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>>big boys will be selling soon
the big boys are Orion, La Mancha, and Glencore. I believe they bought today ($20m of debt) not sold.
I think 'the market' got Horizonte wrong. It didn't understand the shareholder structure and didn't have clarity on the shortfall in $ or the mine profitability when it was refinanced. It ignored the Glen/La Mancha debarcle with the other mine deal in July where La Mancha clearly wanted market participation. Glen and La Mancha learnt a lesson and will not make the same mistake here. It was unfortunate that we got to single figures again and good luck to those who bought. I think a recovery of sorts is on the cards longer term, La Mancha will want to make money on this, as will Orion. And they will. Today is the clearest signal yet that this is financeable - the shortfall is manageable with the funding options available to Mr Nasr 'completed $68bn in deals' and Mr Smith 'likewise'. GLA
It's Rovers message that got me thinking:
"I would have liked to have seen more funding in the interim, maybe $50 million"
So I can only see three scenarios at play here (because, agreed, $20m is not a big package in the scheme of Horizonte):
1. It was all the additional the cornerstones are prepared to lose in a 'no deal' scenario. Unlikely IMO....or
2. They can raise $20m when needed easily. But this doesn't tally with reassuring the market, which is now the BODs job, as the market doesn't like existential revolving mezzanine finance, so unlikely IMO .......or
3. (Most likely IMO) The main finance package is all but agreed based on the DD underway and parties are confident this can be and will be completed in the $20m window, whatever that gives in months. Of course in the holding RNS they have to give the 'worst case' timeframe but I now expect it to be much earlier.
Final parting thought - you've stood down the contractors sometime between October and December. You desperately need them to continue building the mine for you, because re-contracting people without experience of this build is going to be expensive, time consuming, leading to further delay and cost. How long you got? How long till the contractors find other work? You need them back on the build earlier, than later, I would suggest and that is as good a reason as any for getting the finance package over the line at the soonest possible time - literally all delay now costs $$$ and eats into the cornerstones eventual returns.
Don't be surprised if the final funding solution is completed in Q1, is what I'm saying. GLA
Also, this RNS came earlier than anybody (including me) expected it. Don't be surprised if the main package comes earlier too. Mr Nasr is working overtime and encouraging others to do likewise, I expect.....
""There can be no certainty at this stage that the full financing solution will be achieved.""
...but we'll throw in $20m anyway, with what we know in the data room. Which means the project is financeable and will get financed. The share should get back to par value as that would be reasonable (it was the price before the 'we may run out of money in December' RNS), but it probably won't because PIs are chickens and will prefer to sell for 10% profit.
To me this is a signal it will get financed unless the nickel price collapses in the next 1-2 quarters. And I also think they won't kill equity - they've just put up something like 10% of the capex all debt. GLA and merry new year to you all.....
Anyways, have a good break everyone we won't know much more for months to come. Wishing everyone the best (even the shorts and the publicans!) It's a cruel beast the stock market if we roll back a year this was looking pretty good and here we are. I'm super sad more because I lost a good friend over this, gone forever, his loss is much greater to me than any financial loss here. Life sucks sometimes best to be clear about that and walk with eyes open. GLA
Yeah if it was all debt we'd be back to a significant portion of the former price in a jiffy. Less the impact on NPV it would be 'as you were' equity wise. And a lot of options would lapse eventually because they wouldn't be in the money so total shareholding would stabilise once Orion and La Mancha converted their bonds though they have a really long time to do that.
Suspect all debt is a fantasy but I totally get where you are going with the illustration. La Mancha and Orion both have a headache and an opportunity - they can increase their holding here by taking on tranches of equity or other options like convertables not available to others, and they have the headache that if they don't do it they lose $250m where I only lose £750k. Then there's the banks with the $300m odd debt with whatever was already drawn down as potential loss. The only thing is out of administration the banks would get something back so they can't take a total loss here in any case.
Hi Rover your maths is reasonable and for the illustration (I haven't checked all the numbers) I totally get it. If you don't participate (I can't, even if offered) you get more shafted by others participating because their average reduces and yours doesn't. And for the record, I do expect equity so a level of shafting will be received (by me) to be determined.
What becomes interesting then is if there is an uneven split among major shareholders, and also, their relative risk positions and that of the banks. The whole equation is much more complicated than just pure maths, although of course, they will be doing their pure maths also. In a way I think the reason we might be saved is because of that complexity and remember it isn't even one bank we are dealing with, it is 5 + 3 ECAs.
The competitive tension between La Mancha who want it liquid, Glencore who might want it private, banks who want their money back, and Orion we don't know what they want, is probably what keeps us going in the current structure IMO (the other parties are less significant though we do still have the 15% II holding in 3 positions to consider).
I see the latest developments as positive, the two senior board appointments, and the current plan and timescales. Other than that it's a wait and hope and assume it's not the 7p issue and 20:1 consolidation scenario all over again 'cos that didn't go well last time :)
Also I can't see part finance solutions now, it'll be total finance or nothing (notwithstanding the bridging facility). The idea that anyone parts with some cash until they can see all the cash is not going to happen. And because of that I can't see the SP doing much until the finance has landed. One way or another, there is going to be a huge bang here in a month or three, I hope for all longs (traders/ short term investors/LTHs) it's the bang upwards! That said they might underwrite the finance then offer it out to market but that bit will be wrapped up quite quickly I expect. Every day on this project now costs megabucks they will want it sorted sooner, than later, I expect.
Fair point CpatainSwag perhaps Glen could/would want to take it all - our protection there as you say are the other cornerstones which is why when it went Pete Tong in October I took some solace of the fact that their interests would be split and for that reason it should survive providing always there is enough in it for everyone to keep it going. If it's not economically viable then it might end up going down the admin route and someone (glen/vale?) getting it cheap or something but lets hope not.
The main risk here I see is not intent (Glencore want to own it, La Mancha want to own it, they want it cheap as chips, they want to profit from a distressed situation etc.etc.) it's actually economics. IF the mine can't be financed in a way that provides a return that stakeholders are happy with (so for example, $300m is needed, and ferronickel nickel price forecast is falling - and I say IF because I don't know either of these parameters) is there enough fat left on the turkey once it is basted in the juices to warrant cooking it. That has to be a complicated equation but it has to be an equation the banks are happy with as well as the cornerstones because if not, they won't put in the extra $$$ and we're in big trouble.
The rest of the market (i.e. us) not having any true sense of the $ shortfall is a big problem for valuing it at the moment IMO. They obviously have a number they know internally, it seems to be kept top secret, while all parties go away and do their DD to make sure it is accurate to within their own risk tolerance.
Just to provide balance, it can go either way and current equity/shareholders/PIs could get wiped out, but I personally think that scenario unlikely for many reasons I've detailed in the past. So here's a question. Irrespective of the former shareprice people bought (and in new money I bought everything from 35p up to 170p) why aren't more people buying.
So for the institutions this is obvious - there is existential risk and if they buy shares right now they know neither the terms of the deal (indeed, if any) or La Mancha/Glencore/Orion intentions for the same. They could buy a stake and La Mancha can decide they don't want to put any more in and it's curtains. That's why institutions aren't buying.
But PIs? As our gambler friend, the pubbarman points out often enough, it's all a punt. So here we sit at £20-25m mcap with $400m+ invested in the mine and $bn NPV to come. If you were a non investor looking for a high risk, high return play, you couldn't ask for better IMO. Still sucks for those of us who invested 4,5,6,7 figures at higher prices but for new entrants, it's a buy, if like me, you believe it will exist in its current form come Q3 Q4.
But institutions won't touch it with a bargepole until there is a deal and also, the current institutions (the top 6 at least on the register) are not selling because they couldn't even if they wanted to. GLA
Yes it was meant somewhat ironically/sarcastically.
As somebody who held shares when they were previously 7p pre consolidation, those shares are now worth 7.7p (so nearly 7p) except I have 0.05x as many. And they're worth a lot less than I paid for them pre consolidation, as a total :)
The announcement today was a positive but it pushes a real deal back to Q2 which won't suit the traders so they'll take their money out here and go play elsewhere for a bit then come back nearer Q2 I expect. Is tuan buying yet :)
7p. Maybe they like the symmetry of raising at that price, it's a 10% discount on current price. Then we can do a 20:1 consolidation to get us back to 140p where we belong.
Good news on the whole. The doodoo is big, we knew that, and so it's going to take time to sort, we knew that too. Expect that mezzanine/bridging finance in January to get us through to funding solution. GLA
Tuan dipping his toe in I expect. First buy of a large potential position. If I had the funds I'd join him at this price sadly my 800k shares cost a lot more than £74k - I could buy around 3.5% of the company at the moment with what I've spent, which would put me above Condire and azValor. Oh to be a fly on the wall in that war room. GLA.....
Greg Entwistle
He was appointed recently and will be delivering a mine imminently (ducks for cover)
Rover nearly agree but don't forget 3 other institutions also own 15% odd and I'm sure they are being consulted. It also seems like those 3 didn't sell and it was mainly Fidelity (of the signifcant holders) who dumped.
wrt to PIs indeed, we are the bottom of the food chain, the plankton as it were. Ever was it thus. Take the biggest risk, get the biggest reward or the biggest shafting.....
Tuan 'big holder' is risk averse, we know that. Pre consolidation the shares were 1.7p then eventually they got to 10p. 'Big holder' wasn't buying at 1.7p, but I was, and I sold some for 6 figure profits.
So I have no problem with the fact that institutions aren't buying because they need an indication that the company in current form is a going concern and that the finance package will happen. That's what Mr Nasr has to provide. But once (and f) he does, the shareprice will be higher. If he doesn't - > were going to 0p. Are you buying or selling yet?
Hi Theorist - not diagreeing with you and should have caveated it with 'in due time!' Shareprices don't rise quickly after raises we saw the same it took an awful long time for it to go from 90p -> 150p after the last one.
But once the mine is actually built/close to built, commissioned, and producing something, the rerate should be along the lines of 40p at built/commissioning and 80p at steady state production (ignoring drop in NPV from the debt).
I think if La Mancha want equity done higher, to protect more of their pre-existing investment (especially if they want to offer it to third parties) Mr Nasr is going to have to earn his bread.
By the way I'm not saying the above will happen/not happen as I have no idea if 3:1 is going to be the number or 20p. I'm just saying that if it was, then that's what I would expect to play out (eventually).
Future NPV is very hard to calculate so I disagree with posters here on that who urge downside. Sure, that's here and now. Indonesia can keep mining out their nickel to lower and lower grade using coal but we have secured long term hydro and long term nickel price will be up, not down. If you don't think nickel price will be strong in the future don't invest in a nickel miner it's really that simple. I do, and so I did.
Mike that's relatively straightforward. Ignore for a minute that any additional debt reduces npv just to keep the calc simple and assume par value is 160p for x shares not fully built and 160p/4 for 4x shares not fuly bult 40p. Double that at production. So if you think current shareholder structure and 20p issue worst case and it isn't going to be 100% equity 8p is a screaming buy, obviously.
Maybe reduce those numbers slightly if $100m+ additional debt to carry but then we might also get equity on better terms.....
Sorry 1.2bn shares in total including convertibles.....