Member Info for pickedpeck

Hard to smile on a market wide down day, but collar my backside. Sigh.

I'm seriously tempted at this price now to add a few more despite swearing 10m was my max. This price given the achievement is now ridiculous.

Hazbeen - its possible that they have not held it back. Its could be as simple as what has been said, Glencore will buy the production of Araguaia for the next 10 years. Implicit in that is 'at market price'. I believe for what they handed over ($8m) you don't get entitlement to a huge discount on $4Bn of production.

Wasa - Its understandable. I don't actually think $25k a ton is needed, where Ni is right now is enough for a very profitable venture. When I first invested here it was at $12k a ton and we were speculating on a base case of $14k a ton being the upside! We are now in a situation where the mines will deliver over 100% more profit.

I think we debated how this would play out ages ago, you told me I was being pessimistic at the time, I think I was trying to be more realistic. The amount of money the company just raised is a phenomena, I don't recall a similar fund raise by any AIM company. They have got broadly excellent terms, low interest rates, great institutional investors on board, and have eliminated any questions on contingency or working capital that could have come up. The only downer is the amount of equity which is definitely higher than we had all wished / imagined / wanted / expected. So you and I are going to own a lower percentage of the $100Bn of in the ground Ni.

The thing is, whilst it was in the ground, it wasn't worth very much. Now it is going to be dug up and turned into stainless steel and battery cathodes. Bird in hand vs multiples in the bushes...

I am seriously thinking of a field trip to inspect the assets in construction next year. You might want to suggest such to SR as you seem to have a line to him, see if the can accommodate some of their PIs!

PS - I did message you on twitter, not sure you saw it.

Jeffa - Sadly only hindsight is really clear. I doubt many people expected the share price to drop sharply after announcing the equity part of the finance and Vermelho DFS funding.

If it helps I definitely see this drop as a short term thing, I would be very surprised if when the dust has settled over the next 4- 6 weeks that the price stays down here. As we go into the new year the reality of building a mine and the associated news flow should start to help the share price again. Clarity on the Vermelho FS will also help, and I think the nickel price will continue upwards barring some sort of miracle or catastrophe.

There are a lot of people upset right now at the degree of dilution, and a lot of schadenfreude too it seems from miscellaneous others. As broker notes get published and analysts digest the deal and data, we should get more clarity on the longer term share price direction. We are all at best gifted amateurs, the real money that matters will come from institutional professionals.

My take is that the Lassonde curve is real and followed by many mines, its a model that has been around for years and proven to be true.

You were the one that said you were not invested here and were only posting for entertainment. Are you not entertained?

I think you're confusing the bid and the ask, perhaps you should look up the definitions. Or just scroll to the top of the page, there is a clue there which is more than you have right now.

Contrarian - What don't you like someone having some fun at your expense? Oh dear. How sad. Never mind. As if I care whether you have time for me or not, hilarious.

You're mistaking the ability to have an honest unbiased debate with just making stuff up because it irritates people. So I do care about what you spout here influencing others. Its poisonous ill informed nonsense and deserves not to go unchallenged. Filtering you would give you the opportunity to pontificate your horse droppings without contest, I prefer to see the rubbish you're coming out with.

Looking at the other boards you comment on I rather think its your investments that may not be going to plan, maybe that's why you come across as nothing but bitter. Mine are doing just fine thank you very much.

Investing is always about risk and reward. Before the Orion $25m for Araguaia royalty, there was a lot of risk that a £60m mkt cap (at the time) company would not be able to raise $500m + to build a mine with no security to offer. Then it was purely speculative and 2p a share or so.

Each step of the way the risk has reduced, the care price has risen a bit when it has.
Araguaia FS - Risk down, price up (then down for other reasons)
Orion royalty - price up, risk down.
Banking mandate - price up, risk down more
Credit approval - price up, risk down more still
Equity deal - risk to get to production significantly reduced.

The thing is the Lassonde curve https://www.visualcapitalist.com/visualizing-the-life-cycle-of-a-mineral-discovery/ that someone mentioned earlier is not a straight line. The last trough of the curve is where speculating retail investors exit and institutional investors arrive. That is happening right now as we watch. Speculators that expected multi bagging GGP or EUA style are disappointed with the reality of the institutional investor equity deal. Holding now is for steady growth, an income stream, consolidation, main market listing, Vermelho upside, or takeout. This has gone from explorer into a developing miner and producer. Orion and La Mancha want long term returns on their investments, they will get a multi bag.

There has been a lot of disheartened speculation on the share price over the last few days, comments like two years to get to 15 p and so on. That's excessively gloomy. There is still a lot of upside potential here, but the rise will be steady rather than meteoric. I realise that's probably incompatible with many AIM investment strategies.

I said that to Contrarian123, good of you to answer on his behalf though.

The only long term collar you found was in exchange for $1.5Bn, not $8m out of near $700m financing.

My point is you were purely speculating, using an industry term without context and with no basis for your assumption. That can only have been for negative reasons, as the opposite positive assumption is equally valid without information from the company on the contract. Why make the negative assumption and include it in one of your first posts ever on this board? One can only assume negative intent, either schadenfreude or shorting.

Contrarian123 later seized on your speculation and also used it negatively, almost certainly without ever having being familiar with that type of contract or the terms commonly found in them. Sounds bad, so he repeated it.

If I am wrong help me understand why you think the company will have gone for a capped revenue model in return for just $8m.

Olderandwiser. Yes sir, I will do my best sir. Tugs imaginary forelock in deference to the poster with 12k posts.

Oh, no, wait... first post on the HZM board and that's it?

I admit my personal experience of hedging production is in oil and gas rather than minerals, but extractive industries all have similar contract constructs for sales guarantees. With such variable commodity and energy prices even very large deals generally don't have long pricing durations, but do often include the mechanism for agreeing the price for the next finite period.

There will always be exceptions, but not when only $8m was stumped up. Forget HZM themselves holding a weak hand, but with every analyst on the planet regularly increasing nickel price forecasts why would Orion and La Mancha limit their equity performance upside? They and the debt holders are the ones that will have agreed the offtake terms, and whilst I agree some sensitivity to risk may have been included it seems very unlikely they will have allowed much upside to be limited in exchange for just $8m.

Actually even the examples you quite prove my point. #4 - Ten year agreement (worth $1.5Bn) where only the first four years were fixed. Can I remind you that Glencore have only paid $8m here.

Ten years of production is worth i.r.o. $4Bn. Paying $8m up front wouldn't get you much entitlement off that. Now if they had put up all the money, all the debt, then maybe.

But $8m, you're having a larrfff...

Tell you what... that $4bn of product you're going to mine, I'll give you $8m for it now... you sell it me for less than the forecast market price by tens or hundreds of millions a year. How's that sound?

Do you actually hold here? I see you turned up a few days ago. What's your investment plan?

Shear class (is that meant to be ironic btw?)

I absolutely believe in long term off takes. What I said was find one where a collar or a base that lasted longer than a year was included. Most commonly hedging production by both sides is done annually, sometimes quarterly. I have never heard of one where a fixed bounded price is agreed for 10 years. The risk to both parties would be simply be too large so it just doesn't happen.

On longer term agreements , I am sure most of those you have found would include similar terms, is that that off take agreements will include a fixed discount against market price in lieu of an upfront payment. A big up front payment gets you a big discount price.

The 10 year off take in this case will almost certainly simply guarantee both sides a level of sales / supply. In Glencore's case this means they can offer their downstream customers a volume of product with a margin added. That's the bulk of Glencore's non direct mining business model.

Well done with google though.

Wasa - I'm not so sure.

Firstly its not one of the main participants putting the money up, it is a separate Orion sub entity. That's a little odd too btw. Smacks of putting it somewhere easily transferrable.

Secondly, a $25m royalty is non trivial, its not like chucking an extra pack of biscuits in a full shopping trolley. There must have been significant negotiation, it can't have concluded on the same day.

Thirdly we know the Vale FS exists and is in HZM hands, with a massive amount of drill data, the Araguaia one had to have drilling and sampling done over a large area. The PFS suggests a level of production out of line with the Vale one.

My own completely unfounded conspiracy theory is around Teck. I can't see why they haven't participated in this round of equity raise, allowing their percentage of control to reduce, other than because they are already negotiating a Vermelho JV approach. Sepanta Dorri is a corp development bod, it implies M&A or JV expertise needed. The reason I say acceleration below is because the only reason to bury this in the Araguaia announcement is to half hide it. There is bound to be a high level of inbound interest on the Vermelho asset, the faster it gets to FS the easier that interest will be to rebuff.

The company has said all along that Vermelho is too big and too complex for them to develop alone, and if you are investing in an FS on that basis then you must be pretty sure what form of partnership the development will take. Why develop an FS as an independent minnow if you know you won't be able to execute it alone? Makes no sense, the FS has to be for partnership.

We could speculate on the forms of the JV, but anything we say without further info would be just wild assed guessing.

The key moment for me deciding to invest in HZM was when Orion stumped up $25m as a royalty payment in August 2019. At that point I believed they would have done sufficient diligence on the Araguaia project to see $25m as a low risk investment on a royalty, and that if a company like Orion Mine Finance, one of the big names in the industry, could go in at that level on a ROYALTY rather than an equity purchase that the projects would inevitably get financed. That's when bluster became content and it was the moment when risk in the future of the company really became outweighed by reward.

The RNS from Tuesday included:

'an affiliate of Orion will also purchase a 2.1% gross revenue royalty on the Vermelho project (the "Vermelho Royalty") for cash consideration to the Company of US$25 million. The net proceeds from the sale of this royalty will be used to advance a feasibility study and permitting work streams on the Vermelho project.'

That's a repeat of the previous royalty agreement. Taken in isolation this is big news, I think it would have been more impactful if released in its own RNS.

Like the Araguaia project in 2019 Vermelho just shifted from being a bargain basement non balance sheet asset with speculative value to something that a major mine finance organisation is prepared to pay $25m for 2.1% royalty on. Digest that for a moment. $25m = 2.1% . What does that make the other 97.9% worth? Ok, so its not quite 97.9, Vale have a small royalty already, but clearly implicit is that Orion see Vermelho as in investible bargain at a pro rata valuation of $1.2Bn.

Orion have put the money up now not out of the goodness of their banking hearts, but because $25m for 2.1% of Vermelho downstream revenue is an absolute steal! The DFS makes Vermelho not just bankable, but potentially executable.

Why now, and why bury it in the midst of the Araguaia financing? The answer has to be acceleration. Earlier this year JM was pressed in a webinar on what the company was doing on the higher value Vermelho asset in terms of catching the wave of EV market demand. I forget his exact words, but they were to the effect of 'there will be acceleration, we see the value as not being reflected in the valuation'.

Its worth remembering that for the Araguaia DFS the company had to drill, sample, design process, survey etc. The fundraising for the Araguaia DFS was 374,000,000 new shares which raised £9m (2.4p a share). This time Vermelho has tons of geological data and planning purchased from Vale with the asset, they may do some confirmation drilling and a test run, but even allowing for inflation that is a much bigger expense with on the surface of it a much simpler DFS to deliver. Vermelho is a much smaller land area than Araguaia too.

For the Araguaia FS the money was raised November 2016, contract awarded March 2017, study published October 2018. I am hoping this one will be a lot faster than nearly 2 years!

Well I find it intriguing anyway

Posting scary sounding nonsense again I see.

Charts schmarts - All chart data is overtaken by changing fundamentals. This is effectively a different company than it was three days ago so why would charts be relevant?

From here what is the possible return? The fact even you are saying 150% implies the actual potential is much higher given your agenda of entertainment at other's expense. I notice you don't mention, and possibly can't think of, a long term downside risk price.

We have discussed loading up with shares. Where exactly would JM get the money from to load up with shares? He has sufficient options to make him wealthy should the company be successful, that's enough to keep him in the game and reward him if it all comes off. Which other BoD member would you like to see buy shares specifically or fo you just like saying this as it sounds a bit 000...

Convertible loans - I see this as nothing but good. It gives the option for the company to reduce long term dilution rather than taking it as equity now. The lenders believe there is a significant reward, so want either a hefty premium back on the money OR the ability to take additional equity. Be specific about why this is bad rather than making scary sounding nonsense statements about it. Would you rather they took the equity, or additional debt? Not long ago you were moaning about working capital, they now have this in a flexible form.

Offtake collar - I doubt you even know what this is. Can you find an example where Glencore has done a single deal with a collar or a base price lasting longer than 1 year? This is a 10 year offtake not a quarterly one. Again trying to induce paranoia for fun.

I don't think you have any intention of buying or holding here, in fact given the amount of time you spend on something you don't hold I rather suspect you don't actually have much money to invest anywhere let alone here. Why aren't you focused on something you have an actual involvement in? Living vicariously is dangerous, you will start to struggle to separate fantasy form reality if you are not careful or maybe that's already happened?

As for who bought, it looks like a fairly even buys vs sells market, someone is hoovering up the volume of sells. Maybe its you? Someone is happy to take the shares off the sellers, wonder why?

Just bringing back this thread from August. Back then I was speculating that we would see 600p by August next year, and 500p by Feb. I posted that at 402p , we are now 41p or 10% up from there. I still think 500p by (the end of) Feb is possible as the buy backs are still ongoing and helping the price.

As someone mentioned earlier a more realistic target may be 500p by the full year results, if the divi is restored at that point we could see a kick on towards 600p.

I know internally the HSBC management target is to return the share price back above 700p over the next two years which would be a pretty solid return from here. I don't see any reason they can't achieve that, with Evergrande likely to blow over or roll under the carpet, more buy backs, and restoration of the dividend. Of course the pandemic is not over in Europe yet, but seems to be all but gone in Asia.

Ihowells - I guess they could not agree terms as the loan would likely have been in Reals. Initial approval is not final approval by either side.

I agree the deal lacks local involvement, no Brazilian government funding, no local banks. It is a bit disappointing and leaves the door open to more political disruption in future.

Dj - Teck's play here has to be a JV on Vermelho or there is no point to their holding. If they had been cornerstone at this level they would have effectively fully controlled the company and would have realistically had to buy the lot and build the mine themselves, plus pay more as the offer would have had to be at a higher level to be accepted.

Cash generation post month 31 is 20kt x Ni price. You were disingenuous yesterday when saying DFS said 9kt for first four years when 31 months of that is construction phase. Using the DFS post 31 months the next five years generate over 100kt of Nickel, at todays price that's $1.1Bn of cumulative operating profit. Using the Wood McKenzie price that rises to above $1.6Bn.

On top of that CLNs are not about collecting interest, they are about conversion. I expect them to be converted rather than paid, although if there is the expected cash generation level the company could choose to buy them back.

HSBA has 20.4Bn shares in issue, doesn't seem to have held them back too much.