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I’m under no illusion that this RNS is at best a holding one. They have given themselves another month to find a financial solution. We don’t know what going on behind the closed doors. All we know is they haven’t struck a deal yet that they are willing to sign off on. In the current environment the negotiations will be extremely difficult. Yes , miners are thinking twice where they invest in nickel. High cost facilities are shutting in favour of the lower cost. Horizonte is in the lower operating cost bracket which will help. It’s the duty of BoD to do the very best for all shareholders. Unfortunately it’s has been a substantial minority of those shareholders that have made this situation worse. They absolutely had the right to sell, but that is why the market has priced the share at its current value. Is the mine worth more than its current MCAP, $9 million, well yes. Joking, you’d get more for its scrap metal. I believe that the BoD, because of this, will be trying to attract as much debt they can, to reduce the amount of equity needed. Any amount of dilution of equity is not good for any shareholders. Also raising equity via a raise will not be easy. Again I’ll reiterate that unless some underhand shenanigans are performed the raise has to be done at at least 20p a share.
Let’s assume for agreement sake, that Glencore wants to buy 100% of the company. What’s stopping them? Nothing except the price they’d have to pay. Currently La Mancha have invested £77 million for their 62,297,182 shares, or £1.24 per share. 23% of the company. I would hazard a guess that La Mancha would really like to see a large proportion of that back. To budge La Mancha and Orion into selling their shares Glencore would have to make a significant offer, and not at the current share price of 4p. By buying one or the other or both they would have to make the same offer to all shareholders.
As has already been said here on this chat regarding the cornerstones not taking this private, here were a few.
Glencore the most likely to buy this outright, haven’t because at this stage they share risk as seen in the current situation.
La Mancha have stated they do not own mines. Their sweet spot is 19.9% of the shares. This gives them flexibility and the ability to help and have influence.
Orion are just mine financiers. They are here for a 3-5 years for a multiple return.
Another element is they have first to convince themselves it’s still doable. They’ve looked at the CTC and EAC now they’ll be looking at the OPEX, crunching the numbers to make sure that the future profits margins are still in line with their current projections. This is will influence what their stake in the company will look like in the future and what the financial package they would want. We can only speculate about this. Depending on whether you bull or bear decides what you favour. Admittedly I’m bullish so I’d say the best thing is to fund mostly from debt, however, the bears will have us all wiped out with a vast dilution. The other option is administration, but this is costly with no guarantees.
One thing the new management team will need to do is convince the market that they have a true handle on what’s going on. There are several facets to this from explaining how the previous management got it so wrong and to why they didn’t know about it to what they’re proposing to do to get it right. For the past they’ll easily be able to concoct a convincing explanation. The future is slightly more difficult because they have to be watertight. By bringing in GMS they will lend credibility to the CTC. Yes, they have overinflated the figures and by some margin. The reason again, the need of being viewed as credible, given the previous management asking the market for more money only to come back for more. This next raise will have to be the last.
Rob,
I’d like to bring to your attention that the cornerstones are in here at at least 80p plus per share.
For the rest of the 49% of shareholders there will be a fair chunk who didn’t sell on the initial crash and are stuck at a £1 plus. Given that only 20% of the company was sold AND bought on the way down to 20p there’s a good chance that that would be still. A substantial percentage of shareholders will be holding.
I wouldn’t know the exact amount of shareholders that would make up the 3 to 4 p buy category, but would expect that to be extremely small. Less than 5%.
How about some from the Brazilian government.
https://www.bnnbloomberg.ca/lula-unveils-60-billion-plan-to-revitalize-brazilian-industry-1.2025012
May I suggest that you all re-read the RNS. After the initial revelations and headline figures, and a week of discussion here, some of the interesting content may have faded into the fog.
The key element for me is, other than the headlines, is the engagement of G Mining Services (“GMS”), a specialized mining construction and engineering firm.
They were engaged to undertake the review process, delivering the re-estimated of cost to completion and achievable schedule estimates. They seem to have completed this process using a different programme/project management approach. This has obviously exposed the weaknesses of the previous methodology, leading on to the project execution going forward being implementing with tighter more focused management using better methodologies and tools. GMS employees will be directly employed overseeing this. It seems the previous management suffered from obfuscation by their contractors and staff. They hadn’t got a clue things were going wrong until it was too late. By the new team controlling directly each work stream, with a less aggressive timeline with fewer workers, will let them identify issues earlier and mitigate them.
Using new productivity data has I believe inflated the CTC, but will prove to be a more reliable estimate.
In the long run it will provide a more secure environment to succeed.
As always they do caveat with whether they can raise the money.
Rob,
As has already been suggested, I think you need to do a bit of homework on the financial state of the company. Your calculations are flawed as dilution is regarding current shares and new shares. Maybe you need to go back school. For a start the amount needed to be raised is the $454 million but with $131 million already raised. That by simple calculation is $323 million. You could assume a similar equity:debt ratio from the original financial package of 1:2. $633 million raised of which $197 million was equity the rest debt, however, that’s unlikely, Maybe more a 2:1. I would suggest $200 million equity raise rest debt. Lets round that to £s for argument sake. There has been plenty of debate on here as to whether that can be done and at what price point. Without some underhand manipulation the raise would need to be done at at least 20p per share. So one billion new shares.
We can all read about what’s going on and cite various sources to advance our own agenda, so I’m not.
Maybe we could all agree that the market is uncontrolled and volatile, and has been for some time.
Maybe we can all agree that the demand for nickel will continue to increase over time.
Maybe we can agree to disagree how much and how fast this will be.
Maybe we can agree a baseline will be the stainless steel market.
Maybe we can agree the battery market will drive the vast majority of any increase.
Maybe we can agree the EV battery market for ‘The West’ at least currently uses nickel and cobalt in their chemistry. This could change with a change in attitudes or a new battery chemistry turns up.
Maybe we can agree that Indonesia with Chinese backing it’s attempting to control the nickel market, successfully, I may add.
This has resulted in oversupply with nickel prices hitting a recent low.
A few questions.
Will they sustain their supply over the medium to long term at the current price?
Will the LME split the nickel market into ‘clean’ and ‘dirty’?
Will governments legislate for ‘clean’?
Will there be a price difference ‘clean’ and ‘dirty’?
So what will the nickel market look like in five years?
I know this doesn’t address the Horizonte position directly but it shows some of the questions those involved will need to answer.
Maybe we can all agree the mine will be built.
Stow,
Sorry, when I used ‘ apparently’ it was with its ironical meaning. I was trying to draw out if they had any real evidence other than their bear outlook. They, as I suspected, have none. They may well have been stung previously with AIM miners and are just applying their ‘expertise’ here. Yes, there have been failures but also successes. I have no idea if a solution will be found, but I’m not willing to believe P&C. They have only talked about two scenarios, dilution and administration, both discussed at length on this board and both found to be wanting. The stakes here are too high and too many entities involved for there to be any kind of underhand deals.
P&C, I’ve given you your own thread and a chance to explain with evidence. You hove NOT.
You apparently called this correct. You absolutely have the right to air your views on any chat. However, the reason why nobody listened was the way you delivered those views. Both of you have used words like imbecile, deluded among others. When opinions are expressed with the arrogant and condescending manner you both have shown, no wonder people respond negatively towards you. I listened and seriously considered an exit. I didn’t, because neither of you presented evidence to convince me to think your views were valid. Your evidence was circumstantial at best. That weighted against the fundamentals and ‘facts’ from the company, you should understand why shareholders stayed invested.
Going forward you’ll try to make your point, but again you’ll deliver it in a way that really winds people up which makes them ignore you. That way you’ll only fail.
You have always said shareholders will be wiped out. I’d be interested in how you see this panning out. Please take this opportunity to put on record the actual mechanism you the company will use to transfer the PI assets to themselves. Illustrate this with substantive evidence that we can actually identify with that relates directly with Horizonte.