Member Info for pickedpeck

CT - I agree, except... There is now contingency on contingency on risk reserve.

Even if they can't use any of the significant contingency they now have for A1, the fact they need ~$90m less from cash flow to build A2 brings the date for A2 forward a year.

Cleverthoughts - I am not so sure I agree. I think I'd take the dilution now in exchange for getting Araguaia fully up and running 2 years earlier than if they had to pay for it out of cash flow and full price of capex. Taken in combination the higher raise and reduction in total capex is a great deal for all shareholders.

More cash flow will arrive earlier, potentially enabling the company to fund a bigger percentage of Vermelho themselves.

This has potentially very large implications ofr the long term value.

I'm delighted, and have bought more this morning.

NPV of Araguaia just became $2Bn, delivered in a shorter time scale. Once the study is published on Araguaia build I would be amazed if they don't show a saving of $100m plus on the capex for A2, that should allow an all but parallel build.

They have been negotiating for this equipment for 2 years. It's what happens when you give smart people enough time to think, they come up with a plan.

Shorter has to be feeling squeezed this morning.

Explain how a declared holding of 29m shares on morning star and no notified short position translates into them shorting the company?

In fact, one short aside, there is a more green than red on morning star. There are a couple of notable exits, but more increased or new holdings.

The Lassonde curve predicts the shift from speculating PIs to Institutional holders at this point, that's been happening for weeks even ahead of the finance announcement.

The institutions will be the ones that see the bulk of the wealth generation apart from the smart or more hardy PI. Loose holders, speculators, short termers may all be shaken out shortly.

Fiera not likely to be a short. They are not tin pot, $100Bn + AUM.

Sigbed up to this : https://www.fieracapital.com/en/press-releases/press-release-122919

Ivor - I think there is a hint on the way the DFS is funded, with increasing cost of payback if production is not achieved in 5 years.

I think the likely timelines:

Araguaia construction starts 2022
Vermelho DFS h1 2023
Araguaia mine opens 2023 and ore starts to be stockpiled
Araguaia 1 RKEF commissioned and first nickel production h1 2024
(insert potential take out here!)
Vermelho JV announced h1 2024, build starts
Araguaia 2 first nickel production h1 2025
Vermelho mine open h2 2025
Vermelho first nickel production 2026

I actually think production for Araguaia will be higher in the first few years than the 14kt mine life average forecast due to higher grade ores being prioritised and stockpiled.

If we can pay back the CLNs and avoid further dilution then we should be considering mkt cap vs 3.7Bn shares.

150p on 3.7Bn would be £5.5Bn mkt cap. That's pretty racy and would depend on a lot of other things happening which collectively seem unlikely... however...

Average PE ratio for the mining sector is somewhere around 11 , so to justify £5.5Bn mkt cap we are looking at earnings of £500m after interest and tax, or 13.5p eps.

Gross profit to get that would have to be in the region of £750m or more. Translating to dollars that would be $1Bn gross profit p.a.

How much nickel does $1bn translate into?

AISC for Araguaia and Vermelho is in the region of $10k per ton , with nickel at $25k per ton by the time A1, A2 and V would be in production. $1Bn translates to about 66,000 tons of annual production.

To get that HZM would have to have A1 producing 14kt , A2 also producing 14Kt, V would then have to reach 38kt of production, around the midpoint between the lower Horizonte PFS and the higher expenditure Vale DFS of 46kt production.

The problem with that picture is HZM cannot afford to develop Vermelho alone, and will very likely have to give away a significant chunk of production in a JV mine build. More likely is to be able to count on 15-20kt from Vermelho for a total production of around 45kt. At $25k nickel that translates to $675m gross, 2/3rds of the amount required for 150p but neatly coinciding with 100p or so.

There are other development options by that stage, it is unlikely that HZM would just turn into a 30 year plus cash cow. There is extra resource at Serra Do Tapa and the rest of the unexplored Araguaia acreage.

All of which is completely moot as way before then HZM will get bought out. Right now the price would leave the company a sitting duck from January onwards, the only defence is very large sticky holders looking for a much bigger return on their investments, which fortunately we have.

So bottom line, 150p is unlikely without things we don't currently have on the radar. 100p is possible if they get all three current planned assets to full production without further dilution. That's not likely as the investors are likely to take an offer for the lot well before then, the value at that stage is anyone's guess.

Today's volume of just over 1m shares implies that everyone that was either going to buy in or has left on the release of finance news has done so.

I agree that none of us know the future of HZM, but investing has never been about knowing, it is about probabilities and risk. In this case it is very highly probable that in just over two years Horizonte Minerals will be a nickel producer. I've mentally allowed for the end of June 2024 as production start.

It Is also highly probable that a new definitive feasibility study for Vermelho will be completed inside that time frame, I am hoping for the end of 2022 for this, but expect early 2023.

The Nickel price is a big question mark. Actions by Indonesia have pushed the price up, there is no guarantee that they can't make a change that will affect the price adversely. We do know there is a huge up tick in demand for both stainless steel and nickel cathodes that is influencing the price, we don't know the capacity available to meet that demand at the higher price. 16% increase in stainless steel demand in H1 2021, the highest ever production of stainless steel.

There are always risks to construction and heavy engineering projects. This company has not built anything significant before, but their employees and subcontractors definitely have. The mine itself should be fairly simple, and the construction is not remote from services and transport, but shipping, manufacturing, weather, local disputes, design iteration and other causes can derail building a green field plant. I'm expecting some delays, but also some optimisation and parallel working. Support from all major shareholders should help derisk this.

The reward economics have been much discussed here and elsewhere. Time to finance payback once in production is very short, value add coming from first A2, then Vermelho, then hopefully later development of Serra Do Tapa and more exploration of the vast Araguaia acreage.

The CLNs have caused a huff, rightly so as the terms are a little harsh. Having said that the rest of the debt os at very low rates, taken as a whole package debt looks serviceable, but any sharp down turn in Nickel price or long delays could cause problems.

So now its a different risk / reward calculation. It used to be could they get finance or not, now it is can they spend the finance wisely and efficiently. The reward, the high revenues possible from a whole nickel district, still remain. I don't think share price predictions will matter too much as I think HZM's destiny is to be bought out as they enter production.

Hi luke,

Mine are split between Isas and SIPP, it may be the virtual option share that is the problem.ii have listed it in my portfolios with zero value, it could be just a mechanics problem.

Flavour - there is another option:

3. Nutters never rest and stupid doesn't sleep. (paraphrasing my wise eldest daughter)

It's pretty clear to me that option 3 is in full swing here.

Check out the mullet's other investments, going backwards and in one case suspended. Hardly a golden portfolio.

The simple facts are clear. Two of the biggest mine finance companies in the world conducted thorough due diligence and subsequently have bought in with an expectation of a growth driven return that will multiply their initial investment. You for some reason are lucky enough to be able to buy in cheaper than they did. That's it, nothing more complex to it than that.

Everyone makes their own choices, over 20 years you will have had income from dividends, seen the price above 800 and below 400. Its a bad investment right now, but if you were investing at this price would you call it bad in a years time? That's the decision to take, where will it be in a year, and is there a better or safer place to put your money.

This looks massively over done now. Adding some more even though I am apparently speaking to the ether! I guess bigger companies are less interesting on these boards than speculative AIM minnows.

So I have a few shares here, not many, just a smallish speculative holding, just so as you all know I am not having a dig (pun intended).

I see nearly all the posts here seem to talk about the share price with little or no content on what the business drivers are for the price.

Has anyone done any enterprise value calculations, or made any assessment of what the property may be worth? How much is known about possible reserves or is it all based on future drilling campaigns? What's the exit strategy here vs someone like GGP?

I am assuming the longer term plan is drill, prove reserves, sell out rather than mine. What sort of realistic target sell price could be achieved?

Sorry if all this has been posted but it really is quite hard to see anything meaningful between the fairly vacuous share price posts.

I've been in the background for a while here, don't have a big holding but have to admit to a degree of confusion on some of the trades.

There are multiple trades this morning around £1 in value, with one just 37p. I know free trading platforms exist, but really?

BTW, I live in and run a business in Gwynedd, I know exactly how pedantic the planning authorities can be particularly about any perceived threats to wildlife. Don't disturb a sleeping bat or hell will hath no fury like the planning police. Ironically shoot as many pheasants as you like...

Wasa I agree, I don't think an early offer is likely either, but you never know, someone may chance it. The miners are in general awash with cash, they either spend it buying stuff or give it to shareholders.
I think / hope a take out happens post A1 startup, post V DFS, pre V financing, with nickel heading toward $30k...

Ivor - what would you take for your shares if an offer arrived tomorrow morning?
More to the point what would Canaccord, Teck, Glencore, Orion, CIBC and La? Mancha take?

I reckon that lot would fold if a 15p a share offer landed post issue of new equity, say in January. As the mine gets built and Vermelho gets a dfs that may stretch well into the 20s. In production you'd have to pay in the 30s or higher, Vermelho built and in production, anyone's guess.

Backspace - on the surface of it yes, it's great to have a ten year market for all the product you can make.

However despite the arguments last week with the numpties claiming there would be a collar or a fixed price, I would have rather had a bigger fee for the offtake than the relatively paltry $8m Glencore have paid in exchange for some discounts off product down the line.

For example selling product at 10% discount to market in exchange for $100m towards financing the build. Glen win as that would amount to maybe a $400m value over 10 years, we would win as less equity needed. The actual sale price would be still well above base case in all but the most unlikely scenarios.

I had frankly hoped the offtake element would have a bigger lump off the capex, I would expect to be able to market an in demand product at or very near market price without the offtake in place in advance.

Well there has been nothing else to talk about...

Their transactions are all shown in SAR. Where a company is incorporated is not necessarily where their money comes from.