Member Info for pickedpeck

Oops wasa - mistaken identity!

TDT - fair point, I'd see them in the round number share trades - it's a compulsion when you have loads to deal in round numbers. But there are some odd lumps of between 150k and 300k shares going through.
I also see that 7 seems what a techy would call solid support, at the same time as not wanting it too high they maybe also don't want it too low.
Maybe I am reading too much into this, numerology is a very tricky way of fortune telling.

Seems like one of the larger PIs has decided to sell up, similar sized sell trades for the last week or so, I doubt its an II. I guess the stress of finance not landing yet and shinier opportunities elsewhere must have been too tempting for someone!
I'm not counting down to the end of H1, the deal could land any day as could a bid, or it could stretch into H2. The basic proposition has not changed though, so long as the mine gets built or the company is sold there is a large profit to be made.

TDT - your sums are off a bit but the point is still valid.
Nickel is currently around $18,000 a ton, or $18 a KG. I think the number you used is for a lb.
The rise in raw material cost even if we went to $30 a KG would have a cost impact of under $1000 per vehicle if taken at a raw rather than compounded value.
What motor industry experts plan for is the percentage margin compounding effect in a manufacturing supply chain which may not be appropriate or accurate here.
Say Tsingshan sell Ni for $18 a KG, would they sell it directly to Panasonic or would it go into a supply chain? Perhaps a Nickel refiner would buy it from Tsingshan and purify the Nickel before selling it to Panasonic who cast / mould it into battery frames and manufacture the battery before selling it to Tesla.
Tsingshan sell at raw cost, the refiner sells at cost plus 30%, Panasonic sell at cost plus 30% and Tesla sell to the consumer at cost plus 30%. In a three layer supply chain like this the cost gets amplified rather than absorbed, so by the time it gets to a consumer it is significantly higher. In this case about $39.50 a KG. A rise to $30 a KG from Tsingshan may mean a rise to $65.90 for a consumer, much more than the $12 raw rise.

I don't have the full supply chain or model costs, but I do think the big auto manufacturers will seek to have control over as much of the supply chain as possible to avoid compounded costs like this as if the percentages are much higher the costs can run away with themselves.

For a daft comparative model, go have a look at the cost of copper pipes at B&q. What was £15 five years ago is around £45 now. They have multiplied in price, whilst the cost of the raw copper content has risen it doesn't correlate to the rise in price at a raw level, maybe a few (3-5) pounds extra.

Five years to get to £4B NPV, £1.5 A1 & A2, £2.5 V and that's at today's nickel price.
If those assets are all producing and the nickel price is still rising then we could see a > 100% NPV valuation.
By that point the company may also have returned to Serra Do Tapa for further 30% expansion.

60,000 tons annual production would be around $1.2Bn annual revenue, with gross costs around half that, so maybe $600m gross profit a year.

As wasa says, the prize is just too big to not be pursued, that's why Teck, Glen core, Orion et al, a serious crowd, are here.

The biggest risk is not building the mines, transportation, technical challenge, power supply, ESG credentials, geopolitical stability or any of the other cr@p normally facing junior miners, for private investors the risk is that this will be taken out before realising even 20% of its potential.

Ggg.... The company has said a few different times that Vermelho is about 2 years behind Araguaia. If we get Araguaia first production in late 2023 wouldn't that mean Vermelho say early 2026? How would the market value the NPV of Vermelho as it nears production?
A2 is not another oilfield, or a new mine or discovery. Its the same resource from the same pits, the A2 investment is in an extra nickel processing line. Again production from it should be added 18 months to 2 years after A1 wity no extra capital raise needed. Full production from Araguaia should be in 2025, high grade ores to start should see 30,000t in 2025.
I think this is all a lot closer than you think. These are not deep mines or exploration projects, the ore lies just beneath the surface and will be mined using diggers and trucks.
We could absolutely see 50-60kt production by 2026. A billion dollars in revenue for 400 million in costs? What's that worth?
Vermelho will be a complex deal, I suspect to accelerate it they will seek JV or even license post FS to avoid any further debt and equity dilution. Full Vermelho production won't come to HZM so it needs to be apportioned.
I think you're being wildly pessimistic. These assets are a lot further on than you're allowing for.

Ggg.... The company has said a few different times that Vermelho is about 2 years behind Araguaia. If we get Araguaia first production in late 2023 wouldn't that mean Vermelho say early 2026? How would the market value the NPV of Vermelho as it nears production?
A2 is not another oilfield, or a new mine or discovery. Its the same resource from the same pits, the A2 investment is in an extra nickel processing line. Again production from it should be added 18 months to 2 years after A1 wity no extra capital raise needed. Full production from Araguaia should be in 2025, high grade ores to start should see 30,000t in 2025.
I think this is all a lot closer than you think. These are not deep mines or exploration projects, the ore lies just beneath the surface and will be mined using diggers and trucks.
We could absolutely see 50-60kt production by 2026. A billion dollars in revenue for 400 million in costs? What's that worth?
Vermelho will be a complex deal, I suspect to accelerate it they will seek JV or even license post FS to avoid any further debt and equity dilution. Full Vermelho production won't come to HZM so it needs to be apportioned.
I think you're being wildly pessimistic. These assets are a lot further on than you're allowing for.

Just to add... At the current exchange rate of $1.42 to the pound and Ni hovering around $18k NPV8 of A1 and A2 is £1.048Bn, call it a billion pounds in round numbers.

As we enter production an efficient market would have the mkt cap at the NPV plus the valuation of Vermelho. If Nickel is still rising then the price will be higher, if it is falling it will be lower. Even my very pessimistic view of 50% of NPV valuation still makes a £500m mkt cap, a more realistic 80% at production gets us to £800m.

Share price obviously depends on the equity raised, but 2.7Bn shares as assumed below is a share price of about 30p for the £800m, plus whatever you ascribe to Vermelho.

My forecast is for the share price to double next year... 15p. And then double again as we enter production... 30p. Full A1 production the year after and nickel crunch landing, plus A2 approaching production and Vermelho in development could see us double again 60p. If they can get Vermelho into production the year after could we break 100p in 2025?

Anyone wondering about the Scandinavian ECAs, maybe worth a look at these babies. Would love to play with one :)

https://www.volvoce.com/global/en/our-offer/articulated-haulers/

GGG - I have to say there are some poor assumptions in there.

First of all the 30% to NPV number, I have seen companies trade anywhere between 40 and 110% post finance depending on commodity and upside, very few high risk projects trade as low as 30%. That assumption also still factors Vermelho at $0, that seems unlikely given the ongoing FS development. The low percentage against NPV post finance for some miners is due to complexity and risk of mine build. This particular mine build is about as low risk as it could be. This is not really building a mine but a nickel processing plant close to existing transport links. The mine is no more complex than shallow pit with some diggers and trucks. Once the power is in the hardest bit is done, it is really then about installing some expensive machinery in sheds.

Also which NPV are you using? At A1 finance A2 becomes a reality also, I would suggest over a five year period you should be at least looking at A2, and more likely A1&2 plus V. If you're taking A1 only, what valuation are you allowing for A2 and V? The NPV calculator on the HZM website that Luke2 keeps posting the link to is a useful tool. The base case was built on $14k Ni not $16.8, and definitely not $18k today. Predicting the future price of Nickel is a hard game, but I think a decent working assumption should be the current price rather than a lower one.

Thirdly the 100% dilution also seems unlikely depending on the raise price. Given the recent raise is already contributing to the equity stake and construction costs have already started with the power line, I'd hope the debt ($325), plus off takes (???m) plus current cash situation would mean no more than 3Bn shares at the outside, but I would hope for somewhere around 2.7 depending on the size of the off take agreements or royalties. Thats 60-75% new equity compared to today. Looking at the equity another way, I suspect they will raise $100m in new equity as underpinned by the cornerstone investor. Whatever the public offer raises would be subtracted from the cornerstone rather than added to it. Call it £75m for the sake of argument, that again lands us at 2.7Bn shares if the raise price is 7.5p .

I depending on the construct of the finance package I would expect the trading range to advance from here. Post finance and de-risked I would expect a quick leap to 12-14p and then a steady rise as go live approaches geared to the Nickel price. I'd be surprised at go live to see a price less than 20p a share , or in the region of £500m mkt cap.

Times like this I think stepping back a bit helps. Draw the chart from January last year to today. It zags about a bit but the long term moving average is one way only. There are definitely other opportunities, I'm not far behind you in volume now and the temptation to diversify is always there. The reason I haven't is I see this as a low risk play for a potential high return. I've done well on some riskier plays elsewhere, but have banked the profits into here.

I seriously think this could double every year for the next four years, there are not many companies out there that you can realistically say that about.

I don’t thin JM should or will do anything to respond to the day today vagaries of the market. The drop is on low volume, but there are more sells than buys by a small proportion. I suspect a number of buyers are sitting on their hands with the hope that the public offering would offer a better price than the open market, that may be enough to create the trading difference. I think that’s a bad strategy. I doubt the public offer will be below the price of the recent raise, so right now you can buy at a discount.
As for the finance, it seems very likely to happen over the next couple of months, the company doesn’t entirely control the timeline so I can’t hold their feet to the fire over it. I’d prefer it to be in H1 to avoid the noise if it isn’t, but if it is early in H2 I wouldn’t care much.
I think TDTs point about the long lead items or lack of them is on point though. There is more going on than we are seeing here, I can’t help but wonder if there is an offer in the background.

Reading the numbers, some pretty unfavourable currency adjustments right through, but there is a line on £4m additions on 'mine development property'. Any ideas? Wonder if this is to do with the power line or something else. Cash raised of £18m seems to have only added £10m net by the end of the period, but can see why they raised now at least. If they had £16m or so at the start of the period, and expected to burn through £8m in the quarter, they needed to raise to get to the finance package securely.
A bit tighter than I'd have hoped, but it is what it is pending finance.

Strummer - What you will see is speculators exiting and investors entering as production and a corporate income related to the project NPVs become a reality. The timing of both transitions will influence the share price, but generally the speculators wait long enough to gain from the rises caused by investor purchases.

Most of us here at the moment are speculators, we have mostly speculated on a future potential value rather than invested for an income from revenue. There is a lot more discussion for the moment on future share price than future revenue and dividend. Some speculators are more fickle than others, but only a few of the current crop of PIs intend to hold until this is generating significant income from dividends.

Could be Vermelho Cobalt could turn out to be much more valuable than we currently think. I China has really tied up all the supply from DRC then other companies will be desperate for supply.
https://amp.ft.com/content/0ee4a6cb-9dbe-4fee-84d0-3f48f3190935

Nothing to talk about until finance lands... TDT - No offence of any description intended, shutting up on the off topic now.

TDT
That's the problem right there, a little bit of knowledge is a dangerous thing. At the risk of getting into a physics 101 course...

The sun is a massive source of non ionising em radiation, but it is also a massive source of harmful ionising radiation, particularly at ground level ultraviolet but if you're in space gamma and x-ray frequencies too. We will ignore neutrinos and cosmic rays or you really will want to start wearing a tin foil hat. The stuff that burns you, and me and my freckly kids especially, is the ionising uv radiation. Visible light frequencies from the sun at earth just don't have the energy or intensity to ionise.

Ultraviolet emitted from the sun is known to be harmful, it has the ability to change molecular structures and even cause cancerous mutations of tissue. Gamma and X-rays are higher energy still and have a correspondingly stronger effect.
The electromagnetic spectrum spectrum is generally divided into seven regions, in order of decreasing wavelength and increasing energy and frequency. They are: radio waves, microwaves, infrared (IR), visible light, ultraviolet (UV), X-rays and gamma rays.

Then you have to factor in intensity, or effectively em density. 92million miles from the sun we have a relatively low intensity of all spectrum em radiation. The intensity is inversely proportional to the square of the distance from the source, and directly proportional to the power of the source. The exception is laser light, as that is highly organised and not from a point source.

The gadgets and EM sources around the house are generally emitting very low energies of low frequency em radiation, mostly in the radio wave part of the spectrum but occasionally microwave. Really hot things will also emit some infrared, whilst only things getting really very excited will emit visible light. Unless you have a gadget specifically designed to emit UV, like a bank note checker or a bad sunbed, there should be nothing harder than visible light in the house. Very powerful lasers in the visible light spectrum can ionise, but it is unlikely you would have anything that powerful in a house or even normal workplace.
So as far as em is concerned, anything below artificially manufactured intense laser light simply does not have the energy to do anything on a molecular level. In fact humans are also emitters of em radiation in several parts of the spectrum.

I can't prove to you it does nothing, its extremely hard to prove a negative result as you would have to test absolutely everything, but what I can say is there is zero scientific evidence that low energy / frequency and low intensity em radiation has any effects on a human body, harmful or otherwise.

As for the pacemaker, the induction hob works by creating a specific magnetic field. A pace maker has electrons flowing in its circuits that could potentially be effected by the magnetic field created, possibly disrupting the normal operation of the pacemaker. Exc

If you are worried about the health risks of an induction stove then you're also going to have to do without a microwave, wifi and repeaters, your mobile phone, any PC or laptop, anything with an old CRT would be deadly, and you may want to consider whether to ever ride in an electric car or on an electric train. You may also want to buy a house away from overhead cables and definitely away from a windfarm or power station.

They are all sources of non-ionising electromagnetic radiation in a range of frequencies. The biggest source of non ionising EMF is hard to avoid in daylight, its that big yellow blob in the sky.

So, to stay safe from NIEMF live in a Cave, an unlit Cave as fluorescent tubes and LEDs also emit, and only come out at night. Cooking should be done on a well ventilated fire, and communication should be verbal only, preferably wity some grunts thrown in for authenticity. Transport by horse or other suitable animal, but watch out for the methane emissions.

I believe people used to live like that thousands of years ago, Cavemen. Wonder why there were no Cave women?

Mr flibbles,
They are trying to raise between $440 and 465m against a market cap of currently £140m to build Araguaia Phase 1 and probably fund the Vermelho FS.
Seems improbable at first glance, but they have made solid progress towards it with investments from Orion Mine Finance, and a recent relatively small raise. Export Credit Agencies and a Brazilian bank are likely joining the $325m debt syndicate announced last year. With off takes also making up part of the mix and a cornerstone equity investor for up to $100m secured (not yet known who but possibly Orion again) they seem right in the edge of securing the full finance deal to build the mine.
They also have good takeover defence in the form of Teck and Glencore on the register so are unlikely to be taken out in the cheap.
So whilst the numbers seem improbable they also seem about to actually happen.

Seems like we will know for sure in the next couple of months.