Member Info for wasarunner

The cornerstone takes less risk than the last ii's who bought at 7.5p. Therefore, in theory, the last ii's should have been buying at discount to the cornerstone. When the cornerstone lands the money they know the mine will get built. I'm not saying it will be above 7.5p but I don't see it at 6.5p.

As for the rest of the raise, well, in the grand scheme of things it just won't be that much IMO. Our mcap is currently $165m USD, cornerstone adds $100m USD. How much more another $35m USD? That would be 20% of existing shares so maybe existing holders offered 1 in 5? Assume Glen & Teck would take that placing assuming neither is the cornerstone. Obviously not everyone would take the 1 in 5 - I couldn't even if I wanted to most of it is in the ISA.

So would people wait for 1 in 5 at whatever price the equity is offered to retail or just buy at 6.6/6.7p on Monday? I know which I would do if I had any cash.

I'm of the view that the cornerstone will pay at least the last raise price so at the moment it would be done at premium. All just conjecture but it is interesting on a short term view especially if we drop lower because the shares enter basement bargain territory then.

Just for context I bought some of these at 5p over 3 years ago. We're 33% above that price right now. Then, we didn't have a Vermelho PEA, we didn't know we could make battery grade nickel from it, Araguaia didn't have a DFS!, we hadn't already raised successfully $25m+$25m and nickel was around $12-14k/t and we didn't have banks queueing for $300m+ of debt and we didn't have a cornerstone for $100m+. The current price is bonkers which is why I think it is artificial. All IMHO

I reconsidered overnight - I think current market price below is below the next placing price - this is obviously just opinion, I don't know. I can't see how the next raise will be significantly (and to institutions 13% discount from 7.5p to 6.5p is significant) lower than the equity price the last ii's got. So on the basis that:

a. the finance price will be higher than current price and will result in an immediate rerate from current price
b. no guidance yet 12/6 and 'aiming for H1' has to suggest we're close even if it doesn't complete this month
c. I just can't see Teck and Glencore, if they don't participate and the cornerstone (Orion?) gets a shedload of shares much chearper than their historical average price which I believe is at or above 10p. And 6.5p would be a sizeable discount to 10p+.

So I would say now there is guaranteed upside on a 1-2 months view and if I'm right we _should_ see at least some traders appearing soon. Decision I'm mulling is do I see more upside here from 6.7p -> 50p over the timescale I think it will happen vs my other stocks which are also waiting for news. That's 7 bags and I think it will happen, maybe more.

Have to say I didn't see us staying below 7.5p for any protracted time. When I spoke to SR he told me 7.5p drew some kind of line in the sand for financing - I just hope they aren't measuring the discount from it.

I'll keep mulling it - we might get a quick bounce back to 7p if this drop is artificial. We go to or below 6.5p I'll start buying I think. GLA

If it's 6.5p then this is about the lowest we will ever go and a huge buying opportunity with massive long term upside which is why I am genuinely contemplating it. Everything I bought since I sold horizonte is up 20-40% while horizonte has fallen 20-40% since the raise. There comes a tipping point. The assets are the assets. Soon I can afford 30m shares which must end up close to 1% fully diluted....

I also think 6.5p would be slightly screwing the institutions who got in at 7.5p raise. Fine, some were clearly hedgies who then sold for 10% and tanked us further. Thanks - those guys. But some will still be holding. If the cornerstone price is 6.5p if I was them I would like to have known that before I did my 7.5p. Otherwise they could be buying open market right now at 6.6p. All IMHO

Well at least dollar weakness helps if it is. ~1.1bn shares = $100m USD at 6.5p. We stay under 3bn shares (just, including options). Assuming no more is needed - but it shouldn't be if we get the target from banks and the $25m already funded into 'long lead items'.....

the red flag is there is no macro to support it and in the face of game changing news the price should be rising (in a strong nickel price environment) immediately before the news and not falling. Falling implies someone knows something. I hope it isn't that the deal is 6.5p. That would be below my estimates.

If it's a delay I can live with it because it explains the price action. If its an entity bringing the price down to benefit from the raise then that stinks and the company shouldn't pander to the game. Source alternate funding. We know there is institutional interest at 7.5p - we proved it in Feb. Do not issue equity at 6.5p.

incidentally no intention of selling, don't play their game. Buying is what I'm considering or failing that, holding.....

It stinks if financing lands in next couple of weeks. I hope they hold now till we regain some SP. Call the bluff, drip some news. I hope the IIs who participated in the 7.5p aren't feeling too shafted at the moment. Hopefully they were promised good a return on their investment. They could always come open market and buy a few 6.7p thought that was the idea right?

Another strategy - offer another $25m at 7.5p. They'll be queueing up right like they were last time?

I can buy 7.5m at current price. Drops any further might just try and shift the needle....

goes without saying at the moment, the future price of bitcoin is everything to Argo's sp and mcap. So all the macro events driving adoption etc are key. Over time they will absolutely diversify but for the time being the valuation will very much reflect bitcoins prospects. But the market is very imperfect so at a given point of time like I said the valuation will be well under or well over at times. For me, if bitcoin is going to follow the curve (I forget what its called STF model?) we are absolutely bargain territory.

My calc also ignores HODL which should add value over time particularly in the btc upcycle when it is worth more. At some point they will have to sell some to invest back into the co. but that's fine as long as they do it at high points in the price. But over time HODL should add to mcap.

£5 - my back of a fag packet calc:
At current issued shares, that's £2bn mcap
Very conservative P/E because we're not listed properly on a US exchange 10x means we need to reliably/repeatedly generate £200m earnings at P/E 10.
Guesstimate 3k btc / annum that's £66k/btc revenue.
Assuming some % for opex a very rough calc $100k/btc sale value might just do it.

The above numbers factor out lots of other potential but might be considered reasonable for a reasonable company in a stable sales environment. There's nothing that stable about btc it goes up and down so the volatility obviously adds risk, but also reward.

P/E 10x is of course very conservative but then, mining BTC gets harder over time.
But there is my back of fag packet calc, how the market values the co of course will never follow any calc exactly. Sometimes it will overshoot sometimes it will undershoot. For now the investment case remains strong on fundamentals if long term btc price is up, which is why I stay invested (and would add if I had funds).
GLA

10-Jun-21 10:33:43 4.75 1,298,337 Sell* 4.80 5.00 61.67k

that's a buy looking at the timestamp. It looks like they took out all the float pre 11am? Presumably someone wants 1.3m shares because they know where this is going. Alternatively could be an MM moving stock around but looks like a buy to me....

Really big jump tho even for argo. I am hoping more, maybe company specific news leaking. Yes we were oversold, for sure, but the price action is odd. Guess we find out in the daysto come!

If it's china news (btc miners shutting down there) then surely we produce more btc as % of total global production, while our costs are fixed, (difficulty drops) so win for argo even without btc price movement? I don't know if there is another story behind the rise I know first country adoption of btc is news but surely in the short term the news coming out of china is bigger?

H1 ends then and latest guidance was they are aiming to have finance complete within H1. It could slip of course. When the guidance was Q4 last year we got an update early in December to say it wouldn't be 2020. I guess if it slips by days/weeks we might not get an RNS, if it looks like longer, I would anticipate an RNS later this month. Still hoping no slip and on we go. I get more funds with a bit of luck Sept 1st. If by some scenario we haven't financed by then, they're going into Horizonte if we're 7p. GLA

Well it certainly isn't a small deposit! But good ESG will be important I think customers will pay premium but also crucially, if funds only invest in ESG we should achieve a higher relative sp in due course.

On a separate but amusing note I checked in last night and read 'hottest spodumene' by aimtodeath and thought I was on the wrong website! Like I know as investors we get excited about minerals. "Click here for hot nickel etc".... 3 trading weeks left folks, not that anybody counting or anything.

pp - yes that's what I've concluded. A year or two ago I hoped give away say 40% of Vermelho and have 0% dilution on Araguaia. To me 1.6 mines with no dilution was quite attractive. Of course in absolute mathematical terms, retaining 100% of the more lucrative mine (although diluted at company level) could end up being better business overall, but in any case, if Vermelho isn't investable at this stage it is moot it is the only way to go.

Like you I think whatever costs to DFS will be rolled into this financing round, for Vermelho, to give us a 'shovel ready' project a major would be most keen to get involved in. Still think Vermelho is being set up to make the whole company sale-able at such a point - at around Araguaia production, so it may not go as quickly as you think. It may be that the Horizonte BOD are trying to time Vermelho DFS to nicely coincide with Araguaia production to make a 'compelling' (JM's words!) proposition to a major ;) I'd be happy for total sale end 2023 early 2024 providing of course the price is right, which it should be, if latest nickel deficit forecasts at around that time come to pass. GLA

My take on Vermelho is, if we do dilutive funding on Araguaia (which de-facto dilutes Vermelho) then I would really like full value on Vermelho. To me that means when a JV partner is appointed, their buy in should be at the market value of Vermelho, whatever that is. No more dilution at that stage (ideally)

If Horizonte go on to develop Vermelho to production independently (very unlikely IMO not least due to the lead time on the finance side - to finance Vermelho out of FCF on Araguaia will probably take most of this decade) then of course we get 100% of full value. If a partner comes in I am expecting them to do majority of mine funding for their stake at least so we get either free carry or if we join it is debt only.

In any other scenario it would have been good to get the JV done on Vermelho to help fund Araguaia capex, which to me it looks like isn't happening (but still an outside chance perhaps). Maybe Vermelho at current stage just couldn't attract the kind of financing option which would have made a dent in Araguaia capex in which case of course the BOD is right not to give it away cheap. But in the latter case I would really like us to develop it to a point where the JV partner buys in in the $ 100s of millions, and not beer money, for whatever % they get in return.

If it all plays out as above then I think you have to look at this funding round in the context that it could be the last (ever) dilution and the key to unlocking these great projects, including A2. I firmly believe A2 can be done without further dilution.

My feeling too is we are at around the raise price here. Would be nice if it was 7.5p at least though but maybe we're splitting hairs. More important is to get it over the line and get it done, I'd really like to be producing come 2024 at the latest.

I second PRE - not currently invested but it is one I am keeping a close eye on and if I had more funds that's where they would go. Same timescales though as Horizonte (IMO) for full return so a very similar style of investment. You takes your picks, for now I'm in Horizonte for that particular timeframe....sorry for the O/T to the board!