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This is the fallacy you see. The risk is a lot lower than 6.5p. If they have any delays with construction then debt will hang over them like the grim reaper, Orion get 15% interest on their convertible in the case of any default - not that they tell us what constitutes as a default... look at something like Metals Exploration PLC or Petra Diamonds to see what can happen in that situation.

People see 7p placing price as some kind of line in the sand for the share price, in reality it's nothing of the sort. 7p a share is what it cost for Glencore, Orion, La Mancha & a syndicate of banks to take control of the future of Araguia. Glencore have now got a guaranteed source of Nickel out to ~2035, do you think they care who operates the mine during that time?

Glad that my post was useful to some - I did the calcs and felt it worth sharing...

The other critical element I didn't mention in my first post was the 10 year 100% Glencore offtake agreement. The specific terms of this are now vital to any potential upside. Given that HZM stated the offtake was a 'key requirement of the lenders', I think you have to assume that it includes some level of Nickel floor price that will be guaranteed to HZM, otherwise it wouldn't provide much assurance. The problem with an offtake agreement that includes a floor price is that it'll almost certainly also have a ceiling price.

If the ceiling price is $24k (which would be realistic or even optimistic given it's 20% above the current 7 year high & the terms will have been worked on over the last few months when the price has been in the $16-20k range) then any Nickel upside is completely capped. Sure, HZM may have wanted the Wood MacKenzie long term forecast of $26,450, but why would Glencore agree to that given their lynchpin negotiating position? The fact terms aren't disclosed makes me think the actual ceiling could be significantly lower. Speculation yes, however in the context of the rest of the deal it makes sense.

Somewhat back of a fag packet, however I'm not at all convinced on the investment case here post last nights financing. A great achievement for an AIM company, but at what cost? Surely an equity JV with a major would have been far more attractive?

Some of the Orion elements appear punitive, particularly the 11.75% interest on the $65m loan notes & requirement for the convertible note principal to be repaid in quarterly cash instalments, 'subject to their being cash available for distribution'. They've set the gauntlet and HZM appear to be at the mercy of significant risk over the next few years.

Year 1-4 cash flow has to be a concern, look at section 22.5 of the DFS, table 22.7 in particular. https://horizonteminerals.com/news/20210401_HZM-Araguaia-Project-NI-43-101.pdf

Revenue in years 1-4 is just $171m with operating costs of $83m, add in tranche A+B financing costs of ~$15-20m per annum PLUS convertible loan cash payments of $7.6m per annum PLUS say $25m per annum of ongoing CAPEX and where is your free cash flow? Even if the mine is built to plan and Nickel production starts by the mid 2023 (absolute best case IMO), you're looking at year 5 in 2028 before they become cash flow positive. Note that the DFS was done with the assumption that the project would be 100% equity funded, so no financing costs were considered.

Yes, the DFS was based on $14k Nickel prices vs the $20k today, however cumulative Nickel sales in years 1-4 are just under 9000t, so even factoring in an average sales price of $20k adds just $54m cash flow in the period - enough to service some of the the debt interest but nothing more. Sure, Nickel could average $25k over the period, but unless it's double the current 7 year high it's never going to be enough to contribute to Vermelho...

Any slip up in execution and I suspect that Orion, Glencore, La Mancha and the bank syndicate will be all over this. Good luck to all shareholders that remain, there is potential upside but it all rests on long term sky high Nickel prices, there is minimal margin of safety.

@SharketMare, yes exactly that. The current resource size is 14.5mt which supports an 8.1 year mine life. So the idea is the scoping study would upgrade the resource size to say 22.5mt and the increase of 8mt would result in 4-5 years of additional mining material.

Totally agree re. being cautious with Spodumene prices and I would be surprised if they used anything beyond $1000. This video from September which is well worth a watch; https://www.youtube.com/watch?v=MaWAPtw5zeA

The Cannacord analyst had upped his long term spod price at $750, an increase from the previous $600, however the emphasis was very much that nobody has a clue where the price will be in 2030. Even $750 with a 4 year mine life increase would add $200m to ALL's share of NPV and take Ewoyaa as a whole to just shy of $1b pre tax.

I'll see what else I can find from peers, but my gut feel would be that they'll go for the upper end of the $750-1000 range.

It'll certainly be re-rate time once the upgraded scoping study lands! In Friday's Liberum broker note it was stated that they expect a revised resource estimate & NPV / IRR in the 'coming weeks'. We know that Vince is doing another Proactive presentation on 7th Dec, so I presume it's going to land sometime between now and then.

If mine life is increased to 12 years from the current 8, this would add ~$160m to the project NPV. However, the real NPV catalyst is what long term spodumene price they use. The Jan study assumed $650 as a long term level, however we know that prices have rocketed since then and are currently up around $2400 (fastmarkets). What price will they use? My punt would be that they'll go for a round $1000, which is prudent but will still transform the Ewoyaa NPV. It would also leave room to further upgrade the price post next years exploration work should Spodumene prices rise further.

As a reminder for any newbies, the company has previously guided that each $25 increase in the spodumene price adds around $60m to project NPV... so using $1000 instead of $650 would add an incremental $840m.

So in summary, if the scoping study adds an extra 4 years to the mine life & updates the spod price to $1000 from $650, the combined NPV impact will be around $1b. Given ALL own half of Ewoyaa assuming Piedmont complete their $102m earn in, that would equate to $500m for ALL itself. Even adding 20% of that to the ALL market cap would put the share price at 40p...

It's no wonder industry experts are amazed by the apparent misvaluation here; https://twitter.com/LithiumIonBull/status/1461693416862060548

"Quite astonishing how much @PiedmontLithium 50% partner @aim_irr has lagged @SayonaMining & broader #lithium rally."

The bottom won't be reached today, I see a double bottom of the 2016 low at around 40p as the most likely outcome. Hard luck to existing holders...

Nope. It’s just a dividend that’s paid in shares rather than cash, all that happens is the share price is marked down before open commensurate with the dividend amount.

Some think this will be 12.5% to reflect the 1 for 8 split, or you could argue that as Ricca is being valued at A$7m in the rights offer, that’s what it was valued at in the IRR price, which would be about 1p / 4%.

We’ll know come Monday morning.

Teddy, the purpose of renaming the company Atlantic Lithium is to signal where the lithium will be going... worth watching this video again; https://www.youtube.com/watch?v=8hKWXabXfCQ

At 2.14 Vince confirms that the project was 'hotly contested by Lithium players globally', in subsequent media we've also heard Keith Phillips of Piedmont confirm that the Chinese were interested. He then goes on to say that what they liked about Piedmont was 'their vision, American status, established relationship with Tesla & other American automakers, and that effectively made the decision for us'. He also states that it was important that Eyoyaa will form a fundamental part of the Piedmont business model, as we've seen from their PR / presentations since.

It's been obvious for a while now that China have been on a landgrab, led by Gangfeng & CATL. BCN shareholders have suffered at the hands of Gangfeng's derisory low ball offer but that was ultimately the fault of BCN management for allowing them to gain a controlling 29% stake in the company. IRR have zero reason to want Chinese involvement and I think the odds of that happening are close to zero, the top 4 shareholders + management team holder ~52% of shares so can control their own destiny.

Also Vince will know he won't get another chance to take a company from explorer to producer, and if we're producing and earning EBITDA of >$100m per annum, £1 a share will seen cheap. Medium term I think PLL will buy the rest but it'll be at greater than £2 a share.

This is a unique project - super rare to get a high grade DMS resource this close to a port, with road and power on tap!

This has to be in the top 10 worst AIM placings of 2021.

- Why have they raised such a paltry amount vs the market cap?

- If you’re going to raise such a small amount, why the 10% discount?! Could understand if it was £30-50m…

The conclusion has to be that no institutional players had any interest in investing at the current price level. The primary bid offer was priced so low to tempt PI’s, without which they may have had to reduce the price further to get II interest.

Bottom line - they’ve raised below the year low, at the lowest price since August 2020, not what you want to see from a relatively new CEO.

The difference between this & the wine society is that Naked support new winemakers in getting started, rather than only buying wine from existing suppliers. The purpose of signing up as an 'Angel' and subscribing £25 per month is to support their strategy of enabling new producers to start up or expand, the £25 goes onto your account as credit and then when you want to buy something you just use the cash in your account. If you want the cash back then you get a refund, so it's not as if they are taking a direct debit from you...

I think their business model is very good, however what I don't like about them is their comms style. I agree about a lack of transparency in their marketing practices, if they changed tack to focus on supporting the wine industry instead of how cheap your first 6 bottles of wine are then I think they would do a lot better with retention. Less new customer spend and higher retention of the ones that do sign up, but a slower growth rate.

Bottom line is that the repeat customer cohort is very profitable, standstill EBITDA is £37m per annum and they have a very solid balance sheet. I'll listen in to the call at 2pm, my gut feeling is this will go lower in the next 6 months / until they show incremental growth on top of the pandemic numbers.

What’s lousy about the business model?

It should drop by the value of the cash they are spinning off to Ricca - so $7m / £5m or less than 1p per share. The argument being that the market cap is already covered by the Lithium assets (it most certainly is IMO) and so the gold has no current value. It could well be that the ex div drop is absorbed by the spread...

I really can't wait for the updated scoping study to land - another 5 years on the mine life would add ~$200m to the Ewoyaa NPV (using the massively discounted Spodumene price of $650). This would be net $100m NPV to IRR / ALL which is worth around 12p per share...

I suspect they'll up the Spodumene price used to somewhere between $900-$1200 which will take the NPV through the roof. Every $25 increase in Spod price adds ~$60m to the NPV.... I'll leave others to do the maths here.

In the words of Keith Phillips of Piedmont, 'the numbers are going to be fantastic, this is a really special project'.

It’s pure filth, I couldn’t believe my eyes when I read the prospectus. Also interesting that it was available for trading on HL this morning but seemed to get removed halfway through the day…

Great to see a rise up. I'm frankly amazed at the opportunity still on offer here. Making money in investing isn't easy, nor is it supposed to be, IMO the Ricca situation is an inevitable part of investing life - if you want the biggest rewards you often have to go out of your way to get them. Vince confirmed last night that anyone holding shares at the record date will receive a share certificate & will be able to get their rights issue shares, he said you could contact IRR directly to get help.

As for valuation, I think an awful lot of it is down to the wider market perception that we are still an explorer. There are hardly any posts on here or ADVFN, nor on Twitter. The biggest thing on the call last night was Vince stating they want Eyoyaa to be in production by 2023, which again is well ahead of market expectations...

Between now and then we'll likely have several updated scoping studies, a PFS and a DFS, all of which should reaffirm the amazing project economics. Once we get to DFS, the share price should reflect the potential far better than now. No point putting a number of where it could be because there are too many factors at play, however with EBITDA at $105m per annum on Spod prices of $650, it should be multiples higher than present. Could we even see dividends as early as 2024 if Spod prices remain anywhere near current levels?

Already at nearly £50m market cap, £68m if you include the 50% dilution from pending warrants & management options.

They have £2.4m cash to fund projects all around the world that are early, early stage. The recycling business is interesting, but why is only 49% owned by TM1 when the CEO set it up?!

Here is the prospectus for anyone that can't find it on the TM1 website (it's not there for me);

https://data.fca.org.uk/artefacts/NSM/Portal/NI-000036963/NI-000036963.pdf

Management fees total around £500k per annum...

This is a great gig for anyone that CLN's at 1.5p in the summer, even better for those that owned shares in Emperium. It takes money to make money...

Ha, I hadn't spotted the 'pending approval' acquisition in the admission doc. Another skeleton in the closet...

Also from P246;

"The Locked-in Parties have entered into a lock-in deed dated 30 November 2020 with
the Company and Optiva in respect of their aggregate holding of 33,696,132 Ordinary
Shares, representing 45.08 per cent, of the Enlarged Share Capital, and the additional
9,350,000 Ordinary Shares which will be issued to them on completion of the
Acquisition. Under the deed they have each undertaken to the Company and Optiva not
to dispose, other than in accordance with the terms of the deed, of any interest in (a)
during the six months immediately following Admission"

So the 6 month lock in ended on 30th May when the share price sat at 92p...

Just 7 trading days later a Telegraph article is released that ramps the share price to £1.60.

Ever since the share price has been in freefall.

What a *****ng coincidence! In my opinion this is a very well polished turd, the lack of any pre feasibility study just adds to the evidence.

Tradegate continuing to rise into the evening, now at €0.074 / 6.3p, so pretty much at the days high.

Today’s trading was a carbon copy of AFC Energy when it announced its partnership with ABB in Dec 20, shook out the weak hands on day 1 and then gapped up 3 days in a row, suspect the same thing will happen here - especially with today being a Friday…

Commenting on the deal with Linde she said the deal "validates the technology."

"The fact that Linde want to work with me means that they believe that this works."

I've always been a sceptic of the market cap, however when Linde get involved you know the technology is the real deal.

Suspect that this retests the 2020 highs in the next few days - particularly with many traders already in significant profit from Velocys. Long term it could go anywhere.