Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
So - we have Theorist 30p-50p in a few years....nothing guaranteed..... and billyr 30p-50p in the next few minutes take your bets ladies and gents etc.etc. the horses have left the gates and HZM is frontrunner.
My view is something inbetween. The first news and next news isn't going to be good, it's going to be a shedload of dosh needed with perhaps hints at options to finance it, perhaps not at that stage. So I definitely don't expect 'good news imminently'.
Then we need the management team to earn their bread and having had 4-6-8 weeks from when they were already no doubt talking to the senior stakeholders as the bombshell landed, deliver us something that (fingers crossed) keeps us with existing shareholdings in the game.
I expect the latter announcements relatively shortly after the funding needed, maybe 2-3 weeks. And probably all to happen in November. It is simply unsustainable for the company to continue building the mine longer term with a large funding shortfall which isn't understood, documented, and resolved - anything else and you can't have 1000s of contractors on site working with no clarity of when or if that suddenly stops. So for my money this all gets wrapped up in November or failing that first couple of weeks in December. It's exciting, but sadly for all the wrong reasons.....unless you're a new punter at the races and like billy's odds he's offering.
Bebeto, this might be true but here we aren't talking about about firat tranche financing on a go/no go decision to build a mine. If we were, Horizonte might today struggle to raise the $630m or $700m required to get the project off the ground (the amount they already raised).
No we are talking about Orion and La Mancha saving their existing $200-250m invedtment to date, and completing a mine which might already be c. 75% built. I would say the odds of Horizonte not being able to finance the rest are minimal, however, the million dollar question remains what does that do to (our) existing equity.....
It is a disadvantage at the moment that Horizonte have to solve this problem and only have Araguaia to play with. The obvious solution here would be to sell something of Vermelho to help get this funding sorted but it isn't worth anything yet, or rather, it isn't worth anything like it could be worth so that makes no economic sense right now. It's always the big risk with a junior developing its first mine that the options are very limited if it runs into cost issue and it has to be solved with current shareholders.
Hi Strow - maybe 40% of my shares are in SIPP and I turn 50 will be able to access the money in around 7 years. That is my timeframe (from now) on that portion of the investment and like you, I envisaged dividends, further mine development (Vermelho) etc.etc. It was always my intention to hold some of these stocks through the energy transition because, in time, we obviously hope nickel $25k/t and $30k/t and not the current pricing.
Right now this is a big setback but we should (and I say should as I don't know the $ needed or the precise options available to get them) get through it and the investment will still be worth, hopefully, a lot more than we paid for it. When the news broke I decided I can absolutely live with 50% of my envisaged return, and if it is 33% then so be it. For reference my goals were around £4.50 with Araguaia 2 producing which for me was my first planned exit point. Of course, if Horizonte delivers vermelho that should all add to the eventual valuation. Now for me 50% looks like ~£2+ and 33% looks like £1.50. For the SIPP and if we stay independent I hope for more but still feel a T/O somewhere around A1 producing is more likely.
My estimates may be pessimistic or optimistic we don't know until we see the finance package. But I do think this latest setback could have halved the eventual value of this investment, which is a shame, but it happens.
If I'm even remotely right though 16p is the bargain of the century to be buying though. GLA
Strow yes.I expect it impacts debt payback. But - they will be talking to the banks and negotiating that part for sure. It isn't lost from the npv but it does impact medium term cashflow.
Fwiw I think it will get financed at some dilution - exactly what remains to be seen but 16p is ridiculous imo and will not be the sp for long after finance.
Strow welcome! These are my 2 reasons for believing the funding required is > $100m:
1. If it was less than $100m, it could have been funded in 1-2 weeks using a similar mechanism to the extra $80m raised in round 2 financing and nobody would have batted an eyelid - short term drop in SP to something like 80p from 120p then a recovery as we neared production.
2. The 6 month schedule delay at nameplate production is worth c. $130m (14.5kt x $18k/t / 2). Reaching nameplate production 6 months later, having built the mine and hired all the crew whilst it won't necessarily cost that much, it costs that much in lost revenue which was assumed in the model. I think this is a really significant cost and so the schedule delay cost could easily be 50% of the total extra funding required (on top of extra materials et al).
Just my 2 pence, I could be wrong, but I am expecting a figure ~$200m. As is the market or we wouldn't be at 17p.
Your logic is correct but incomplete.
>>access to rail infrastructure...would give the company a competitive advantage
so it will, over say, a a graphite miner in Uzbekistan, who doesn't have access to rail infrastructure. Nowhere does it say a competitive advantage over other graphite miners in the same region.
>>which is expected to provide sufficient power for the entire project's needs.
Heysham2 provides all my electricity needs. But it also provides the electricity needs of others. One does not proclude the other.
You make the interpretations you make because you want the shareprice lower. Wonder why.
Where I disagree with pickedpeck is - I don't think the banks will lend unless the total financing picture is clear and all money is available. I don't think they would put up $50m - $100m or whatever and say 'yeah just find the equity around March time' not going to happen. The debt needs to see the equity and the equity needs to see the debt - and the other financing options like CLNs et al may bridge the gap but here my knowledge ends so I don't know what mechanisms exist. Obviously royalty type deals would be one of the most desirable outcomes for a significant % of what's needed.
The shareprice won't go up before the next RNS because there isn't enough info in the public domain a. What precisely the deficit is and b. What are the options for financing. In the absence of this info and with the credibility of mgt shot with many former investors who have sold, I don't see where the buying presuure will come from unless the news on the deal or likely deal leaks, which I suspect it can't and won't.
That means the shareprice will stay at around this (IMO mispriced) value and it's actually the rns' thrmselves which will need to shift it. Quantifying thr ampunt won't help much if the $ value is large UNLESS that rns also hints or provides info on what the likely financing mix is, that it isn't all equity at current price, and hints at how cerrain the finance deal is. So I am not seeing that as a price catalyst.
The best price catalyst would be an rns with a tranche of financing secured which isn't equity, like pickedpeck has said many times a staged approach, each stage reducing total $ required by equity and each stage making it much more likely finance will be complete. Whether we get that or a big bang finance complete rns in due course time will tell. I really do 't expect price to rise much until there is good news here, in the absence of good news in this market the shareprice action imo is understandable, if not justified.
Just 'based on my research' means something you plucked out of your ****. Just saying. You inflated opex by $3k/t. Why. Over lifetime of debt aggresively calling that 6yrs that's $261m. Where did that money go? What's your agenda? Yo me evrything you said is bull**** so - what do you want?
Just nothing you say make any sense....
Headder we see you :) you weren't here, now the company has problems, wonder what your agenda is (well I don't wonder it at all tbh). Are you a holder? Or are you considering investing? Or are you here to warn us how bad our investment is (which is why djryan is here ableit he doesn't know it).....
Just wondering.
· As stated on 2 October 2023, Reta Engenharia has been retained to complete a detailed capital cost and schedule analysis which is expected to be completed by mid Q4-2023
.....
· Araguaia Nickel Project Line 2 Feasibility Study ("FS"), which aims to double nickel production from 14,500 tonnes per annum to 29,000 tonnes per annum, to be published in mid Q4-2023
.....
Reta Engenharia is expected to complete its capital cost and schedule analysis report, following which an independent technical advisor, nominated by Senior Lenders will review the updated costs with targeted completion by mid Q4-2023.
So: mid Q4 2023 is the target for the significant items to drop by which it has to be November. I can't help feeling the A2 DFS is somehow significant but don't know how, it just seems odd otherwise, given the situation with A1, to be quite clearly tying the timeline on publishing the DFS to the updated assessment of A1 (I get that the costs of overrun on A1 need to feed through to A2 but I don't understand the requirements to get the A2 DFS published asap UNLESS it is perceived to be helping with the financing round - perhaps to present to new investors what the bigger picture of A1+A2 will look like in production).
I don't understand some of the posts this morning. How can you expect equity finance then go on to decrease the profit forecast? If you fund with equity there is no additional debt to finance so sure, the profit gets distributed across more shares but I don't see how it impacts on the cost to breakeven. And as far as I can tell the company aren't saying OPEX will increase, so far the problem has been CAPEX increase? But as ever, WTFDIK DYOR yadda yadda. GLA
They will have to find proper money I just don't agree the lower estimates. Remember that they had allowed 12 months for commissioning through to get to nameplate production. Along this trajectory you don't know when they were planning/hoping to get to cashflow breakeven (i.e. do they only produce 0.5kt a month in months 9 or already 1kt+ a month) but there had to be some slack in there to allow for ramp up.
Now the schedule has moved to the right by 6 months the impact on not getting to nameplate is already, simply due to the delay, without any additional cost to the build +/- $130m. So it seems pointless to me counting out the pennies on how much is left of existing money when you can see such a big financial impact in the schedule. Sure there might be some mitigation, banks might be prepared to move first payment dates etc as part of the finance deal but do not expect the money needed to complete and get to production to be < $100m, and probably not < $200m IMO.
That said I do expect to get a deal, as I said, the mine is all but built and no way it will be allowed to go down. From this latest RNS it seems obvious they will have to publish the sum required first, following the complete of the technical analysis by the engineering company, after which this will go to review with the lenders anyway. So at least 2 more RNS' (the first will be material development and will have to be RNS'd) and perhaps somewhere along the line the A2 DFS will get published. I have a feeling it will be 3 RNS in November. GLA
Read the RNS. Inconceivable they don't agree a finance package. The mine is all but built and pretty close to commissioning. Ask yourself if Orion, La Mancha and Glencore let it go to rack and ruin at this stage. As ever the terms (to us PIs) are what's important but it will 100% get financed. GLA
>>Dj, you have no idea
nm
There will be dilution yes, it will be large yes. Will there be 8x as many shares in issue as before the dilution? Because that's what the current sp divided by the pre-RNS sp is suggesting? I think not, and that's why I think it is a buy at the current price. I don't believe it is in any of the majors interests to dilute at that level which is why the funding negotiations are probably protracted and probably quite creative around how to work around this. It just doesn't work out - La Mancha do not want to decimate their 140p investment at this level, even if they do get additional cheap shares, especially if they will be on offer to the other parties.
I think 2x, 3x, maybe worst case 4x shares in issue but not 8x and no deal is not really an option for them, I think. GLA
>>What I’m trying to understand is why wouldn’t dilution be as worrying to the cornerstones as it would to the PI’s? Wouldn’t they want to finance in other ways toprotect their shares since they have such a large percentage anyway?
Exactly what icecream said - they wouldn't agree. The cornerstones (and banks) consent is crucial to the deal. That's why the discussions at this stage are with them, and not with others.
I can't see PIs getting in on any raise. For the same reasons as before they will need it concluded quickly IMO.
Hopefully an update soon - I'm expecting to hear something progressive in October then hopefully finance deal lands in November.
My guess is 50p post deal (not immediately but after a few of months those that want to leave leave those that want in in) and £1+ at first/nameplate production. So for new entrants that's a 2.5x-5x or bust but with decent odds on a deal. I now have 700k or so shares but wish I had bought them all at this price, obviously, and eagerly await the £1 mark at which point decisions decisions.....
In case there's any doubt JM also wants a deal or its 10 years work down the pan and with 5 banks 3 ecas and 3 cornerstones to satisfy it ain't going to be easy but I think he can do it....
pickedpeck - like you i think a deal will be done. the deal now is likely to contain other elements than just equity + (debt) because the sp is so low and as you say too many and different vested interests to a. let if fail and b. take total control.
the ****up imo has been not anticipating the market reaction in what is, lets face it, excluding 2008 and april 2020 in recent times probably the worst market to release bad news into and - suspending the share on the initial announcement until at least a framework agreement could be established with the cornerstones and banks. the problem now being more creative methods are required to work around the very low equity price to get this financed when it could have been fone more simply and on better terms.
i don't think the wording of the rns was the problem, not suspending was the problem. but i still think there will be a deal and like you see upside from this price - but not a given. it is oversold and as such an opportunity as long as you have risk tolerance. i bought today. gla