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Bwana - Tanzania is right now just about my least favourite jurisdiction to invest in, its a close race with Zimbabwe. Petra Diamonds has had terrible problems there. A consignment of mined diamonds seized was the start of the downfall of Petra. https://qz.com/africa/1074700/tanzania-has-seized-15-million-of-diamonds-from-petra-diamonds/

Petra now has its Williamson mine in Tanzania mothballed and on care and maintenance only. This is a struggling company and finding it not worth the effort to run one of the world's largest diamond mines.

Beyond the seizure they are now in court facing human rights abuse charges, the individuals behind the case are anonymous https://www.mining.com/petra-diamonds-accused-of-human-rights-abuses-in-tanzania/

Its a hard jurisdiction to do busi t looks on the surface to be business friendly, but isn't.

My 150,000 buy is not showing either, although the smaller trade I did later in the day is (no its not the 9.58 one).

I think it may not be LSE that the problem lies with, some of these smaller cap shares have quite slack house brokers / market makers so it could be MM reporting that's the problem.

Alls fair in love and the markets... Question is not whether to weather the storm, but how to. We get affected by the environment around us, its hard to separate ourselves from the daily BBC feed of calamity, doom, and gloom.

I think we get a very UK focused view of the world, but this company is doing business in Brazil planning to feed a global commodity market. A UK second wave should be immaterial, but because of the positions of shareholders it isn't.

My holiday let business is totally shut down (in Wales), like DJ's pub I am losing about £4k a month on that at the moment having just taken on some more commitments. Sigh. Fortunately I am still working class and the day job still pays the way, for now at least.

The clocks have even gone back, its dark in the evenings, the weather has turned, and the government is even talking aout stopping selling booze!

Skies are pretty dark, but in my view shifting world events may lift the clouds a bit, and a new reality will take shape.

1. NHS staff will start getting vaccine this year with the Oxford Az vaccine, whilst Pfizer may have one in November https://www.cnbc.com/2020/10/16/pfizer-says-could-apply-for-us-emergency-use-approval-for-vaccine-in-late-november.html

2. Population vaccines are already starting, full swing early 2021, 2 billion plus vaccinations by end of 2021. Look up COVAX. https://www.bbc.co.uk/news/business-54720971 , https://www.astrazeneca.com/media-centre/press-releases/2020/development-of-covid-19-vaccine-azd1222-expands-into-us-phase-iii-clinical-trial-across-all-adult-age-groups.html

3. The relative success of Asian countries dealing with the virus (China and Japan) compared to the failures in the West (US, UK, France, Spain, Italy, Belgium) has already shifted global economic focus eastwards. The Asian economy matters more than it did, a lot more. Recovery has already started there.

4. Global reconstruction of economic activity has to start as soon as vaccinations are available, governments need this to end soon and can not let recovery be gentle.

5. Economic stimulus packages will likely focus on the next global crisis in waiting - climate change. Ending the carbon economy will be prioritized.

6. Electrification of transport, democratisation of power generation, and the end of big oil will change the commodity landscape for Copper, Nickel, Lithium, Graphite, Cobalt.

7, Battery tech will add nickel for energy density. In most applications weight will matter, capacity will matter, relative cost of Nickel will not become prohibitive.

For me, I just bought some more. Not many and I do hold a big lump, but every day now is closer to that big RNS. I agree it could go either way short term, its a risk for sure. That one RNS could definitely see it go vertical in either direction, but I think its a lot more likely to be positive, but its definitely a massive bet that it will be. If we all knew in advance what was going to happen then there woul

Wasa - The NPV on the HZM site is the value post finance, not the current value. Unless the company has the finance in place to build the mine the figure HZM are quoting is the future potential NPV should someone stump up the money. Orion being in and the senior debt announcement obviously make this almost real, but it is not quite yet. That's why closing the finance deal is so important, until then the valuation is based on in the ground resource which is at best severely discounted to NPV of the fully funded or even better producing asset.

At the moment I have 8.65m shares all in tax free shelters , I haven't worked out the average lately but probably somewhere around 4p having bought in lots of smallish blocks between 1.498 and 8.04.

If I was guessing a bid now would come in at about 12p equivalent pre finance. It would be enough for the holders that invested at 10p equivalent to show a return, but give the buyer a stack of upside once the mines are built because they are going to have to find the capex. I say equivalent deliberately as we may get a cash plus equity offer, the buyer preferring to deploy cash as capex. I'm hoping not though as I don't really want to end up with shares in Teck, their 10 year chart tells a story.

I know a lot of people will think that is way low, but the share price today is 7p and that would be considered a hefty premium to the open market valuation. Pre finance I don't believe we will be offered much more. I'd like there to be the possibility of a bidding war, but Teck have an inside track already. I don't believe Glencore would buy, and Orion wouldn't go against Teck. BHP or Vale maybe?

Post finance I'd day we should be looking at 20-25p plus if it was Q1 2021, or 30-40p plus Q4 2022. We discussed the rerate around NPV a couple of days ago. A speculating market may drive the price even higher though, EUA and GGP have shown what can happen when precious commodity fever strikes.

I agree a takeover is likely rather than possible , but I think we may get a much lower ball offer than many of us would like to see. Sadly offers rarely come in at fair value, but at what the current cast of investors and holders will take to hand over their shares

Institutional investors look at offers against their asset's current valuation, so an offer that came in at 50-80% premium to the current market price would get likely the ii's on board. The execs would also likely be given sweeteners as part of any deal so we can assume they would be recommending an offer too. The only way it would get rejected would be if there are enough PIs that won't take it. At our last count up here we had about 15% of the company, we would need at least 50% to vote against a low ball offer.

Until finance is done we are vulnerable to low ball incoming bids. A rerate on finance would make any offer correspondingly higher.

All still to play for, the NPV is effectively part of the for sale sign I suspect though rather than what we will actually ever earn.

ggg... There is another way of looking at it. The time to payback post production is 3 years for phase 1, 4 years for phase 2. If the company directs it so then three years after entering production debt could be zero. Also every $1k on the price of Ni adds over $100m to NPV!

Wasa - That's why NPV is so important. It takes into account production costs, debt repayment, depreciation, sustaining capital, CoL / inflation, mine life, and every other cost and revenue element. NPV tells you what the funded project is worth right now based on current criteria.

In an efficient market companies are valued (price / (NPV - Debt) = 1) at their NPV and Enterprise Value grows or shrinks as the commodity price rises and falls, costs increase or fall etc. Speculators make money on forecasting commodity demand and anticipating NPV / EV growth.

Obviously the market isn't efficient though :)

One other thing. Nickel price is currently attached to a rocket. Cash price now over $16k/t , Dec 22 price $16.5k up nearly $1k on the week just about $2k since the start of October. At this rate we may see $18k/t in November, the $14k base case is looking more and more irrelevant.

Wasa - simply put, NPV is a proxy for project, and in this case company, value. You discount against it for risks and uncertainties, and add a premium for opportunities like commodity price growth. I am presuming that's why the new emphasis on NPV calculators on the HZM website.

The only reason we are not being currently valued anywhere near NPV is the finance and equity risk. As soon as that goes away then (in theory) the NPV becomes real and we should be up up and away.

NPV takes account of capital requirements, includes a discount rate currently set at 8% for HZM which is a proxy for cost of finance. That may be a little high, we may be able to get finance at significantly lower rates post Covid and from ECAs. More offtake agreements may seem like a good idea now, but selling future production at today's price might mean a lower future return.

Even so we have an IRR in the models of mid 20s to 30 plus depending on Ni price, several multiples of the discount rate. Something pretty disastrous would have to happen to the Ni price in order for us not to be massively profitable even under the worst finance construct.

Wasa - I think we should move much closer to NPV at finance (70-80% once the dust has settled), and move past NPV as we enter production in a rising Nickel commodity market. 1.2x Araguaia NPV wouldn’t be unreasonable at production assuming Nickel is still on an upward trend.

I think we are held back right now on the uncertainty around equity value and dilution in the whole finance package. That makes the actual valuation and debt position open to question. Once the uncertainty is removed and the actual price/NPV ratio is clear we will see a sharp rise as institutional investors will see the program as much more derisked.

As PIs we are ok with speculating on 30-50% equity dilution as the final price/NPV will make the dilution a positive effect given the size of the NPV. It is also possible that equity dilution will be much smaller given the multiple funding options, anything better than 50% and we are all big winners from here.

Just talked myself into another 200,000.

We all know valuation of something in the future is really bloody hard otherwise there would never be any money to make in an efficient market. However, ignoring basic facts is pretty unforgivable in any financial review assessing an investment.
FCF in the billions from a friendly jurisdiction nickel district sustainably serving both the stainless and battery markets for 30 years or so, compared to a 100m company valuation surely deserved a bit of a mention.
Do you think they understand that the valuation of a mining company is typically a PREMIUM to the NPV at current commodity prices due to the forecast commodity price increase?
HZM valuation of Araguaia should now be $1.1Bn at $16k/t , with a premium applied as we all expect Ni to go to $22-25k/t + over the next five years. At Ni $22.5k/t NPV for Araguaia is $2.3Bn!!!
As soon as the equity portion of finance is closed and the money is all in place the valuation of the company should fall between those two NPVs, even if you ignore Vermelho.
Taking the average gives a company valuation for Araguaia of $1.7Bn , £1.3Bn .
Assuming equity moves the shares in issue up to 2Bn then that translates as a valuation for just Araguaia of 65p a share. Even the lower NPV of $1.15bn and a worse case 2.5Bn shares translates as a company valuation of 35p a share.

A 5 x share price multiple as a worst case, with 10 x as an expected case, with Vermelho as a larger project added in this could be 25 x today's price.

Of course the wider industry knows this, and will very likely buy HZM out before those valuations are fully realised. When will govern how much of the bigger prize current investors get.

The idea that Yahoo or MF could suggest investors today may have missed the boat is utterly ridiculous.

The Yahoo / Motley Fool article is badly thought out. It doesn't talk about or estimate future valuation, or highlight what risk / reward leverage there is.
'What could the future value of the company be?' is not a question this article addresses at all.

Those 7.1849 trades are buys, just did a quote for 200k and got that as an offer.

Keep trying to second guess the movement here and not getting it right. I didn't see any volume dumped to drop the offer.

AIM - agreed. I can't help but wonder if a rational seller may just keep their powder dry a little longer with the Nickel price rise and the likely Q4 news flow.

We are effectively quarter of the way through Q4 now, clocks ticking, pressure is rising on stick or twist decisions.

Some nice round number buys today. I think this may get a lot more interesting in the next few days after a bit of a dry spell.

https://www.lme.com/en-GB/Metals/Non-ferrous/Nickel

Dec 22 price now $16,069 , pretty sharp rise.

Got an extra 46k shares @ 7.19 , but order took a while to go through.
Seems like it wouldn't take much to bump this up quite a way if stock is that tight.

Another good sign... seems like not many shares available. Anyone got L2 ? I'm not getting a quote to buy 50k

Brentharg - planning a rebellion is tricky when the only serious weapon you have is a hefty cough. Really can’t believe Drakeford has gone for a full lock down when Anglesey and Gwynedd have 10% of the case rates of parts of England. If they had kept the pubs and universities closed then this would have been unnecessary.