Member Info for wasarunner

I've repeated my calc for 6 scenarios - Teck, Glencore, a non current shareholder is the cornerstone, with or without equity issue to others. Assumptions:
- cornerstone (+others) get shares at same price
- $100m cornerstone, $0/$50m others
- cornerstone stays under 30%
- gbpusd 1.4

There is a little bit of rounding but to ensure the cornerstone is always under 30%, to the nearest whole pence:

Teck
====
Min issue price no shares to others: 14p
Min issue price shares to others: 11p

Glencore
========
Min issue price no shares to others: 11p
Min issue price shares to others: 9p

A.N.Other (e.g. Orion)
==================
Min issue price no shares to others: 10p
Min issue price shares to others: 8p

It is an interesting result. It suggests to me that unless they artificially dilute the cornerstone (by for example issuing shares to others at a lower price than the cornerstone - which doesn't make much sense to me) then the minimum issue price is relatively well constrained by the fact that the cornerstone is committing $100m and there isn't too much extra equity to raise. The other thing that might scupper the calc is if $325m doesn't all land as debt.

It looks eminently feasible to me that Glencore could be the cornerstone. I don't think they would blink at 11 or 9p. All IMHO

Kabunga realised he sold too many so he's buying some back....

ST if you really think Horizonte is a poor company with no prospects and poor Bob (sic) (as you allude to) I hope you put your short on earlier this week. It will work well for you, my sources tell me :)

>>12 months and radio silence is poor by any metric.
which planet have you been on the last 12 months? Did you notice the pandemic thing? The one where air travel stopped, people died, vaccines were tried, and the government paid for people to stay at home? Geez..... oh yes and they're negotiating one of the biggest deals probably undertaken by a junior explorer?

>>From a lenders point of view having to wait until year 6 of production to see the first profitable year
That's misinformation I'm afraid. The company is profitable in the second year of 'production'. The debt is being repaid. What's the problem? Vodafone's debt is nearly as big as the mcap yet people invest in it. Are you counting the three years up to production as 'production'? I'm not.

What's your game pal? Please don't feel sorry for us. Many of us are 100% up on our investment and I'll wager by end of the year that becomes 200-300%. GLA

Assuming Glencore are consulted through the DD process and/or assuming they might be the cornerstone - it would be very unwise to trade the shares and we have seen no update that suggests they have sold any yet. They are very likely to be under NDA and privy to market sensitive info. I don't think the cornerstone can trade shares at the moment unless the non-binding nature of the agreement allows for it but I still don't see it.

Cannacord is different because if clients decide to sell they have to sell (even though they participated in the last round, Glencore didn't).

What does interest me is say the cornerstone isn't Glencore (or Orion), would Glencore and Teck at this stage know who the cornerstone is? Or I wonder if this can be hidden from them. I would be very surprised if it can be concealed especially as Teck have a non-exec on the BOD.

Add to that:
- majority of the nickel mined in the world isn't done so sustainably
- China artificially depressed the market flooding it with (inferior) NPI which isn't that suited to the future EV uses except via the expensive/dirty conversion process
- ESG throughout mining will be a much bigger feature in the next decade for 'clean' metals
- Underinvestment over a decade in nickel exploration/development due to 2. above
- 5% or so YOY growth of nickel consumption for stainless
Then you have the perfect storm. I think it is one thing reading opposing analyst views but then you have to look at where this is all going longer term. I would say most of the above are factors for later in the decade but surely majors have to be positioning NOW for when that situation comes? So if you want to be producing clean EV nickel from Vermelho by 2025 you want to be getting on developing the feaso etc. NOW because - well, it's nearly 2022 folks! GLA

Then multiply your numbers by 2.5x to factor in Vermelho at ~1.5x Araguaia to get 'total Horizonte value' because that calculation is only for Araguaia and Vermelho is 'bigger'.

In January 2022 the last time nickel was substantially above $20k/t drops off the 10 year chart. That means if we enter 2022 at $20k/t then we are at '10 year high'. The market is missing the fact that nickel has been substantially undervalued for a decade, and what this means to miners in this decade. Or rather, the analysts harp on about it but for whatever reason it doesn't transpose into shareprices (yet). Maybe we need the last step of de-risking to realise '2020s' nickel value into Horizonte.

I fundamentally agree with LawrenceH - investment opportunity of a lifetime which is why I remain 80% investment in Horizonte. GLA

but why research nonsense? Why not research nickel fundamentals, is Tesla buying, is BHP buying, how much are they paying, what is the nickel price today, how many do we have in the ground, how much will it cost to produce, what has the CEO and FD saying last few years, how much has the cornerstone committed, and what is the latest company guidance? We can research the worst case scenario but then we never invest in anything because there is no such thing as 100% gravy. This is as close as it gets, say 98% gravy, and the gravy is going to taste great when we get there. If it ain't obvious yet then it never will be. The deal is done barring the suit at BNP Paribas putting his quill to parchment.

'can' and 'will' are also very different things.
Brazil can be invaded by North Korea, Kim Jong Un can seize control of all nickel assets. Giant meteorite can hit Carajas region and all nickel is launched into space all 4m tonnes. Horizonte can issue 10bn shares because their article of association allows it. All three 'can' happen but the question is 'will' they happen. My bet is no and that's why I invested.

510m/2.21bn (enlarged capital) = 23%
725m/2.425bn (enlarged capital) = 29.9%

but agreed, they could issue it higher for less % (or more total $).

PopeUrban very interesting point you make. So in that case as you say Orion is desirable as they might sell at 30p or 40p or whatever, having bought at 10p. And we can get one or more majors competing at that stage.

So if the cornerstone is a major miner (still can't get over how odd that sounds) - I personally think this is more likely. The question is, will all the other majors around the world who might one day want the asset just sit around and let it happen (at 10p). They are effectively buying a third of $4bn+ NPV, and $80bn+ of asset, for $100m. If other majors think 'hang on a minute' won't we get a bid at financing stage? There must be a window between credit approval and equity sign off where this can happen. I make that the month of August, roughly speaking, assuming we get credit approval imminently.

The cycling analogy I can use is the breakaway. The peloton (in this case, all the majors combined) may be happy for Orion to take a 30% slice because they know they can buy them out (in cycling terms, they let smaller groups or less able riders go, because they know they can catch them). But would they be happy to let Glencore take a 30% chance without a counteroffer? Maybe not because they know they probably can't buy Glencore out. Maybe this gets very interesting as it goes down to the wire.....

In fact, if you were a conspiracy theorist you could argue the $25m raise was done to allow the cornerstone entry of $100m at 10p. Because of course - the cornerstone discussion came first right? We already had it in December. GLA

Interesting I just reversed the calc and am pleasantly surprised by the result!

Few of assumptions here:
- only the cornerstone gets equity
- current shares in issue 1.7bn
- ignore options
- lets stick with the 30% max rule applies
- $100m is required

By my calcs number of new shares admissible to cornerstone (assuming not already a holder) keeping them under 30%:

725m

What share price, working on gbpusd 1.39 makes that amount of shares worth exactly $100m remaining capex?

9.92p would you believe it

There you have it ladies and gents you heard it here first. Equity will be done at 10p (and not 3p) All imho and with the usual caveats only invest what you can afford to etc....

Indeed all fair points. In fact, for a major to secure a 30% stake in Horizonte at the moment - it is debatable whether they would be able to do it open market. 30% is give or take 600m shares of existing share capital - who is going to sell it to them? 6m purchased every day for 100 days? Not going to happen. Simply put - if a major wants anything like 20-25% stake they have to do it through the fund raise, or approach the existing ii's and buy them out. At premium of course (Teck are unlikely to sell to them at 6.05p I wouldn't have thought!)

The rising nickel price can't hurt. Wait another couple of weeks - your offtake price just got higher. We always assume it is other parties dragging their feet but the lengthy credit approval process from banks (which has really nothing to do with the prospects of the mine) has given Horizonte ample opportunity to court the best suitors and negotiate best terms. I imagine there are plenty of Tier 1 participants who want the deal tied up! We just need the darned credit approval and we're off at the races.

I'm going Orion prepay offtake. Glen offtake. Glen or another 'chunky' miner as the cornerstone. We don't mention Teck too much but it is hard to know if they are going to go into this space or where their long term goals lie - do they want to invest more in Brazil? The reason I think 'miner' and not 'financier' is simply - there is too much on the table to pass up here. And a miner will potentially pay more IMO (which suits Horizonte) as well as having the capability to help with Vermelho (which suits Horizonte).

Then when considering equity we dont know the precise total to be raised but -$325m (debt)+$25m (already raised) is already $350m. Add $25m eca add $25m prepaid offtake. We now have $400m. Lets say $100m to go. Lets say 7p, mqtes rates to the cornerstone he gets them cheaper than the mug ii's who were sold for 7.5p. There we have $500m with 1bn additional shares dilution.

Yes I plucked the numbers out of the air but point is because I dont know the numbers my gut feel is as good as anybody's. We will know the numbers soon enough. Your options are to be invested or sit on ssidelines until you know the numbers ever was it thus.

I can see at least 3 good reasons to buy ahead of a 'mass dilution' event:

1. You don't care about entry price your eye is on the long term goal. You accept if sp drops you could have bought cheaper but your target remains 30p or whatever.
2. You believe (as I do) that after the equity round sp will be higher. Maybe same day maybe later but eventually.
3. An offer lands for the company. If you are not invested that day then its gonna be a hell of a lot more expensive to buy in ahead of the inevitable counteroffers. Assuming even possible and share doesnt suspend. Interestingly these moments at or post financing are I am told quite common to get an offer.

So there are three there are probably others. Vanishingly small chance now this deal doesnt get done and on reasonably favourable terms for existing investors. I hold, and will continue to add as funda become available while we are pre financing.

The 7.5p placing was oversubscribed (by around 2.5x). So circa $60m could have been raised without even engaging the cornerstone (at 7.5p), who is probably prepared to part with higher for the daddy share. So I think 3p is low, way too low. I don't know if equity will be done below 7.5p but it has as much chance of being done higher. Glen and Teck are in at around 10p average. They won't want another in much lower and there will be plenty wanting in. So lets see. I am more interested in who the cornerstone is than what they are paying but I think they will pay handsomely for the opportunity. Time, as always, will tell. In the meantime I am a buyer at 6p (amd 7p for that matter).

3bn shares $3bn npv (to keep maths simple) on the two projects factoring vermelho isnt wholly owned any more but nickel well north $20k/t is around 70p/sh give or take depends on $/£. 30p is then trading at 40%ish of npv. Cleqrly we disqgree on wventual shares in issue, but I got time very happy to wait till nickel $20-25k/t. 5years if it takes it. Fwiw I happen to think the jv partner will build a bigger mine at vermelho OR takes the whole co 30p+. 30p is minimum and I think I will see it. Gla