@Geng, as you will be will aware this share has very positive sentiment at present and rightly so. Any fall of even 5% will be bought up in a flash, so your talk of a 26% fall ‘in the next few days’ to fill a gap that was created by company changing news is ludicrous.
If there was no news between now and Christmas then you might hit your target, but I highly doubt this will be the case! It must annoy you when news gets in the way?
Top question MJB, and something I’ve also been pondering. I’ve not done extensive research and there aren’t many independent listed comparatives moreover, to be truly comparable they would need to be at the same stage of the development cycle.
However, Solgolds Copper Gold project in Ecuador is probably best benchmark as it is ‘World Class’, based in South America, and has completed a PEA so has a project NPV.
In summary, Solgold have the following fundamentals (taken from their latest annual report)
NPV of between $4.1 - $4.5b (based on copper price of $3.30, gold of $1300). Taking the mid point of $4.3m equates to an NPV of £3.5b at current fx rates.
Cash balance at 30/06 - $42m
Current market cap £439m, but this is at a year low having been as high as £800m in the last year.
That leaves a current enterprise value of just over £400m, versus the NPV of £3.5b. So their market cap is 11.4% of NPV at current values, having been over 20% in recent times.
Comparing this to the $1.5b/£1.2b NPV for Araguaia
HZM has a current market cap of £71m
Cash of £24m
So an enterprise value of just £47m versus the NPV of £1.2b, meaning HZM is valued at just 3.9% of the Araguaia NPV.
So based on the above high level analysis, HZM is significantly undervalued, especially as it has two Tier 1, “world class” assets, plus Serra do Tapo.
Finally, I found the below presentation about what makes a deposit Tier 1/world class very interesting (quoted in the footnotes of Solgolds annual report). Its also worth noting that the recent Serra do Tapo discovery only just falls short of the world class category (>1mt for Nickel deposits, page 57 of the presentation).
The bid was pushed up to 5.13 at around 9am (I had a live quote), presumably to fill the delayed 600k buy order as the MM’s were short? The highest trade of the day was 5.14, so this is very irregular behaviour.
A handful of sells came through, but nothing significant, yet they close with the bid back to 4.7 (actual was 4.87). Overall, even assuming that everything aboveboard 5.10 was a sell (in line with my theory), there were still 1.6m more buys than sells today.
There are definitely games going on here, lots of big buys at 5p throughout the day with no sign of a move up, bid set falsely low to reduce volume etc. It feels to me as though market makers want to discourage any new buyers - I wonder why?!
Joey, you are a wind up merchant and everyone can see it. Unless bad news is released, you aren’t getting 4.1p. It’s as simple as that really! Every time the price dips below 4.7p there is huge buying, I’ve rarely seen strength like it.
Some top posts tonight, thanks all!
Thought it was worth exploring the potential impact of the debt/equity raise required to get Araguaia going;
Total funding needed; $443m
Funded by 65% debt, 35% equity, as per several statements by JM.
$443m * 0.65 = $287m of debt, leaving $156m of equity.
Equity dilution of $156m @ an exchange rate of 1.25, would equal £125m of dilution.
For arguments sake, assume the HZM market cap is equal to today’s £70m when the transaction takes place. The total equity after the £125m raise would be £195m, the original shareholders would therefore own 35.9% of the new total shares in issue.
Crucially though, this would unlock the full value of Araguaia, and so our market cap should theoretically re-rate to be valued at the NPV of future cash flows.
The NPV of the Araguia project assuming 100% ownership and $18000/t nickel price is $885m, again assuming 1.25 exchange rate this gives it an NPV of £708m.
£708m *0.368 = £254m value to original equity holders. This equates to 17.5p per share.
So even in a pretty negative scenario, current shareholders would see a 3.5 x return. And this completely ignores stage 2 of Araguia & Vermelho.
If the equity raise is done at the equivalent of 10p (as per JM this was the value of the Orion deal), current shareholders would retain 52.8% ownership in the new market cap, worth £373m, or 25.8p per share.
All pie in the sky for now, but look at the history of Solgold before dismissing the chance of us being there this time next year :)
“Taking these matters together, the Board now confirms that profit before tax will significantly exceed current market expectations of £20.0 million.
The Group will announce its Interim Results for the six months ended 30 June 2019 ('H1-2019') on Tuesday, 10 September 2019. A presentation for analysts will be held on the day of results at 9.30 a.m. at the offices of Buchanan, 107 Cheapside, London EC2V 6DN.”
Geng, the below quote is one of the stupidest I’ve seen in my time here!
“That 25 million isn't an asset - its there to be spent getting to production so you can't really count it into the SP valuation, all its done is remove the immediate need for finance.”
So cash isn’t an asset then? That is borderline insanity.
You claim to have sold at 5.20 and kept half, this appears to be a complete lie based on your attitude. I’ll bet that you actually sold at 3p a few days before the RNS and have been trying to convince yourself & others ever since that it will ‘fill the gap’. You seem bitter and jealous.
Question; what would the market cap be if HZM had raised $25m by issuing shares at 3.3p? They had 1,446m shares in issue before the Orion RNS @0.033p each, a cap of £47.7m.
$25m/1.22 = £20.5m raise
£20.5m/0.033 = 621m shares issued
New shares in issue 1,446m + 621m = 2,066m
2,066m * 0.033 = £68.2m
Market cap tonight = £67.3m
Most AIM explorers would have raised cash this way, diluting existing shareholders to hell. Not the case here.
The share price may go back to 3.5, but only if there is a long period with no news, I.E. the PFS isn’t released until November etc. Otherwise each time it dips back to 4.5, myself along with hundreds of other PI’s are going to top up, and you’ll get a rebound like we saw on Tuesday.
Top work putting it all together Fulmar29. It’s a real win win for Indonesia, so I fully expect it to be confirmed today.
Ps. 16m volume already today, almost 10% of the company traded since Thursday morning. I’d say there is far more chance of 6.10 by Friday than 4.10 given the incessant demand for shares.
The clue is in the name of the fund; “discretionary clients”. These are nominee shares held on behalf of individuals (I’m fairly sure they are related to the TSX placings that took place in 2014 & 15 at prices of 6p and 1p. Some have decided to take profits or almost break even as is there choice!
@Joey2000, out of interest did you buy back in here or are you still waiting for your entry at 4.10?
I agree that commodity volatility and associated risk is a valid point for miners, but oil also falls into this category, especially when you are talking about a £10m market cap company based in Tanzania! I know which one I’d rather be invested in.
I thought it would be interesting to analyse all historic placings prior to yesterday’s transformational news to put things into context - what a journey HZM have been on to reach this point! https://horizonteminerals.com/news/2010-07-27_reverse_takeover.pdf - Araguaia acquisition from Teck - raised £5.1m @10p - 51m Shares https://horizonteminerals.com/news/2011-02-04_capital_raise.pdf£8.25m raised @ 25p - 33m Shares https://horizonteminerals.com/news/2012-06-13_placing.pdf£5.2m raised at 7.25p - 71m Shares https://horizonteminerals.com/news/2013-06-11_private_placement.pdf£7.3m raised at 7.5p - 97m Shares https://horizonteminerals.com/news/2014-07-31_closing_of_placing.pdf£6m raised at 6.2p - 96m Shares https://horizonteminerals.com/news/20151002_private_placement.pdf£1.55m raised at 1p - 155m Shares https://horizonteminerals.com/news/20161101_horizonte_placing___9m.pdf£9m raised at 2p - 450m Shares https://horizonteminerals.com/uk/en/press-releases/2017/vermelho-acquisition-and-placing/£8.5m raised at 3.5p for Vermelho purchase - 243m shares https://horizonteminerals.com/uk/en/press-releases/2019/royalty-funding-agreement/$25m non dilutive funding raised! So over the course of 9 years there were:- 8 placings- Raised a total of £50.9m- 1,196,000,000 shares issued @ an average price of 4.25p- Interesting to note that the vast majority of cash was raised much higher share prices than today;First 5 placings raised £31.85m via 348m shares issued @ an average price of 9.15p Last 3 placings raised £19m via 848m shares issued @ an average price of 2.24pIn conclusion, this shows what an incredible effort has been undertaken to reach yesterday’s RNS, and how fantastic it is to receive around £20.5m of non dilutive funding. It also shows the importance of timing; 5 placings and much progress was made before the Nickel price slumped in late 2014. Even so, it’s taken another 4 years of hard slog to reach yesterday’s milestone. When the significance of yesterday’s news sinks in, combined with the explosive rise in Nickel, the share price won’t be at 5p. The big question is; how high can Horizonte go?
No humble pie due at present, they may have hit their events target for the year but as they are only trading in line with expectations you have to assume that revenue per event is well below their budget? Also, LVCG have always been uber positive in RNS announcements, it’s the financials that let them down. Interested to see the interims on 30th September...
Once and for all Ciclitera has proved that he is only out for himself, his ego must be enormous to even contemplate hijacking what should be a positive RNS with something so ridiculous! He rightly came in for severe criticism for taking a £503k salary in a year where LVCG placed twice with a third placing this Feb. He eventually backtracked on gifting himself another 1m shares, yet here he goes again taking £36k per annum for using his property as an office. Who knows what he’ll make from the Italian property. This company is loss making and has seen it share price decline by nearly 50% since the results were announced!
For the poster below saying he hopes it doesn’t become a lifestyle company, it already is - it’s a reincarnation of Parallel Media. The business model has been more successful, but you’re kidding yourself if you think it’s being run with shareholders interests at heart. This is a business run by Ciclitera for Ciclitera, if there was ever a doubt it was extinguished today. 30p coming when the next results show the business remains loss making.