Member Info for pickedpeck

Looks like Ferronickel is worth investing in. Now where might you find a supply not controlled by Chindonesia...

https://www.mining.com/web/indonesia-president-launches-2-7-bln-china-backed-ferronickel-plant/

Nice graphic from mining.com, will be nice to see HZM in this list in a few years time. Not entirely sure about the accuracy mind you... Seems to exclude the Indonesians... And doesn't add up to anywhere near the ~2.5m total mined in 2020.

https://www.mining.com/web/the-worlds-largest-nickel-mining-companies/

Fun though :)

Merry Christmas and a happy new year to all of you, even you Contrarian. Lawrence too.

We are extremely privileged to have these First World investment problems, because they are not really problems at all. Many people will be cold, hungry, or just scared tonight, and the stresses of a percentage point on a share price are world away from that. Spare a thought for them, wherever they are, and do what you can to make the world a happier place.

Nadolig llawen, joyeux noel, happy Christmas.

That's really nit picking. Is there some point you're trying to make?

Every mine sells a marginally different product, in the case of Araguaia it will be ferronickel with a percentage of Nickel and a percentage of Iron. Both the Nickel and Iron content have LME market prices, but ferronickel 27:73 (for example) does not have a direct product price, meaning sale of actual product is inherently effectively linked to both the Nickel price and the Iron price.

Also the LME price is live, any product sales will be agreed at a point in time in order for everyone to balance their books and pay their bills. Sometimes this will work in favour of the buyer, sometimes the seller.

There has been no mention of discount, collars or bases other than by posters here with negative agendas. All of the above are tiny marginal effects that at worst will be noise level.

Again, is there a point? Are you really worried about the decimal places of the product sale price 31 months from now?

Classes of Nickel is rapidly becoming a historic classification rather than a current one. The HZM Araguaia DFS meant the mine was and remains primarily targeted at creating ferronickel.

However after line processing can convert ferronickel to nickel matte suitable for use in creating nickel sulphate for battery cathodes. Google Tsingshan Nickel Matte rather than pasting loads of links here.

Battery cathodes don't have to just come from sulphate deposits anymore, nickel briquettes are under pressure from the nickel matte route of producing sulphates.

Having said that, why bother? There is a huge market for ferronickel in the stainless steel sector. Other sources of nickel being redirected has meant there is a stainless steel undersupply situation too.

HZM are well positioned for either, the nickel matte approach requires significant energy but in HZMs case that comes from hydropower rather than coal. That makes HZM future matte operations greener than almost all others. Matte may be the way Vermelho goes rather than Araguaia.

Section 24.1.4 of the same document has a list of planned activities. Obviously the dates have all moved back with finance approval taking much longer than originally expected, also some of the key activities have already been completed particularly permitting and procurement.

I expect the company to issue a revised schedule now that finance is complete so we can all track against the new milestones.

The updated FS https://horizonteminerals.com/news/20210401_HZM-Araguaia-Project-NI-43-101.pdf has construction schedule of 31 months (section 1.11) .

On that plan then first revenues would be in H2 2024, but could potentially come in early as some optimisation has been done since the FS in the value engineering stage. I'm hoping they will have been able to take 6 months out of the construction plan, I guess we will see plan updates when things really get going next year.

Soundbuy - see below :)

You can't help thinking that the it's the short trying to close out.
I wonder if there will be many people claiming to have 'topped up below 6' in a week or so. Seems like bottom may have been called.

Over the last 4 months (since mid August) LME Nickel price seems to have settled in a trading range between $19 and $20k per ton with a few short lived spikes outside. The longer term wma is still generally upwards, with higher highs and lows, but the slope is now gentle rather than steep as in the earlier summer.

I think this range is ideal for HZM development phase as it is not high enough to cause some of the less economically viable mines to come out of mothballs or to drive a new exploration frenzy. It is however high enough for no one to get too twitchy about HZM's prospects as they have wisely based all their calculations on a much lower price, assuming $16.5k for their latest models and an original base case of just $14k per ton.

These prices stabilising for while now are Lilley to make the future nickel squeeze much tighter, the real EV demand spike is forecast out from 2023 and beyond. Hopefully global pandemic recovery should be in full swing then too, wity demand for stainless continuing to rise sharply also.

So just as the HZM assets are planned to come on line we should see the sharpest rise in the price of nickel, I'm now thinking it may well go beyond $30k per ton in 2024.

That in turn will generate a once in a generation scramble for Nickel assets. I suspect there are others seeing the way this is potentially going to shape up, and as a result consolidation in the industry we are seeing now is being driven by forward thinking companies buying up what they see as bargains.

A few deals have been noted here, with generally much higher ratings than HZM. Those deals are happening now not because nickel is currently expensive, it's because it is still cheap. This is only the beginning.

Quite an exciting journey ahead I think.

3p = scaremongering for the inept and hard of thinking.

Taking cash raised from debt vs debt as neutral in the short term, the after the new shares are admitted and the cash from the raise completed, HZM will have £160m + cash in hand. That translates to 4.2p cash per share on the 3.7Bn shares.
Even the most ill informed here can see that you don't discount cash.

If I have learned anything from the 25 years or so I have been mucking about in the markets it is to not be afraid of buying into an investment case you believe in when others are selling and lowering the price. Actual contrarian investment has almost always paid off for me, even if I don't always time the bottom I work out the likely return on the price I buy in at.

The investment case here remains compelling by all fundamental measures, I'm aligned with some of the biggest investors in the industry and have a much lower average price than them.

Each to their own, I just did the opposite and bought 250,000 at 5.99p. For me this is an investment rather than a trade. Two years time, 3x return. That will do me, I am patient enough for that.

Interesting deal, just short of £600m for 16kt of production wity no other prospects in the pipeline and a shorter (remaining) mine life than the HZM assets, although they are sulphide deposits. Production costs higher than the planned level for Araguaia too.

Hazbeen - happy Christmas to you too grinchy!

What would you propose we talk about on a HZM share chat other than justifications to buy, hold or sell? Perhaps you'd rather talk about the weather or football? Nice day here, out for a walk this afto with a new girlfriend. City pounded Leeds last night, and despite being a Liverpool fan I can see City as title favourites again the way they are playing.

Anything else?

BTW - I've not held all the way through, I have persistently added for 3 years, including purchases in the last two weeks since finance.

Ivor, I agree the company should have been clearer on their plan. They understated what they were going to raise.

I don't agree we will be stuck here until production. As the build progresses, risk reduces. As the risk reduces we should start to move towards the NPV as mkt cap. At production I would expect the mkt cap to be the A1 NPV, plus 50% of A2 NPV, plus 20% of V NPV. You can do the maths what that will be.

JM has shares, but has a lot more options. Are you saying he isn't invested so doesn't care about the share price?

The share price is down because of a short by Maven and a lot of PIs reacting negatively to the news of more dilution than expected. Neither of those things should matter to JM, he isn't selling his shares or executing his options until the company is well into production. The price today matters as a paper loss if you bought higher, or as an actual loss if you sell.

A person buying a year ago and griping about the share price right now, then yes, that is a short term speculator. Its only a loss if you sell. If you sell now having bought at 8 or 9p then you didn't believe in your initial investment case, or you expected the share price to only go one way.

I doubt any of us have a crystal ball that allows us to pick the bottom of the share price chart. Yes it is cheaper now. I have bought both higher and lower than the current price.

If you are investing based on the prospect of building a mine and generating profit from that then why would you be concerned about the share price right now? The only reason would be to want to see paper profits, unless it was a short term thing where you were just speculating on the share price post finance.

It is an interesting fact that most PIs believe the company is directly responsible somehow for the day to day share price and should run their business that way. I'd rather they focused on making the business as profitable as possible, as fast as possible, and let the share price look after itself - as it will anyway.

No they haven't, and no it isn't. I don't believe JM thinks two hoots about the short term share price, and if he did I wouldn't be invested here.

I think it is pretty clear than HZM will be selling 28kt into the market as A1 and A2 will be but pretty closely together now without need to raise further capital.

I also think the Nickel market by early 2025 will have expanded from 2.7m tons in 2019. Just the long term CAGR of 5% would take it to 3.6m by 2025 taking out the 2020 pandemic depressed number. If you allow for that CAGR to accelerate due to the demand from the battery sector to say 10% (which may still be low) then 2025 demand could be 4.8m tons.

I am going to repeat I am still delighted with the deal HZM have done, initially whilst it was easy to suspect the extra raise was in order to deliver A1 and A2 rather than just A1, the equipment purchase RNS makes it clear as day that is their intention. Even though the dilution was higher than we were all expecting the NPV as a result has all but doubled, and the timescale has come in to get that higher NPV too. Anyone posting that this is negative for PIs is missing these key points. Its bad for short term speculators, made worse by the Maven short, but excellent for private and corporate investors alike.