Member Info for pickedpeck

Turns out you would have bee better leaving your money where it was. NAV back up above 200 now, not a bad recovery considering the wider market sell offs.

More posts on here than trades is a sign it is summer. Going sailing, see you all in late September.

ZZZzzz...

Weathering the market storm pretty well, one of my only positive FTSE shares.

A guy in charge of the grid, right, because there is one of those. And he just happened to be standing around waiting to be asked. That's a Trump like alternative fact.
The UK hasn't used any coal to generate electricity since the 5th of May. In 2020 we had the longest streak of coal free days, 67 consecutively. Coal is still in the mix over the winter, but even then it accounts for only about 20% at peak and about 5% taken across a year.
Perhaps you heard it the wrong way round, missing the 'not' out. The electricity comes from 95% not coal.

Bought them on Wednesday at 1636p. Quite a vote of confidence for a non exec.

Nice line in that article... 'The long term prospects for the metals, used in batteries, remain strong because of the rapid adoption of electric vehicles, but investor exuberance has led to an oversupply'.

The short term correction would, as I said below, be good for HZM as supply will again become more constrained as current development projects fail to get funding. Coming on line in 18 months time should be just in time for the next crunch to start.

Was that the point you were making?

Demand for Nickel will be sustained through he 2020s regardless of an economic downturn. Systemic production shortages due to a decade of under investment in new capacity means mines can't keep pace with existing demand leading to the first crunch we saw in the first quarter of this year.
LME nickel prices are still hotter than many would like to see, with the spot price around $25k, longer contracts commanding a $1k premium as supply fears linger. Class 1 nickel is also now commanding around $2k premium and widening as global supply for battery grade nickel tightens even further.
https://www.lme.com/Metals/Non-ferrous/LME-Nickel#Trading+day+summary
Shanghai exchange spot prices up to $32k for Nickel brickettes meeting the Jinchuan #1 spec.

With the effects of global warming becoming ever more obvious and the naysayers starting to wilt under the fierce summer heatwaves the pace of electrification and decarbonisation of the global economy will not just be sustained, it will become an accelerating imperative. Nickel, copper, and rare earth supply chains will need once in a generation levels of investment to even get close to meeting the demand.
What will that mean for the industry sector? As money pours in expect to see aggressive market consolidation, with the biggest cash generators like Glencore, BHP, Tsingshan and others swallowing up small and mid size asset holders.

The sector stands in sharp contrast to many other sectors where demand downturn could have catastrophic effects. Premium goods, advertising and marketing, property, travel and many other sectors will feel the squeeze hard, with money and investors deserting in favour of more material basic production assets like food, utilities, and health. Electro mineral supply chain could soon prove to be the only speculative game in town.

Hi Rover,

I was curious about the properties as naming convention changed over time, so I asked a HZM board member directly for clarification. I was told that Araguaia North is made up of Vale dos Sonhos and parts of Serra do Tapa. They added that there was no current development plan for Araguaia North, with Araguaia South and then Vermelho the first and second priorities and future plans beyond that clearly not the current priority.

They went on to add that the company could add additional resources almost at will if needed, with vast parts of the concessions still practically unexplored and others where discoveries have been made awaiting drilling and resource estimation. They felt that the valuation of resources in the ground would be lower than the cost of quantifying them in the short term in relation to any future sale price. Bear in mind Vale spent $200m on Vermelho on a drilling program and FS, HZM are prioritizing spend on getting Araguaia South into production.

Its a hard balance to strike, but I agree with current focus on production and revenue generation. If, and it is a very big if, HZM stay independent long term then they have essentially a mining district with a very long mine life indeed, and / or a very large potential for capacity increase.

Winning by standing still not necessarily the plan though. Bad day for anyone with a broad portfolio, pretty much every sector being hit especially after falls on Friday.

Ant - the real spread is different to the one visible on LSE. Try a dummy buy and sell, currently 141.5 to sell against 138 indicated here, and 142.5 to buy against 145 indicated here. Real spread is less than 1% vs the 5% LSE is showing.

Ivor,
Volumes being down doesn't mean liquidity is down, they are not the same thing. It can at best be an indicator, but even for that it is too early to tell. Before the consolidation there were days when we had more posts on here than trades on the share.

La mancha and Orion tightly holding 40% plus of the company affects liquidity more than the consolidation.

Lawrence, I know it might not seem logically so but liquidity is really unaffected by the share consolidation. The NMS is actually better now than it was before in £ terms, it was 30,000 shares before, now it is 2,000. That's still pretty low for a quarter of a billion company mind you and practically all the MMs will immediately offer many multiples on either a bid or offer, it very rarely goes NT either way implying liquidity is ok.

What having the NMS so pitifully low does is protect the MMs from sudden movements and allows them to have a low pool of shares to trade. Maybe they are (still) expecting some very sudden movement here.

Igor - When I was there we tracked the engines through their full life cycle, some 535s went through at least 8 different fitments and across multiple operators, but I agree Trents less so. The nature of the contracts varied considerably, from the always hot Fedex to the thrashed in a sand pit Saudi ones. The biggest operators, like IAG and American for example, retained their own management capabilities in house.
I'm not sure Power By The Hour is a deprecated term, for example https://www.rolls-royce.com/media/our-stories/discover/2017/totalcare.aspx , I appreciate it is from 2017 rather than this year but is referring to the XWB launch. TCA replaced the older LTSAs in which the airline or leasing company were the engine owners. When I left I think the number of large engines in the fleet covered by TCAs was about 65%, and a much lower % of small engines where LTSAs were still common. Defence has practically zero coverage of either from memory, it was all parts and maintenance on demand.

Calder - There is another twist with how it works. The engines are maintained under Total Care mostly (but not quite entirely) based 'on condition'. RR set up a capability they call EHM, Engine Health Management, which continually monitors the entire Total Care (and other) fleets for condition. The system and service combination optimises the maintenance schedule of engines in service to minimise risk but to also significantly reduce operating costs compared to what almost all airlines can achieve themselves.

That's why Total Care packages are so appealing. Not only does the airline shift the maintenance risk to RR, generally the cost of a TC package is lower than the old 'buy an engine and maintain it on schedule' approach. This approach is called Predictive Maintenance, RR are pretty good at it.

Links to RR sites which are relevant
https://www.rolls-royce.com/media/our-stories/discover/2019/intelligent-engine-health-monitoring.aspx
https://www.rolls-royce.com/innovation/r2datalabs.aspx

Still can't quite adjust to the new share price, so just for my own benefit I am going to put it out there that I expect the price as production starts to be 300p in new money, or 15p in old. I also expect that once the Vermelho FS lands, A1 is in production, and A2 planned that HZM will be bought out. If the production price is 300p, I expect the take out price to be in the region of 450-500, and for that to happen by mid 2024.

I realise my numbers may be more pessimistic than some, but I expect HZM to never fully realise the potential they have for the whole nickel district development and revenue. I feel it is inevitable that a relatively early take out will happen, but only once the buyer has a very short time to payback for the capital outlay. More would be lovely, less seems unlikely to me at least.

Just to clarify some of the misunderstandings of how this works. Flying more does indeed mean more maintenance, but selling maintenance is not RR civil core business. The Total Care contracts are calculated on a flying hours basis given a particular airline's flight profiles. RR civil guarantees power delivery availability and takes responsibility for all costs under the contract, including maintenance, spares, workshop time etc. Contracts commonly include sharp penalties should RR prove unable to meet the power capacity guarantees.
In supplying engines under Total Care RR often use a 'pitstop' mentality, where an aircraft is taken out of service, the old engines taken off wing, replacements put on and the aircraft is sent back into service wearing now different engines within hours, minimising the aircraft downtime. The engines taken off wing are often then flown as cargo to a RR service centre for maintenance. Once maintained they are put back into the total care fleet ready to be fitted to an aircraft, not only not necessarily the same one, but not even necessarily with the same operator.
Basically under total care, RR own the engines and charge for their use by the flying hour.

Last RNS has NAV at 326 , mid price 296 for a 30p per share discount to NAV. Given the momentum now seems in the positive direction shouldn't this be more like a 5% premium to NAV? Is that a 15% short term opportunity? Long term trend would have value at around 340 or so, that would align to the 5% premium.

I've bought in now, target 340 in the next six months for a 15% gain, always hopefully.

Interesting votes reported from the AGM. I couldn't attend, was anyone here able to go? 72m votes against Owen Bavinton, and quite a few cast against other directors also. Obviously not so many as to be able to cause an adverse outcome but still quite a lot of dissent.

Strummer,

Being objective would be fine if that was what you were doing, but being objective in return t looked a lot more just like a general gripe about not making money. You didn't say anything objective about why the share price is where it is, just complained that it is. Be objective about what you're posting, make an argument, put forward some evidence. Its obvious we would all rather be in the mid teens price wise, but we are not. What do you think the reason is? Its not Wasa shuffling his deck, and definitely not me trading around the edges of a large core holding. So what is it?

Why are you invested here, what will make you sell, what return are you looking for and when by? What are the risks and threats to it happening? What is holding the share price down? That's the kind of objective argument you will get engagement on.

I'm not patronising you. I am calling you out for being a curmudgeon in the hope you will reflect on it.

Strummer,what exactly is it you unhappy about? Is it the wider market, what everyone else is doing, or just that the share price isn't going up as fast as you would like?

No one is forcing you to hold, or keep buying AIM stocks, or even keep your money in shares at all.

If you don't like the prospects here then sell, simple really. I do, so I am not, but that's my decision and I believe I have good reasons. Buy hold or sell has to be your own call, and you take the consequences and suck it up or celebrate accordingly.

The wider market is reflecting global sentiment. Inflation, energy costs, inevitable onset of a deep recession, climate change, post COVID economic impact, and the war in Ukraine are all hardly cheery 'buy buy buy' signals. Money , both institutional and personal, moves to safer investments at times like this, generally enough goes out of stocks to drop the whole market. You will see that across the board anything remotely speculative has dropped.

As for the share price here, well the day to day price is unpredictable. Load the three year chart, it looks better. But if you want an investment to have only ups and no downs I suggest premium bonds.