.

All still understating it. Surprised someone hasn't broken ranks yet and gone with a 2000p + forecast. The results and the buy back surely imply a full recovery, if not to pre-pandemic levels then certainly to a price far higher than today.

Looks like all shorts now closed.

The original planned date was October I believe, however there have been multiple comments indicating the actual draw down date would be later. Enabling the delay were favourable credit terms on contracts and also the additional money raised through equity.

The revised date is sometime between now and January, but the exact date and conditions have not been published as far as I am aware.

I think you are both right.

The company has needed to reassure all stakeholders on the management of production costs. Getting a deal for 3c / KWh is solidly doing that.

However the big stakeholder that we should all be focused on hearing from are the banking / debt syndicate. Whatever prerequisites they need to enable debt drawdown to happen HAVE to be put in place. They forced the last raise, not because of cost over runs, but to make sure the company contingency was sufficient. They hold the keys to the balance of the build cost, once they release the money the genie is out of the bottle as far as they are concerned. Its the last massive finance milestone to getting the mine built.

It will be interesting to see what draw down does to institutional investment interest in HZM. At that point the only remaining risk is construction and commissioning, which by all accounts is going well. We are suppposed to be hearing about debt draw down about now... so yes, the power contract timing may well be the last prerequisite for that.

It's a much higher saving than $600/t. That initial saving is against the FS done 4 years ago, pre covid and pre energy price spike. The ehas undoubtedly been fear that production costs would be much higher than the FS, let alone lower. I think there has been a general assumption that the margins would be significantly less, this says they will be higher.

It's a 10 year fixed price deal without inflation gearing, priced in dollars to avoid Real volatility. Amazing.

HZM can't quote the energy price costs of rivals, but the getting a price below $30 / MWh is a ridicuolous saving.

For comparison the UK current wholesale price is around £300 / MWh with contracts out to 2027 dropping that to around £150 / MWh.

https://www.businesswisesolutions.co.uk/energy-market-snapshot/

Global prices are lower than the UK, but nowhere near this low.

Oh... And it will be interesting to see over the next few days if it is one institution or even a bidder building a position, if or when they RNS their holding.

The matched trades all had a buyer, someone bought over 2m shares today.

The big one, 950k shares, was a buy. Most of the others look like matched trades, and a few smaller ones look like sells. Price movement should tell you what the majority were, 7.6% up on the day.
Any more buying tomorrow and we may see an even bigger jump.

#influencer

lol... nice to get the timing right. This is way too cheap for the revenue and growth already showing in the last results.

I first bought in here in 2017 for just over 100p, sold those out for 180p which was way too high for the revenue and growth. Who knew!

I just bought more or less the same number of shares back at 16.49p . With the US revenue growing I can only see this recovering next year, not to the 200p levels needed to 10 bag from here, but to 50p or so in 2023 with a return to positive earnings post EBITDA. If they re-establish that profitability and maintain the growth trajectory in the US then 50p will seem cheap.

The other possibility is a buyout. XLM have always been acquisitive, but there is room for the bigger players to make a land grab too. Again I don't see a bid succeeding at less than 50p.

Downside is drift on not a lot of news until January. The charts I admit don't look like there is a support level in yet, but I think 16p could be it. Positive nudge today suggests this is now in bargain basement territory. They have plenty of cash and current assets in order to keep trading, so little or no risk of going pop limiting the ultimate risk.

I think in all of the production side there is still a tendency to underestimate the rising demand. Whether that's mental scars from 2008 or something more like ostrich syndrome it's hard to say. The rising trend on the longer term contracts seems to imply some built in expectation of shortage rather than glut, but in truth I suspect no one knows even close to what will actually happen.
A major factor apart from battery demand is the wider use of high grade alloys and stainless, particularly in renewable energy, but also in demand from an increasing global population with access to products including stainless.

That line in the Newscientist infographic about excluding new tech demands, and the 20% larger global population are making demand into a hockey stick curve.

"As for the USGC critical minerals list I don't think that's changed much in the last 10 - 12 years." - Actually Nickel (and Zinc) was only added to the list this year, and a few things taken off / modified.

When I first started looking at HZM Nickel was just over $12k a ton, base case was based on $14k, and $16.5 was upside whilst $28k was the highest number the old NPV calculator would accept. I'm happy enough if the price is sustained above $20k as HZM production costs with hydro power will be very low and hence produce a nice margin.

I think anything higher won't be sustained long.

China being the biggest consumer is true, but the vast majority of those end products end up in US or Europe.

I agree on the China point, they do seem to have already seized control of the base metals markets. Sooner or later the big global consumers will have to look at their sourcing strategies on this, or Western governments accept Chinese hegemony.

The critical minerals list in the US may become a vehicle for change. https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals

At the moment it has a little of the 'so whats' about it though, it seems few if any major movements or investments have been made since publication. Weirdly the Democrats seem to be more hawkish than the Republicans on this, so maybe the midterms may turn out positively. In the UK it seems the government has not given a toss for quite a while on any of it, including the LME itself going to China. Europe also seems pretty toothless come clueless.

That global supply chain may become interesting depending on the traffic crossing the Taiwan Strait.

TDT - LME stock levels look tiny compared to the numbers you were posting earlier in the year. Do you think this is because so much trade has moved off the exchange? If so it does make the whole market rather opaque now. I'm guessing the Shanghai price for Briquettes is broadly Class 1 Nickel, bouncing around $28-29k today but on a tear for November so far.

That Nickel crunch may still be lurking. Damned shame not to be in production yet, although wonder where we will be a year from now?

Contrarian - don't take this as criticism, it's meant helpfully despite our obvious past differences. You are clearly not understanding how the options work properly.

The option prices went through the same consolidation as the listed shares, so options granted at 4.8p now have an exercise value of 96p. We can debate whether this is so, but I have asked the company and they have confirmed it to be the case. Exercise value is a right to buy new shares at the exercise price. A buyer / exerciser only benefits if the current market value is higher than the exercise price, and then only when they subsequently sell the shares they have bought.

Options are also subject to complex tax rules over the duration and nature of ownership since grant. Depending on the type of scheme they are granted under the level of capital gains payable vs income tax payable varies. Without trying to explain the most common rules here, in general schemes where options are held for 5 years or more have the best tax outcomes on exercise.

I accept that options were granted at a mix of rates at different points in time, but if I was holding a significant tranche of them I would be evaluating each grant before expiry on both value and taxation grounds. In almost all cases you would choose to hold the options as long as possible in order to get both the highest valuation and to pay the least tax.

A lot of the options from memory have an exercise price of 4.8p in old price, 96p in new. Taxation aside even there is no rationale for exercising now, unless there are other expiring options granted at a price way below the current market level.

Nope, it's a positive number not a negative one. It's not the contract award, it's the net asset value shifting upwards.

Regardless of what some have claimed / said / inferred / bull shixxed... The macro Environment for non producing junior miners has been hostile in the extreme since the start of the year. HZM moved down in line or even behind its peers, nothing to do with any individual company attributes.

However the macro environment is now changing rapidly:

1. The energy crisis whilst not resolved is reducing in ongoing effect as the world adjusts to new energy paradigm. Wholesale energy prices are falling sharply.
2. US jobs data and inflation are levelling out or even receding as threats. Jobs data and inflation were way better than expected in yesterday's figures.
3. As inflation shows signs of control gilt yields will recede and interest rates with them. That is already happening, figures this month will show it accelerating.
4. Zelensky is being pushed to at least open the door for negotiation with Russia, and Russia's announcement if Kherson withdrawal was done without Putin. The war isn't over yet, but both sides have probably just about had enough.

All of the above factors may lead to global economic stabilisation and a return to growth. Base materials prices are already starting to reflect that, demand is returning in dribs and drabs. Who knows when it will become a torrent? However there are signs the global base materials demand destruction of the last 12 months is coming to an end.

For junior miners the effects will be delayed compared to the global players, but look at GLEN, BHP and RIO, they have already started trending up.

Should be interesting, the next few months.

Total equity and liabilities

$400,566,506 vs $308,522,965

That's a change.

Alessandro - You seem to post nothing but negative comments on every share you write about here, generally predicting ridiculous levels of doom. Are you being paid to do so, or is the stock market maybe just not for you?

African local currencies devaluing against reported currency may be an ongoing problem, but I suspect the derivatives issue is because of failed hedging strategy due to dollar strength.
The underlying business is growing strongly and looks set to accelerate, definitely an opportunity to buy in lower.