Member Info for pickedpeck

Just read back some of the posts over the last couple of weeks (I've mostly been away and offline).

It seems no matter what good news the company posts there are people wanting to put a negative spin on it. That's perverse considering this is AIM where the norm is crazy hype over hollow assets.

Even more bizarre is anyone getting spun up over someone else's trades. When I decide to sell I rather doubt I will inform the bulletin board first, in fact I have never seen anyone do that on any share.

Yesterday's RNS reads like great news to me. Awarding 50% of contracts on budget means more contingency is available for the remainder, reducing the probability of needing extra cash before production revenue kicks in. Given the inflationary state we are in that's a great performance.

Speaking of great performances, making money on forex was also a smart move, as is moving to dollar based accounting. Our product is denominated in dollars worldwide, surely easier to account and forecast that way without the little old gbp complexity.

Imagine what would happen if the company did ever produce some bad news? If good news can be spun so negatively bad news may look like the onset of the apocalypse.

If you are a holder, and clearly not all posting here are, then the breaking ground announcement me as you own shares in a mine developer rather than an explorer. Soon enough if you hold tight you will own shares in a nickel producer. That's something to be excited about.

Your list is incomplete because I know of at least one other main market listed company with a share price below 10p - Anglesey Mining AYM. The market cap is small though, but still main market. One missing suggests there may be more.

It's not really that much of a faff to do a consolidation, it just makes the company appear more serious in the minds of international investors. I don't think there is anything more than that to read into it. Maybe the board watched Wolf of Wall Street and how penny shares were treated.

70p, hmm. Who are these analysts? I keep a pretty tight eye on this and analyst consensus is anywhere between 280 and 640 for the new share price, or 14 and 32 in old money.
In order for them to fall as far as you are wishing then they would have to spend all their cash and have no mine which seems very unlikely. When we are producing nickel in 2 years time do you really expect the share price to be less than double today's price? I don't think so.

Largest trade of the day on Friday was me, just over 1m bought at 7.25. I think we will hear about breaking ground this coming week. And yes I have been quietly accumulating, but not sure what it means to anyone else.

You're comparing apples to fish with RMM and HZM. Different scale of company, different profit prospects, different cash situation.

HZM have put forward a consolidation to attract American and Canadian buyers who are averse to penny stocks. They don't need to raise money, they have done that already.

There won't be any more dilution beyond the noise level of directors taking up their options. They just raised $633m to build Araguaia 1, which when in production in 2 years time throws off $200m plus profit annually. They have said they expect to build Araguaia 2 from cash flow.

Read the latest company presentation. It may be helpful.

Would Glencore make HZM an acquisition using cash, or would they consider an equity swap? May be better to keep the powder dry with the cash in order to simultaneously develop the assets.

1 glencore share for every 2 (new) hzm shares would meet everyone’s targets.

Horizonte Minerals has to be a potential target, nickel resource soon to be a miner. Glen have 10% already due to a recent open market buy, and it makes sense to add to the green credentials with clean nickel set to be produced 2023/4 onwards.

Maybe small beer but cheap for a nickel District.

Well that's an awful RNS this morning. They had to say something given previously saying late April, but releasing a note saying they don't yet know when results will be is pretty bad. It clearly implies a lack of control, and for a company the size of RAI five months or more for results prep also implies something wrong with accounting practices.

Oh dear.

Not encouraging that they said late April and we only have one day left for that to be true. Releasing results on a Friday is normally seen as a no no too, so next week at the earliest.

It's all just psychological. People have a habit of looking at share prices rather than market caps, in reality the share price is irrelevant as it is the mkt cap, balance sheet, and profits that make a difference.

So given it is all about psychology which statement sounds riskier:

'I am putting £100,000 into a company that is 7p a share, expecting it to rise to 21p'
Or
'I am putting £100,000 into a company that is 140p a share, expecting it to rise to 420p'

Even people that understand the fundamentals of business are influenced by gut reactions. Ask the above question to a non investor and see what they say.

Taken this as a buying opportunity, I really didn't expect to get below 500 again.

Oily, I think you are right, it's going to be all about timing.

I think the Vermelho FS won't be completed this financial year, looking at previous time scales it will be half way through next year, maybe even later as they are going for all the permitting as part of the same project. They want to get to shovel ready I think by the start of 2024 just as A1 goes into full production.

That point in the timeline will be maximum vulnerability to a take out, it really will depend on Orion and La Mancha vision at that point but would be getting close to their 3 Yr investment timeline histories.

If HZM manage to stay independent past the end of 2024 then they will start to be a decent sized fish to land as A2 should be commissioning by then.

I think the company will go with the projects in sequence A1, A2, V, An. The question is the gaps. A1 2 years, A2 1 Yr, V...? Got to think 18 months to 2 years at least sadly. That means first production from V late 2025 or into 2026 with the spend a count back of 2 years from mid 2026.

I originally bought in here for the takeout which I still feel is invetible, just when. It would be cheapest for a buyer as A1 comes online, wity quickest time to payback on the investment. It may cost more, but they get their money back quicker.

Glencore are now clear front runner with Teckxit and this weeks move. Now if Glencore bought Canaccord's stake it would effectively signal the deal is on its way.

OK...

How about...

A1 producing at nameplate for 2024
A2 producing at nameplate for 2025.

If the Ni price stays the same then net income I.R.O $300m EBITDA in 2024, and $600m in 2025.

A2 original capex was around $200m, the secondhand equipment purchase should shave at least $60m off that. I'd hope they don't eat too far into the contingency for A1, so let's say they need $100 - 150m for A2. Covered entirely by A1 production with enough change for early works on V.

2025 should see $600m net from A1 and A2, enough to spend say $400mon V on top of the $150m in 2024. Getting closer to what will likely be $750m needed.

Equity by A2 production should be somewhere in the range of 35 - 55p a share. If the JV partner needs to stump up $200m to get a bigger stake in V then it may only be 500m additional shares, but with that income level $200m could easily be raised as additional debt.

Even if I'm way off and they need to find $500m then they will have choices either to do it all from income, from debt, or to take on a partner. Profit by that point gives operational freedom.

Good work but a few other things need considering.

1. Part of the raise for A1 was for contingency and working capital. With a couple of hundred million annual income from a producing A1 working capital will not likely be needed.

2. In sequencing construction and finance it is likely HZM will have a hundred million more annual income from A2 by the time Vermelho is built.

3. Speaking of time lines A1 commisioning late 2023, A2 late 2024, Vermelho at a guess late 2025, Araguaia North 2026?

4. Do a cash balance across the timeline, you'll see the cash raise needed is much lower than your numbers. So much so that it is entirely possible they will be able to raise it from debt alone.

We won't really know until the FS, they may decide to go the cheaper RKEF route for Vermelho even. Good fun guessing though.

The Glencore transaction news release from 2015 includes this...

The current Gap (Glencore Araguaia Project) concessions contain three significant nickel laterite deposits, Serra do Tapa and Pau Preto (together: “SdT”), and Vale dos Sonhos (“VdS”). Exploration work in the original concessions was started by Falconbridge (later Xstrata Nickel) in 2003. By 2008 this work included the completion of over 2,500 diamond drill holes as part of a resource programme.

HZM bought it off Glencore for two pints of lager and a packet of crisps in 2015.

Nth - have a look at the BMO presentation slide 4. It shows Araguaia North being linked to the Glencore 2015 transaction, and located somewhat nearer to Vermelho than Araguaia South.

The slide says PFS for Araguaia North, presumably by Xstrata, at 32kt pa. That's clearly indicated as on top of Arguaia South at 29kt pa and Vermelho at 46kt pa.

107kt pa would be nice.

Nth - the company lately has stopped talking Serra Do Tapa but started talking Araguaia North. The BMO conference presentation was pretty clear that Araguaia South is what is currently under development, and that Araguaia North is a separate project quite a distance away.
Some clarification may be helpful there I think.

I know it was a while ago, but... https://horizonteminerals.com/uk/en/press-releases/2015/glencore-transaction/

We all talk about Vermelho being a Vale project, but a good portion of Araguaia was an Xstrata / Glencore project. There will be people at Glencore that remember the asset and the potential to massively expand Araguaia production.

Yep. Post financing and all feasibility engineering, speculative investors left, institutions arriving, pre production. The steepest and highest rising part of the curve.

It's worth noting that HZM should have at least two Lassonde curves superimposed as they have at least two assets in different stages of development, and arguably three. Araguaia is now in stage 4, whilst Vermelho is entering stage 3.