Member Info for pickedpeck

Some talk of AMC vs HZM , I see there are a number of holders of both stocks. Whilst they are both Nickel related stocks the similarity ends there.

The pre-feasibility study of the Kun-Manie project revealed annual nickel production would be slightly under 16,000 tonnes p.a. yielding a total output of 159,000 tonnes over a 10-year mine life. Kun-Manie’s net present value is calculated at $84 million after tax and the project has an IRR of 15.7 percent. The nickel price used in the study was $7.50 per pound, or $16,530 per tonne.

For HZM Araguaia's NPV @$16,800/t Ni is $740m with an IRR 28.1 percent , a 28 year mine life, producing a forecast 426kt Ni over the life of the mine.

So Araguaia has twice the IRR, the effect of lowest quartile production costs and low relative capex, more or less three times the mine life due to the much larger resource, and nearly three times the total amount of expected nickel production.

If you add Vermelho then the comparison gets really silly. 38 year mine life at 30kt p.a. , NPV of $1.7Bn , IRR 26.3% . The NPV of just Vermelho is around 20x Kun Marie.

Then there is Serra do Tapa and the other resources without PFS yet.

Its a good contrast to show the relative valuations, and why it is important that HZM is sat on two tier 1 assets vs AMC's single smaller scale tier 2 project. AMC could make money in a high value Nickel market, and their current valuation is a discount to their NPV.

However HZM have a different order of magnitude of assets.

More than two months now since any material RNS, no recent interviews - the planned Crux one plainly dodged, and even HZM twitter account has just been regurgitating nickel related news from elsewhere.

Either:
- Something is going on that means the company can't speak openly about it. Takeover, financing, JV, whatever.
- Nothing is going on and the company can't talk about that either for obvious reasons. A material delay would have to be announced once known though.

The former seems very likely to me, 7am check process every day now for RNS. I find it hard to imagine no material announceable progress has been made on equipment, finance, staffing etc so something else is stopping comms. Something big enough happening that means a news blackout seems the most likely explanation.

The latter is not impossible, but seems very unlikely given the $325m senior debt announcement in the summer and the rising demand and corresponding price for nickel. If it was really that quiet they would be dripping whatever positivity they could into the market to try and shore up the position, that's not happening.

Wasa - just like a portfolio there is a size up to which is ok to handle on your own, beyond which you start to need professional help!
Of course mine is a modest 38ft , it can feel pretty small when it gets bumpy and it starts to behave a bit like a cork in a washing machine.
Then again size is not necessarily a guarantee of a successful trip, or even buoyancy https://www.youtube.com/watch?v=suc8pgfB1O0

On the other hand, if you are trying to raise finance for a commodity project whose output is predicted to increase in value you may well want to choose to do it when the BoE has just been asking banks if they are operationally ready for negative interest rates.
https://www.bbc.co.uk/news/business-54506853

If it comes to swimming its all gone wrong...
A guy I knew that was sailing across the Atlantic stopped half way, put the sails down and he and the crew went for a swim with 5,000 ft of water under him. What he didn't realise was that the windage effect would keep the boat moving faster than he could swim... Fortunately one crew member was asleep on board, woke up and was able to come back for them!
It's a quiet day...

Hi Wasa,

Similar approach here except my caravan floats and is propelled along by the wind, and is pointy at one end. Think self propelled floating static caravan and you're not far off :) . The other benefit apart from no fuel needed is free overnight parking (anchor), and the ability to visit places which are inaccessible by other means. I've been renovating my floating jalopy for the last three years, ready to go in 2 years when I can start taking back out of my SIPP...

Windy days can be a lot of fun, really windy days can be a bit over exciting.

Anyone interested in opting out of the rat race this book is an excellent manual of how to : https://www.amazon.co.uk/Sail-Away-Escape-Race-Dream/dp/0470979763

Just for Sh it s and giggles...

NPV of Araguaia and Vermelho combined at $18000 Ni is about $3.5Bn, £2.7Bn . In production with a rising Ni price it is not unreasonable to assume the company valuation could get to close to 1:1 to NPV, possibly even higher with higher NI prices giving a higher forward NPV. Best case on the additional equity side of finance for 2Bn total shares would give a share price of 135p.
Move Ni to a not unforeseeable $25k/t and NPV goes to about $6.5Bn , £5Bn. 250p a share.

I'm seriously considering a trip to Brazil to go look at what's occurring on the ground, and whilst a trip to an interior mining district may not seem particularly appealing there are beaches a fairly short flight away.
I wonder if the company might entertain a bunch of PIs in return for some (social) media coverage?

It was only a bit of gentle leg pulling wasa... :P

I agree Teck and Glencore must be contemplating a bid, or at the very least a JV around Vermelho that would give them control of the asset and the ability to accelerate investment in it. Jeremy was pretty much hinting at that in the previous rounds of interviews.
I can't help but this recent silence from the company (reduction in Tweets, Crux cancellation, no RNSs) may turn out to be golden. It went very quiet just before the debt finance deal was announced. We are all assuming the creep up is driven by the wider market news, but it could be a leakage thing too.

Wasa - how many posts do you reckon you will have made on here about Nickel and HZM by 2030? Should we have a sweep?

I'm actually still fairly surprised that HZM has not been the subject of an offer yet. It looks like a perfect 'take it off the market' play for PE to me, let alone a resource bank hungry major. I would love to be a fly on the wall in HZM board meetings, just to see if they have the same WTF? kind of questions about why they are still meeting. I don't think there is any chance at all HZM will get to 2030 as an independent entity, the value proposition is just too high to be ignored indefinitely.

Different deal, nothing to do with Vale or tesla. Read the article.

https://www.intellasia.net/us-invests-in-british-miner-to-fight-chinese-control-of-rare-metals-817820

I understand the boredom factor here, we live in a time of instant information and on demand gratification. Everyone wants to binge the box set rather than watch an episode at a time a week apart. That now pervades our culture and its hard to extract yourself from it and to understand the real world works in real time.

Personally I keep my investments in with one broker, and play pocket money games with another, preferably a free one like Trade212. I've found my best return performance actually comes from what I often regard as the lowest risk investment pot. I run my daughter's CTF derived account from a nominal investment, that's up over 1000% in the last five years. My trading pot (pennies) generally performs much worse... quick decisions and fiddling leads to some pretty bad outcomes.

So most of my HZM holding is sitting tax free in between ISA and SIPP accounts and is going nowhere for a while. I am not even thinking of selling any until 2022...

Fund raise for building the Araguaia mine is in process.
Last year they had a $25m cash deposit from Orion Mine Finance against a 2.25% future capped / limited offtake , they had about £17m of that left at last results.
They need to raise $443m to build Araguaia Phase 1.
$325m as senior debt from a consortium of international banks already announced.
We are waiting to see how the remainder of the balance is split between...
ECA - Export credit agencies. Can give funding for equipment purchases (exports) off setting the capex need.
Brazilian banks - additional loans, likely to get local buy in
Offtakes - Orion, Glencore (a major shareholder) and others may fund via additional offtake agreements
Equity placing - The outstanding balance will be an equity raise. Anywhere from 0 to 1Bn additional shares possible depending on the above factors and placing price.

Consensus / hopes are for minimal equiry dilution at a price premium to market rate and a combination of other sources for the remaining $118m for Araguaia.

Vermelho likely to be a JV / partnership or it will miss the EV boat.

Hadn't realised the Crux interview was postponed with Crux outside the HZM offices. Dodgy Internet my backside... Very suspicious indeed!

This was from the 19th tweeted by Crux:

'GOOD NEWS everyone @HorizontePLC postponed the interview as we were outside their office, so we have more time for more question ideas. Keep them coming. #nickel #AIM $HZM #TSX Probably going to be mid-October we are told.'

UKI - AMC? Have a look at the director deals on APF, I doubt you'll easily find a share with more director buys this year :)

By the way, the stainless market has grown about 5% compound since the 1950s, but the nickel consumption by the stainless steel industry has grown faster as the concentration of nickel in the alloy has increased significantly too.
For ****s and giggles of a nerdy type have a look at maraging steel. Its nearly 20% nickel and has some interesting uses...

UKInvestor - stick it in APF and stop having to watch daily for a while. Its less exciting but a steadier income. You'll get slower capital growth and a dividend quarterly of 7% ish on an annualised basis.

Nickel exists as ore, you have to mine it and process it into metal. The two routes (mines) of interest to HZM are RKEF and HPAL ore processes.

RKEF (Araguaia) produces Ferro Nickel which will still go towards the stainless steel market simply because it is easier to do so. Stainless steel is an Iron-Chromium-Nickel alloy, depending on the target use other elements like Molybdenum or Aluminium are added. It is possible to extract the Iron from Ferro Nickel to get the nickel, but it takes considerably more energy than getting metal from sulphates. Its a lot easier to use it as feed for the stainless steel process.
HPAL uses sulphuric acid as part of the process to extract Nickel from the ore. It produces an intermediary product which can be used to create pure nickel.

I don't believe Tesla have created a process to go from ore to metal skipping the beneficiation and purifying steps.

https://en.wikipedia.org/wiki/Lateritic_nickel_ore_deposits

Tesla want to be able to have purer single crystal nickel cathodes, you need nickel metal for that and almost certainly that will have been transitioned from sulphates, either mined as sulphate or derived from the HPAL process.

To be clear the tabless batteries will still have substrate and anodes, dropping cobalt doesn't mean manganese will also be dropped.

HZM tweet about Vermelho today, the weekend ahead of Tesla battery day, and CEO has a Cruxinvestor interview scheduled for the day after it.

1. Could be HZM trying to piggy back on battery day
2. Or could be laying the groundwork for announcing some sort of battery nickel deal - they are doing what I would do if I'd made a deal and wanted to maxmise impact.