Member Info for velcrofajita

Hi oldspursfan

Yes clear we all want this to be sold. Why the listing comment in the RNS, this made me guessing that maybe it is the alternative which EUA are now throwing at potentially interested parties to try and get a better deal done?

Has anyone considered that the company may be in the process of re-domiciling to another jurisdiction which has good or at least neutral relations with Russia, ahead of a listing to for example on the Moscow stock exchange.

In the group I used to work for we had a very significant Russian business under a separate holding company in the EU, which was successfully re-domiclied to Qatar, prior to selling the entire business. In Qatar for example they have no issue to receive dividends from Russia into local bank accounts.

In the RNS and trade finance loan there is language about listing on another recognised exchange so clearly this scenario is under serious discussion and may be the alternative if a sale is not secured at a reasonable price. With such a listing, IPO, significant funds could be raised from what the Russians deem "friendly" jurisdiction investors as part of a package to ramp up WK mining operations and start with the construction of MT / NKT

In the end all that we are doing is guess work, but within that also the possible scenarios of how this could be a viable business or sale opportunity, outside of today's dark geo-political clouds

As for any comments coming back to me that I am a ramper, talking rubbish and so on which turns this chat board into a zoo, i frankly don't give a damn.

I expect the difficulty is the get the Export Credit financing providers to agree to the restructuring package. If i remember it is Denmark and or Finland and they are probably the first that got spooked by market cycles and the China-Indonesia tie up. The cornerstone investors will not move until this gets sorted and the secured lenders agree to restructuring so that funding could be put in place to complete. Now with administration nobody can set on the fence anymore, looking at the other to move first.

Maybe playing a game to get protection such as tariffs/environmental standards for Nickel production so that they have a stronger competitive position vs Chine-Indonesia?

If the West introduces ESG criteria for nickel sourcing, all the way through the value chain, this will either stop Indonesian Nickel production coming to the west or drive up their costs as they have to conform to minimum standards.

I personally find it a joke that we talk about the Green revolution and then the Nickel in EV batteries is sourced from coal fired smelters in Indonesia.

Https://www.arabnews.com/node/2502541/business-economy

Administration seems to have been the best possible option for HZM. Not sure or hopeful that there will be any recovery for shareholders or a way to fund construction with existing lenders/cornerstone investors , but geopolitics are giving the administrators a much better chance;

1. There was the ban on Russian Nickel, so this source of supply is gone for the West

2. Then there is the hike in tariffs by the US on critical minerals and EV's from China. The big debate is if Europe will follow, but anyhow this starts a trade war that could mean more EV production in US/Europe and less availability of Nickel from China funded Indonesian Nickel smelters

3. The situation in New Caledonia is a reminder to all how political risks can curtail the supply of critical minerals

The strong recovery in the Nickel price, driven by above factors and improving global economic sentiment, should force a rethink about development in Tier 1 projects outside of Indonesia and Chinese interests. This certainly makes HZM assets more attractive and helps the administrator in either getting a higher price on sale of assets or getting a financing (debt and equity) deal done.

If i was in the position of secured lenders, who have the first take in administration I would probably tend towards geting this mine constructed (and moving consecutively to 2nd production line) rather than recovery through sale of assets out of administration, with many vultures circling.

I am talking from first hand experience on production assets in Russia. The information we get is as i mentioned in my post and as a company we have adjusted to this environment by re-domiciliation.

I have no benefit nor need to scaremonger. I invested £100k in this and losing big time, so i would love to see EUA do well.

Just wanted to share info on the significant restrictions faced by EUA in selling its Russian assets

1. UK is one of many countries considered as hostile by Russia

2. For sale of Russian assets by an entity from a hostile country, special permission must be obtained from relevant Russian ministry

3. The permission would require the sale to be at 50% of the assessed market value of the assets and then from that 10% has to go as a donation to the Russian budget

4. No person holding a passport from UK/EU/EEA could sign off a resolution authorising sale of the Russian subsidiary if attached to that are warranties or other security requirements. This would be contrary to sanctions in force

Unless EUA can somehow get an exemption from the Russian rules, then sale s just not feasible. Maybe company needs to be re-domicilied to a jurisdiction that is total neutral, not hostile for Russia and not sanctioned by the West. Qatar or Abhu Dhabi come to mind. Alternatively EUA has to construct and mine itself with key partners

Then reality is that if the Russians want to nationlalise this then not much can be done under any structure. Key therefore is that management and key shareholders are ok with Russian leadership.

My thoughts on this one remain that it is an enticing longer term investment story

Near term there is ARG1 for which the financing has been raised and capital increases done. ARG 1 is the driver for HZM to grow as an independent mining company. The share price will re-rate where we come to succesfull production ramp and cash flow generation which we will know in 12 months time, but if one wates until then probably you have to pay say 50% more for shares.

Then medium term we add ARG2 on top and that is with much lower capex / funding as it is an add on line with some key equipment already secured. This will really start to drive the cash flow and value creation. Who knows about ARG3 thereafter

We also then have the separate resource VM. With the forecast Nickel demand from EV, my thinking is that the 42k tonne larger project as per the Vale work will end up being the one done. That is to much for HMZ to swallow so they sell 49% of the resource to a mining major and develop VM together on fast track, with the sales proceeds financing the majority of HZM funding cost share.

The above path will lead to huge value creation, multiples from where we are today. They key is succesfull start and ramp up on ARG1 to prove that HZM can mine profitably

I am also very enthusiastic on the prospects of HZM. Although I could not participate in the capital raising's, I used the opportunity to more than double my holding at prices well below £1. More than start of phase 1 ARG, I am looking forward to phase 2 ARG which significantly increases annual production but at a fraction of the cost. More so, some key equipment is already purchased and funded

I do believe that the SP will follow that of ASX listed Nickel Industries as the production across the various phases builds up. There can be a re-rating in multiples over the next years for those that take a long term view, like the institutional investors have done.

That position definitely respected, many will not touch a mining share while there is no mining license.

I have risk for higher long term return. In my case i see that MDA is coming and that financing will follow. This may not be what actually happens

I have topped up with another 100,000 shares.

Short term this placing has dragged down the share price but I see many positives from this;
1. Funding needed to pay for mining licence/surface rights. The implication is that the MDA is coming up
2. Funding to get Hypromag German plant moving ahead, linked with increasing share in Hypromag Germany to 66%. Very positive for the long term

I see it very unlikely that the company will not get the financing package for development of the Songwe mine. There is a huge focus in the West to become independent of China of RE materials, enough that I can see government guarantees to Lenders.

If there is something interesting in the Rutile deposits, probably sale of the resource to Soverign (or license out) would be the best way to obtain any value from this.

Fulmar/Picked, totally agree with your assessments and m aware about the very large additional highly prospective exploration areas. I was looking for market cap £1.5-£2 billion in 3 years, but it could be a further multiple of that if there is significant production expansion. I am always comparing back to Equinox Copper in Zambia that was finally acquired by Barrick for A$7 billion.

If I may ask, what are your targets on HZM, long term hold to realise all these future potential benefits?

MKA is so undervalued, under the radar that it is a screaming long term buy. There have been some important developments at the start of 2023 (Songwe environmental approval, CoTec investment and Malawi professionally progressing MDA regime) but there is allot more to come.

Putting aside the rear earth mining in Malawi there is a huge potential licencing business for the magnetic material recycling. The company will have a number of its own plants but I can also see the model expanding rapidly into licecing of 3rd party production in Europe and the US. This will mean little capital requirement and a stead/growing revenue stream from licencing.

I have now invested about £150k in this (across both UK and Canada listings). I am looking at minimum holding period of 3 years, so one for the long term. If anything I actually hope share price does nothing for a few more months so that I can slowly accumulate more.

There is no Nickel producer with the potential scale of HZM, that has a market cap below £1.5-£2bn. Nickel Industries is one of the very few comparable to HZM and that is trading at around A$3bn. With VMH I personally feel HZM is better but that is a moot point, although we should keep in mind that VMH was started as VALE flagship Nickel project so there is a huge quality resource there and future expansion possibility from current reduced scale development.

If all goes to plan (and here is the risk) then HZM could be trading at a 4-5x multiple of today's SP in 3 years. For me the risk is well worth the reward and I am now holding 240,000 UK listed shares. The day to day price movements dont concern me at all as I am here for the longer term.

Yes there are still many risks, but I am beginning to feel that MKA is a grossly undervalued and represents a rare opportunity to get into a strategic mining / recycling share that may re-rate multiple times over the next years

Absolutely there will be dilution along the way but that new equity is what will get this going. Maybe not an interesting one for short term traders, but personally that is not something that I get involved in.

I am here for the next 3 years for sure, after that will see. That is if we re not bought out before that

I am involved in Russia for my employer, who has not been able to sell out. Now decisions have been taken to provide subsidised loans in Rubles to promote export projects and critical investments. The effective loan interest is cut by more than half.

Possibly any interested party to acquire EUA assets has been waiting for this as it will make a huge difference to the return on investment.

I picked up another 50,000 shares this morning

Have not posted for a while.

I am not expecting an asset sale any time soon. M&A activity in Russia is on ice and any deals happening at very low valuations as the vultures circle to pick up good assets for nothing.

I am at 80% loss so for me not much else to do than sit on the shares and see what develops. Company can maximise cash flow from WK and consider mining the resources itself vs waiting for a change in the political/economic situation that may make sale viable again.

In my full time job, I have had to deal with my employers production plants in Russia. Sale at a decent price is just not there so the plants need to be operated, expanded and run for cash generation. Same considerations for EUA