Member Info for pickedpeck

This is not the rise. This is not even the beginning of the rise. This maybe the end of the beginning of the rise.

LTHs and newbies alike are justifiably excited by seeing double digit percentages. But like many others I didn't buy in here for the chance to make a penny a share here or there. In particular I don't believe La Mancha, Orion Mine Finance, or Glencore are expecting a penny or two a share return.

My 480p post the other night was tongue in cheek (beer in head) , that's a fantasy price. But it was based on things that COULD happen. Of course nickel price could be lower too, interest payments could be higher, we could get windfall taxes on profits, and production could take longer to come online. But there is no place beyond some sort of global financial apocalypse where 8p a share will even be relevant to HZM in five years time unless we are talking dividends. If they get both the first two mines producing by then we should see a share price in three figures.

Luke posted the NPV calculator earlier (welcome back too, you were missed) , she could have pointed out that it only goes up to $28k a ton nickel. Current today right now price is $33k a ton and rising, with the squeeze only getting tighter. LME stock levels - effectively nil now. I genuinely believe $40k a ton is sustainable.

We have often mentioned the Lassonde Curve here, Google it, read about it, it should be shaping investment decisions in HZM

One last point, wasa mentioned HZM might pass the EUA share price. Its worth knowing the HZM resource in the ground has a multiple value compared to those of EUA and GGP combined. It's not gold, it's not palladium, it's the 21st century metal. (Note : if all HZM mineral was extracted from just the first two mines total value i.r.o. $132Bn at today's Ni price. Maybe we should call it $0.13 Trillion for emphasis)

OK, as I am in the pub and a few pints in...

Just how insane could it get? I think it is possible, likely even, that the new baseline for Ni will be in the region of $40k per ton, with spikes higher. The production gap will just continue to widen this decade, but high prices will suppress some demand.

In five years all assets should be fully producing, but with a ramp up of the original capacity in response to pricing and extra cash being available. Two lines at Araguaia South, 29kt. Two lines, maybe even three at Vermelho, I think 40kt. Araguaia North, fast tracked and feeding two lines 25kt. 94kt total production potential.

30k gross profit per ton at 40k Ni.

94, 000 x 30,000 gross profit. $2820m EBITDA. Allowing 25% shrink post tax and interest, $2.1Bn profit pa, 54c eps. PE of say 12 for rarity and more as yet unknown exploration upside (Araguaia plot is county sized), share price $6.48, or about 480p.

A lot of ducks to do a lot of lining up, but you want optimistic based on the maddest assumptions... That's where it goes.

Never happen of course, somebody will buy us out long before any of that even vaguely starts to look real.

The analysts have all been wrong so far on the price of nickel, mainly because there is no last time this happened. I don't think the world has ever properly run out of a mineral resource before, maybe oil in the 1970s was a good comparison.

No one really knows where prices will go, but more production is not coming to the rescue may time soon, and those companies with or near production could become insanely priced.

It's not impossible to believe HZM could be making $20 or even $30k profit per ton at production. If they get Araguaia producing 29ktpa in three years time that's $870m gross profit pa, wity Vermelho and Araguaia N still to come.

Numbers could become utterly insane for the patient.

Has form for buying single digit percentages of companies...

Would be nice to have a development partner on board for Vermelho, but at current nickel price maybe we don't need it.

I wonder which would be more unbearable, Lawrence's told you so's when we reach 50p, or Contrarian's claims to have bought back in at 5.8p when he saw the rise coming.

So this appears to have bottomed out and settled at 24p a share or so. Market cap has taken a hammering, but I am not sure one bad year against a background of bad years for everyone makes this a bad company. I am going to take a punt here and buy back in.

Those two unknown delayed trades at 7.00 times 11.41 are the ones that caused the pull back not a 400k trade.

We still have sellers at 7p, until they are cleared we will just hover here a while. They are almost certainly loose money from the raise. I know various people have said the book build was poor, but when you've got your hand out sometimes you don't get to choose who drops the coin in or why. Its a shame neither LaMancha nor Orion are up for buying on the open market, you would have thought they would be adding to their holdings and lowering their averages. Canaccord have been here since the last ice age too without executing any transactions, then there are Teck and Glencore. Come on chaps, if you're in the boat start doing some rowing...

Taufour, you do know it rains almost every day in the dry(er) season don't you? Just not all day....

I bought a few grands worth at 120 a few weeks ago, I saw them as good long term value at that price, and still do. Obviously I could have timed the trade a bit better, but any price below 100 will see me adding more. As a longer term investment this will recover, the question from here is not how low but how high this will go.

RR stands to make a fortune in energy transition long term as the world has to move away from carbon stat. That means electric engines, hydrogen turbines, renewables, SMR and other power sources will need mass producing as the world won't want to stop moving. A less stable world is sadly also good for RR as the defence sector, and energy security, will play a huge part in their future.

Buying and holding with a three to five year view.

Nah, that's a load of rubbish.

We don't stop buying basic food stuffs even though the price rises, same as needing new knickers or socks. When times are hard are you going to get your socks from M&S, Amazon, the poundshop or Primark? A big portion of people will associate Primark with value for money, hard times are actually good for them.

This price is too cheap based on the numbers, I'll be buying more with the expectation of seeing mid 20s sometime in the next 12 months.

I suspect the fears are around inflation of wheat due to the Ukraine conflict. It is traded as a global commodity, and whilst ABF don't buy from Ukraine for their bakery businesses the fact that both Ukrainian and much Russian wheat will be off the market will have an impact. They will have a lag between commodities rising and being able to recover margin through price rises, although that should be a short term problem.

I also think that in times of higher inflation discounters like Primark benefit massively compared to say Next or M&S, less money in shoppers pockets likely means more spent at Primark rather than less.

I'm happy to take a punt at these prices and will be buying in tomorrow with expectation of a rise post results later this month, and longer term a return to pre-covid levels.

Anyone know what Xinguara Bay is on that slide? I am guessing a typo, but you never know...

Actual extraction has effectively already started. If you look at any pictures of the pilot mine it's surrounded by neatly arranged piles of ore. The ore is just below the surface, the mine will be open pit and the ore removed by nothi g more sophisticated than a digger loading it onto a truck. Big digger, quite big trucks.

On the project timeline everything construction wise has to finish by the end of Q3 2023 or will likely be stopped by the rainy season for 6 months. So the plan is that the mine and processing plant will be built in 18 months time, and then it's on with commissioning

Interesting that about one in six shares bought today were bought by the company themselves. It should be having a bigger effect on the price surely?

Wyndrum - I just like the contrasts of brokers, you can normally guess which ones are the house brokers because of their rather obvious higher valuations!

There may be a business opportunity in checking broker accuracy in hindsight! Save all the old broker ratings and rank them based on accuracy.

Yep. Mental.

2204.6lbs per tonne or 1000kgs , looks like someone may have got that wrong in an update.

By the way, it seems really odd looking back at the Araguaia FS now with its $14k $16.8k a ton base case and upside values for nickel. The upside case is almost exactly half today's price. Interesting in the FS that the difference between base ($14k) and upside ($16.8k) took a whole year off the time to payback (3 instead of 4 years). I wonder what $33k a ton would do for Time to Payback? An extra $243m a year income?

They obviously raised a lot more capital too though so its not all roses... even so I would have thought time to payback would now be inside 2 years

Bwana... £350m mkt cap for a LOM revenue of only US$3.43B .

At $28k a ton (or higher) Araguaia alone makes more than three times that revenue level as free cash flow over the LOM, with revenue of $12Bn over LOM. Strangely that's just stage 1.

I think we may be worth rather more.

CBAX - depends if you are a value investor or sentiment / momentum based.

On a value principle, you might use the NPV of the company as a proxy for discounted value. In theory as Araguaia 1 enters production the company value should be at the NPV of that project plus smaller percentages of future projects. That's now less than 2 years away, but we don't know what the nickel price will be then.

The Horizonte NPV calculator at https://horizonteminerals.com/uk/en/npv_calculator/ gives a directional idea only, with nickel at $28k a ton then the NPV of Araguaia 1 is around $2bn. Stage 2 takes that to $3.3Bn, or £1.5 and £2.5 billion respectively. Translating those values to share price is about 38p and 64p respectively.

So lets say the share price should be 38p from Araguaia two years from now, and is starting at 7p. It needs to gain 31p between now and then, and also go on to add another 26p to reach 64p about a year after that. A straight line between now and the value two years from now suggests it should add around 1.3p a month to A1 production, and then the following year add about 2.16p a month until A2 starts.

If the value went up in a straight line then it should pass 10p in the next three months. Obviously it is not currently behaving like this, we have been stagnating around 7p since November, so every month that goes by at this price makes the eventual rise steeper. We also don't know the nickel price by then... it may fall back, it may go higher. $33k a ton today, ish.

Then there is Vermelho, and Serra do Tapa / Araguaia North. Post FS Vermelho should be an investable asset, and have a value on the SP. How that final deal will affect the price is anyone's guess.

In short, I think most long term holders are a little surprised we are not already past 10p, but it is a when not an if. That's the perils of real investing, sentiment and momentum, or lack of it, really controls the share price rather than the value fundamentals. Will breaking ground, completing project stages, getting electrics and equipment on site etc change sentiment?

By the time I had any significant cash I had blinked and missed it. I think the MMs marked it down assuming the buyers would be dumping stock bought at 320, when that didn't happen in any obvious volume back up she came. Quite remarkable, a significant portion of the company effectively dumped into open market and only down 2.5%.

Hopefully now this will soon be behind us the company can get to a more sensible share price level based on the fundamentals.

Spoke (just) too soon I think, seems 3900 is a resistance level.

Surely the share purchase scheme has to increase share value at some stage though.

Thanks Wyndrum , will look.

Interesting broker ratings quoted here on LSE

01-Apr-22 JP Morgan Cazenove Neutral - 1,442.00 Reiteration
24-Mar-22 RBC Capital Markets Outperform - 1,700.00 Reiteration
15-Mar-22 RBC Capital Markets Outperform - 1,700.00 New-coverage
03-Mar-22 Berenberg Bank Buy 1,840.00 1,840.00 Reiteration
24-Feb-22 Barclays Overweight 1,685.00 1,670.00 Reiteration
09-Feb-22 Barclays Equal-weight 1,700.00 1,685.00 Reiteration
08-Feb-22 JP Morgan Cazenove Neutral - 1,376.00 Reiteration
31-Jan-22 JP Morgan Cazenove Neutral 1,379.00 1,376.00 Reiteration

JPM increased their price target by 70p today, Barclays cut theirs twice in February, whilst RBC and Berenberg have quite hefty targets. Quite a wide range of forecasts too, 13.7 - 18.4 is nearly a 50% disagreement which implies that it is based on a range of uncertainties.

Wyndrum, thanks, I am with ii so don't see HL stuff by default. I've looked at some news coverage and analyst articles, but a lot of it seems like it may have been paid for by the company!