Member Info for salmonn

I seem to have lost the plot re yesterday's post, I meant to say, "I wouldn't be sorry if the RKEF route proved to be the better fit." at Vermelho.

...unlike RKEF...

Wasarunner, agree re concerns about the HPAL route. At this year's AGM I was saying to a Board member that HPAL worry's me, I wasn't contradicted. JM at the time said the Chinese HPAL plants in Indonesia, while being able to be built could not, in Brazil, be run as cheaply. As to whether the company needs a partner, I got the feeling that the experience of building out A1 using a hand picked in-house team, contractors with relevant experience and the expertise of the equipment vendors may have made them rethink whether they could perhaps go it alone, no evidence for this though. Orion have put up the money for the DFS, it would be interesting to know what they think. I have no expertise at all, but looking at the HPAL Process Flow Sheet there seems to be an awful lot that can go wrong, unlike HPAL. HZM might have to write-off some of Orion's £25 mill, HZM is a half billion dollar company, stuff happens, if circumstances change then you have to change your position. V is a massive resource, especially with regards to saprolite grades and proximity to power and roads etc. It would be cheaper to build out HPAL plants, even with matte capability than at A. I wouldn't be sorry if the HPAL route proved to be the better fit. Worth noting for the future, if at any point there were to be a geo-political crisis between China and the West, I really hope there isn't, the value of the company's product could be stratospheric. For me this is a long-term investment with a lot of potential upside whatever the route taken. Really value your input wasa, thanks.

Fulmar, re the science direct article, one of the authors, Nic Barcza is, according to Owen Bavinton, a world leading expert on electric furnaces, and an advisor for HZM. Things may have moved on since 2013, but I share your concerns.

Just to let you know I will be going to the AGM on Wednesday 24th May. For those of you with Hargeaves Lansdown accounts you can now register online click on "View Shareholder Meetings" on RHS of first page. Hope others can get along, regards.

In Indonesia, the Vale/Chinese HPAL project includes Ford as a financial backer, so as you say wasa given the high capx it will need a financial partner of some kind.

Agree wasa, a partner to put up some of the money, but I used to think it also needed a specialist HPAL company, but the options might have increased. Also the capx is OK if it came in on budget and at name plate capacity, the problem has been the cost over-runs and production failures. All of course dependent on if the reports from Indonesia are correct.

wasa, ihowells, expanding the ore resource as implied with a third line at A would align with La Mancha's stated aim of adding value to the companies it invests in by increasing capacity. So that may well be their influence here.

wasa, I think the vermelho production includes the cobalt as nickel equivalent. I've been thinking since the news on HPAL from Indonesia and the success so far of building out Aragauia using the expertise of the equipment vendors, specialist contractors and the in-house team that there might be a possibility for HZM to build an HPAL plant themselves. If HPAL is now technically easier and the company prove they can build out the A project successfully then the options available may have just expanded. Plus I like the comments about having a track record of raising money in the market and the company having a larger market cap to back that up. And of course this makes for a better T/O package.

Sorry I meant to say, on the demand side of the equation there is plenty of growth on the way

You make some good points there pp. And without a reliable supply of nickel for the long term the market is likely to be looking at non nickel substitution. It has happened before, and as you say on the supply side of the equation there is plenty of growth on the way. For me, an encouraging development, if true, is that the Chinese in Indonesia have cracked the HPAL problem. HPAL has a checkered history with projects going way over budget and not meeting production targets, put crudely, money pits. If so, it makes the Vermelho project a much more attractive investment prospect. Also given the global direction of travel, low GHG nickel and critical material sources independent of China are going to be in demand and will most likely command a price premium. As JM said recently Araguaia cost of production is currently going to be $6k verses $13k in Indonesia, so HZM FeNi is going to be very cost competitive. High nickel prices are good on the upside but not if it leads to a pivot away from the metal by the customer base.

Thanks pickpeck, great point about not moving water round the country. On that note I'm an eternal optimist, even while watching those people breaking in to the government buildings in Brasilia, not too for from Araguaia, I thought, hey it's not raining there, so the wet season is not completely wet!. And the picture book seems to show dry days, and the aerial pics at five day intervals are 50% cloud free. Re drilling Owen Bavinton said the whole district is peppered with legacy drill holes so I guess the industry have a pretty good idea where to look. The people/contractors who drilled those holes are still around and have the knowledge. I agree with regard to La Mancha, any takeover offer with a 30% premium on the current ballpark share price is not going to cut it with LM or the other IIs who paid £1.40 at the "IPO". Like us long term holders that is a lot of effort to go to for such a relatively small up-lift in value. Listening to Jeremy in the latest shareholder report, he sees the next value driver as being the permitting, issuing of the LP, Preliminary Licence and the Feasibility Study for Vermelho. Which Orion have funded to the tune of $25mn, so presumably they are going to want to see a return on that money. Yes, the next two years are going to be interesting.

pickedpeck, like your posts, and others here, you know who you are, thanks. I thought I might add a bit of background which might be useful. In no particular order. Whenever Jeremy mentions Araguaia North, acquired from Glencore/Xtrata he says, "within trucking distance of Vermelho and Araguaia South. I don't know for certain but the logic is, the top layer of low grade limonite is suitable for the HPAL process at Vermelho, and the high grade lower strata of transition and saprolite for RKEF at the southern plant. Trucking is maybe lower cost than building new infrastructure and plant in a more isolated area of A north. Having said that there are options, it is a nice dilemma! Re the HPAL plant. Looking at the process flow sheet in comparison to RKEF its only common feature seems to be the nickel. HPAL is more technically challenging and would probably take longer. On the plus side Orion have put up $25mn for the FS and they will not get a cent back if it is not built or sold, as others say, in a take over. So whatever the time line V is going to add value, potentially a lot of value, the nickel in the ground there is massive. Re the land bank generally, the La Mancha business model is stated, to be to partner with mining juniors and provide expertise to improve ESG credentials, increase the ore assets by extra exploration, whilst not worrying about fluctuations in the share price in the short and medium term. Long term they expect the above to achieve multiples of their initial investment. Re HZM, La Mancha is not dealing with its usual small gold explorer who has never heard of ESG, HZM were way ahead even before LM looked at the company. But I suspect that with a board member LM are keen for further exploration to increase the ore profile. As for Glencore or a take-over I am interested in what others have to say, I have not a clue, except it should add value in the short term, even if it is at the expense of "jam tomorrow". BW

340k shares

I don't know enough to comment on the bond issue. But my take on La Mancha is, they have stated that they buy into miners for the medium term, say five years for example, they are not concerned about short-term fluctuations in the SP, and would not put pressure on management about that and they are looking for multiple uplift on their initial investment. My opinion is L M are looking to V. to make them their optimum return, based on the fact that V. was not (and is still not) priced into the share of the equity LM purchased, so any V upside is pure profit for them. And to get that they need to support the BoD in the project for the medium to long term. So they appear to be aligned with the interests of the PIs atm. Caveat being I've always said these guys including O and G are best seen as "frenemies". I have to say, Vincent Benoit was at the AGM where as the Teck Board Members never attended, if that means anything.

sorry I can't make this work properly. If you highlight the whole line and copy and paste it into the browser it will show the Araguaia site pre-construction.

https://www.google.com/maps/@-7.987805,-49.4194574,1576m/data=!3m1!1e3

https://www.google.com/maps/@-7.987805,-49.4194574,1576m/data=!3m1!1e3

Nthoftheriver, great point about building in some flexibility into the schedule, I nearly got to ask Jeremy about how tight the dead-lines were at the AGM but ran out of time. I would add that COPA are probably used to working in the rain, which should be helpful. Re HPAL, they have a reputation for going over budget and failing to deliver optimal production. HZM need a partner with a proven track record and a deal where the risk is not owned by the company. Sumitomo's Coral Bay is an example of best practice for instance and a partnership they had with Vale has just fallen through. But there are bound to be other options as well of an equally viable nature. craigieboy1, HZM have only ever used Tier one contractors, good point.

pickedpeck, thanks for your information re the company's view on the resource, very enlightening. Just to add to that, I remember Owen B saying the whole district is peppered with historical drill holes from various prospectors. So there may well be more knowledge at an informal level of what is there.