Member Info for wasarunner

"The London Metal Exchange nickel cash price is likely to hit $20,500 per tonne in the third quarter, with strong stainless steel demand and electric vehicle (EV) restocking driving the uptrend, according to analysts at Citi. #hzm #nickel"

I suggest if that is the price in Q3 we offer a $500/t discount to the offtaker. You can't say fairer than that......keeps maths simple :)

Hi Flavour, my background is IT but for last 10 years or so I've been working in financial services with it, whilst also running a financial services firm with my partner. So numeracy accountancy etc. but I haven't really got any insights into how the city works and although I've been an investor of sorts 3 decades I defy anyone to really get a good grip of how stock markets work. If we had the answers we'd all be rich :)

I quite often boil things down to maths, it is how my brain works. So two mathematical equations I am mulling:
1. This is a big deal. Bwana has hit the nail on the head, I have also heard this directly from SR. It doesn't happen often. So for the company to announce with some confidence H1 then Q3, whilst also maintaining guidance that it is 'progressing well' and 'no red flags' - that's why I think the material negotiation is done. There is no way you can be having the material negotiation now, if you think you will complete in Q3. The negotiation is done and we're down to legals. It is a bit like my own circumstances the 'deal' was agreed months ago, we are in legals now.
2. The cornerstone. Instead of worrying too much about the price they are paying, we should be concerned about who they are. In my reckoning they can be one of two entities:
a. a Financier. We know what they want. They want % returns, they want to buy cheap, sell high, etc. They (probably) don't want to take over the assets or
b. a Miner. This in my book is a more likely outcome simply because - the assets are very attractive to miners and - there is a whole separate mine to develop which Horizonte have said they can't do alone.

Now if it is a miner (and I don't know whether it is). Are we particularly bothered what price they pay? Because mark my words the mining industry will sit up if a Vale, Glen, or BHP takes a big % stake in Horizonte. Their option price might be 6.5p or might not, but the shareprice sure as hell won't stay there once they are on board. I also happen to think, like Bwana, a miner is less bothered about the pennies and more concerned about a 'strategic' investment, perhaps with optionality around Vermelho.

The great thing is, the company already know all this and know who it is, and the language is all positive. They can't announce it yet, but we can say with some confidence, significant 'entities' are circling our $100bn assets.

So it comes down to maths - what % of the way through financing process do we think we are (I would hazard a 90% here), who are the entities (I would hazard a -> we will be pleasantly surprised here) and that tells me the current shareprice is bonkers, and I do genuinely believe we are below the finance equity price now. Whether 7.5p remains the floor we will see but I hope so - but if my hunch is right and the cornerstone is a miner, this point will be moot and very soon after the announcement. All IMHO.

>>what’s 0.5p here and there)
depends on the SP of course! You used to get a lot more shares for 1.7p than 2.2p :) But I know what you mean. At these levels it is pretty immaterial - especially if we are heading to 50p+ eventually!

swest - I disagree, I think this deal was materially negotiated when the going was good. I think the current market conditions are irrelevant as long as the banks don't get the jitters (and there isn't a black swan in brazil - political/covid related for e.g.). I think the cornerstone agreement will broadly be agreed perhaps minus a few tweaks and the offtakes will be negotiated if not binding. I think this is done and was materially done some months ago. The current sp is the current sp - I have equally good stocks with also very poor prices at the moment. My hope is the current sp will not affect the financing - I could be wrong - but Horizonte have/had very strong hand IMO.

low shareprice is one option, though not usually the popular one. Imminent news hopefully the more likely option ;)

Brisk - I think it depends on how you generate your investment capital. If for example you have regular income you want to invest it probably makes sense to put some in every month and smooth out the shareprice on stocks you are following.

I have tended to come into money in larger lumps as and when - say when our business performs well in a quarter and we can take a big lump or property sale whatever. But generally my strategy over nearly three years was if I came into money - didn't matter if it was £1k or £100k (and both were real numbers) I'd buy Horizonte. My average is somewhere north of 3p but I've lost track what it is. The strategy works if you have conviction long term the share price will be multiples of what you are paying.

Better traders than me would have got much better entries and indeed been able to 'purchase' their stock much better - buying what was available at each level through the MMs. But my theory is what is 0.1p here or there when you are here for multiples. It matters, but a lot less than the fundamentals and the 5 year view. All imho.

we basically need that finance yesterday, so we can build a mine during the correction.... then we don't have to worry about the SP. The SP only matters until (and if) it is used in any calculations for financing...I am rather hoping it isn't, and the 7.5p raise set a floor for the equity price. In which case, on a medium to long view, this is excellent buy territory now and as soon as I have funds I'll buy. GLA

to only $4.5k/t above 'base case'. fear and greed, ever was it thus in markets. I am fearful. That my new money doesn't land while I can take advantage of current buying prices :)

When the whole market is getting hammered hard not to see how undervalued stocks like Horizonte become. Yes, some risk that financing is more difficult in choppy markets but eventually we are selling the commodity in $ which will rise in $ terms as $ deflates so what's the problem? Interest rates going to rise really? Don't think so. How else do we deflate all the debt. Buy nickel, copper gold (all imho). Buy when others are fearful. GLA

>>just have to ride it out or sell
or buy. With a 5 year view....

When the deal is done and company starts constructing. I anticipate a lot of management time which was previously spent securing the deal to move onto other things - the most obvious thing is marketing the company. JM is very good at this and he has been relatively quiet in the last year or so - understandably - as they have been busy. I would also expect the brokers to start earning their bread - BMO and Peel Hunt once the deal is done. New forecasts based on the structure of the deal itself, revise their price estimates etc.

All in all it should get good marketing in the 6 months following the deal and if nickel also plays ball, we should be good here for a gradual rise as institutions start to take an interest.

Notwithstanding of course there will be loads of volatility after the announcement but if you want to hold long here you would be brave to try and trade it. If you are a trader and of course don't care about getting back in then of course there will be money to be made short term. GLA - like Craig I am hoping bank news before August and my sources suggests that may be a possibility.

Initially I dont know what will happen but what zebo says sounds very plausible. Longer term I anticipate a liquidity problem for institutional buyers which imho will squeeze price up. Once the traders are out - cornerstone aint selling, teck,glen,cannacord aint selling, craig,I and plenty of other pi's arent selling then where will they get their shares for nickel e posure? I think they will have to pay premium. I just dont think the market gets that if the cornerstone takes most or nearly all of the equity here it will be very tightly held after finance and good luck getting on board - it will be much more expensive to do so. I think knowing that, people would be mad selling in the months post finance and gifting their shares away.

Swest noted and of course I agree but I think if this fails now it has to be an external event black swan type thing. I really do think it is done. Gla

Swest thats all I am saying too. 3 years ago when first invested I thought done deal, in hindsight, that was way optimistic. Now not so (imho). Everything I have heard officially (cornerstone, banks, orion, $25m in feb, $200m+ contracts) and unofficially points to it being as done as these get barring the announcement.

I have basically stopped worrying about horizonte 'if' and focussed on other investments. Everyone here is tier 1 - teck, glencore, orion, plus all the ones we dont know about yet. And nickel is $19-20k. So this is done, I think.

My view is this deal is in the bag barring the shouting so 'de-risked' in the pf. For mr fibbles I am 150% up on horizonte at current price ona 3 year rolling investment which means:
A. It has outperformed the wider maket and
B. The obvious time to buy is when nobody else is, for that kind of result. Buy when others are fearful etc.

I dont understand the current price but it is definitely a point to buy imo though many seem not to be doing so. All but de-risked how many updates do people need from co 'all on track' before they believe it.

I think the next 150% upside is to production or, if the optimists are to be believed perhaps after finance lands! Gla...

My other shares with also good prospects are down by similar amounts so I put it dow to wider market sentiment. Market got Horizonte wrong (imho). This creates opportinity but for those fully invested we don't want opportunity of course, we want a result! Gla

I make that a stone's throw from the magic $20k/t. But we already make plenty of profit at $14k/t! FWIW I personally believe the future pricing estimates are wonky and are underestimating demand. I think by the time Araguaia is producing we should be comfortably north of $20k/t and I think analysts will be eating humble pie on pessimistic estimates. Substitution for stainless steel? Unlikely. For batteries? Unlikely in the timescales I care about! GLA

Ditto this is 'the big one' for me. I'm really happy with half of Bwana's estimates for endgame - that would be 35p-50p. But I'll just as happily take 70p-£1, perhaps even more happily.

Bwana - I think the big unknown here is Vermelho and that's what makes the 24month valuation difficult. Just valuing Araguaia 15p by end of this year with finance done 2.5-3bn shares and 25-30p at (Stage 1) production seems very doable. The big guesswork then is what happens with Vermelho. If Horizonte develop it themselves initially (no JV announced in 2021) it might add modestly to the mcap until the DFS is done and the JV is announced, maybe in 2023? But then all bets are off and it could add the same SP again if a major gets involved on the JV announcement.

Just on timings and outcomes. It can't be any surprise to anyone if news starts landing any time now as the guidance is Q3 and a couple of months ago it was still Q2. We also know as far back as December they already have a cornerstone who is prepared to bridge most of the capex requirement from debt, if not all. The cornerstone is likely to be a large industry player, if $100m is likely to be small beer to them. Finally we are assured the offtakers are 'Tier 1' and we have always been told Offtake is the easiest of the components to secure. Therefore nothing surprises me if we get news in the next couple of weeks - and it shouldn't surprise anyone else either. It shouldn't surprise anyone if the deal is better than the market is expecting - Horizonte hold many cards here. The only thing which should be surprising is the current share price. I think the imminent news here, and macro effect of a strong nickel price, has been lost on the Horizonte share price which has been pulled down in a lacklustre quarter for the junior market generally. I think we are weeks away from that all changing....

pickedp - agree with everything you say so I spent all the cash that landed today in my lap - £30k courtesy of first direct - on horizonte shares. I can't believe we can buy them under 7p at this stage in the game really can't. It's worth borrowing for the upside of Horizonte's borrowing being announced to market I would say....

Whole market Kabunga'd at the moment not just ACP! You need to announce a positive RNS these days just so your sp closes at the same price it opened. Definitely a wider summer sell off season in full swing but this is when bargains can be had....

Horizonte are raising up $500m capex having raised $25m previously. And that from half the mcap of Pensana. On track to do it in Q3 this year. So it can be done, apparently. Project economics have to be right, then it can be done - and here we have support of 2 governments for the projects?