Member Info for wasarunner

It was over 6 months ago then 3 months ago this:

The Facility has been provided by OMF Fund III (F) Ltd. ("Orion Mine Finance"), La Mancha Investments S.à r.l. ("La Mancha") and Glencore International AG ("Glencore") (together the "New Money Lenders"), who have each committed US$5 million to the Facility. The New Money Lenders will rank pari passu with the Senior Lenders and will benefit from the same security package. The Facility will have a maturity date falling 102 months from 7 December 2022 and will bear interest at 15.00% per annum.

Why? Why did they all put $5m new money in when it was 'all over'. Because they are suckers who like to lose more money? Appreciate it's small beer to them but it's still - money. They knew the numbers (we didn't).

Yes people say never done before here because it is unusual. But this situation is also unusual - 3 cornerstones look to lose $300m put in (if you include Glencore) at 1% of historical SP they effectively lose that money. Can the banks insist on it (to take some hit themselves?) I'm not sure. Cornerstones want to maintain liquidity don't want to wipe themselves out and bring cheap new equity in etc.etc. Who knows. I thought it was reasonably straightforward at $300m required to do this deal on terms that saved some money and face for Orion/La Mancha et al. $600m may be a problem, that's what many on here are saying, and it is also what the market is saying. 'Done' they say. May be. We will see.

The odd thing here is that the capex required (call it £500m GBP) was also the mcap pre crash (£500m GBP). That's odd because whatever today SP is (or indeed any other SP you arbitrarily pick) and do 100% equity, assume you now recover to the previous mcap because the NPV is unchanged (why would it change, there is no more debt), the price you issued equity at is now the fair price of the share, with better to come when mine built.

So at 2p you can do 25bn new shares raise £500m and if the mcap immediately goes to £500m the shares are worth 2p. At 20p you can do 2.5bn new shares raise £500m and if the mcap immediately goes to £500m the shares are worth 20p.

(Ignoring for now the pre-existing shares 250m or so)

So there are three potential upsides to the current SP:

1. Not 100% of the deal is equity

2. The raise is done at premium to current sp because that suits cornerstones (I know I know, never happened in the history of the univers)

3. At production the shares are worth more than pre production

If you are buying the shares today, at todays price, you are literally banking on one of the three above. All three provide upside. If the raise is done at steep discount (say 1p on a 2p prevailing shareprice) then of course the above doesn't hold.

It's just the maths, I'm not saying it will come to pass.

I don't see the banks getting all their $300m back, and La Mancha seeing 1% of $97.1m back. That's the slider you have to play with. What's a fair number. Surely that's what's being discussed, extensively, as well as where the missing $600m is going to come from (if indeed it can be found).

It's clearly not going to be great or even good for shareholders. If they are negotiating hard with the banks, because that is the only way to refinance, and the banks are going to take some hit, they will also insist that equity takes a hit. What people here disagree on is the extent of the hit. It might be 100% it might not. Given that the current price is at around 1 or 2% of the former price the betting is it is a pretty massive hit in any case. The contrarian view says not - we'll be back to £2 in no time, the contrarian view is this isn't completely done and the cornerstones don't want to refinance at 1p or 2p a (new) share. Both opinions are valid, as is the 'Horizonte in it's current corporate structure will never actually mine nickel' (technically they have mined it because there is a pile of ore but that's a moot point). What we don't know is which position is right and that's why there is still trading, both buys and sells, as people places their bets. All IMHO

$97.1m. Imagine that. Go large, they have. Lose it, they did. Reckless gamblers, they are.

Last raise was 4.5p (at market -0% discount) with 7p warrants. Seems like a long time ago indeed 3 yrs warrants expire in May but hardly 'mates rates' when most juniors are raising now are 50-60% discount? Just saying....

And just to point out the obvious, Karim Nasr was issuing a cautionary statement to La Mancha Investments S.à r.l. (“La Mancha”) - the organisation he previously led - that they might not get all their money back, when those cautionary statements were RNS'd.

The irony being, that prior to 10 March 2023 a date on which he resigned from his director role from La Mancha Services Ltd, he was a director of La Mancha when they made the investment.

I still maintain - much bigger players, with much better information than us, got it wrong. Gambling? Yes. Was worth a punt? Yes. GLA

What, the publican posting factually incorrect or misleading statements? never.

If you bought shares at 3.7p and 3.6p on the prior days to those cautionary statements, and only on those prior days, and a finance deal is done, I think you might see a very positive outcome. Ironically I recommended the share exactly then to a couple of friends non-holders and explained it as a binary bet - deal you (probably win), no deal it's 0. They took the bet. Being gambling types.

For those of us with averages 100p+ then yes, I believe deal or no deal going to be hard to see a positive outcome :-) The problem is the cautionary statement mentions no average shareprice and why would it....

Also very obvious what 'the market' thinks which is 0, company wiped out or 0, existing equity wiped out. The market can be right, it can be wrong. If it is wrong in the context of misunderstanding what the cornerstones can, and will do, and what the ex-CEO of La Mancha can, and will do in raising finance, then -> it underestimated the deal that was struck and the equity will find a new price based on that deal. We don't know. And $600m is a large number. Could clearly go either way.

By the way my contrarian view is one of a number of possibilities. I don't know if it's more likely than no funding and all bust, or funding but PIs wiped out. I don't know, and thankfully there is no decision for me to make on the basis I don't know, because:

- my 1m or so shares are not worth very much at the moment

- I don't have a further £1m to commit

So we wait and hope I guess :)

>>A company in a highly stressed scenario raising at a 900% premium - sure of course.

But the current price is arbitrary? Example - I buy £1m of HZM shares in the next 3 weeks. Sound far fetched? True, it is, I don't have £1m but I've bought that many before. atmo that gets me sthg like 15% of the company. There are _plenty_ of institutions out there with a spare £1m and they just need a whiff of a deal. What will the shareprice be if:

- 15% of the company gets bought in next 3 weeks

- the shorts close, because a deal is coming

Just wondering if there is a precedent for that?

The current sp is arbitrary - it has been lower, and higher, in the last few weeks. Cornerstones could put in interim funding of $100m USD in 2 weeks time, what will the SP be then I wonder?

(see what I did there?)

Company survives. Cornerstones do equity higher than market expects. Why? Because:

1. doing it higher means the company maintains liquidity because pre-existing shareholdings count towards liquidity

2. doing it higher means less new funding to find because proportionately less $ needs to be new investors for the same reason as above

3. doing it higher maintains their pre-existing investment

How much - what number? I think at a push it could be 1bn-1.25bn shares (4:1 or 5:1 dilution) at 20p. This would raise in the ballpark of $250m-$300m from equity, and if Glen chip in with some prepay / offtake / royalty type deal as well could bridge the gap to debt keeping total debt sub $500m and making the mine viable.

If equity is done at 1p I'll eat 50% of my shares (physically), as they'll be worthless anyway.

GLA - sun is shining (metaphorically speaking), my 1.9p buys are in the money, and once the raise is done at 20p pub barman will tell us he bought a gazillion at the same price.

Well the capex cost (from DFS) was 2.5x. As long as the opex cost from DFS isn't also 2.5x, we're profitable :-)

I'm joking of course but it has bound to have gone up. The electricity price was fixed nice and low though.

>>La Mancha/Orion/Glencore could finance this themselves but it doesn't suit them to do so, and ironically, that makes financing it harder.

Also IMHO the reason we have a financier in charge who has pulled in $50bn in deals. If he can't do it, it isn't getting done. If only the three parties needed to agree it with the banks, I think that's would have been more straightforward.

The challenge the cornerstones have got, which is what I think makes it complicated to get this deal done: even if the three of them could finance it (+ some debt from banks) because they want to maintain liquidity, keep it listed, and have it traded open market, they MUST attract further investment and can't carve up the $600m required between them. My reading of the Appian deal was that other investors didn't want to come in when Glen+La Mancha were taking the major share because they would always be in a minority shareholding in a company run by two majors.

The reason that's challenging here is irrespective of the terms on which La Mancha, Glen, Orion are _prepared_ to fund their slice of the capex requirement, they have to convince a.n.other partie(s) that this will remain a liquid company not entirely under their control where the further cornerstone(s) will have liquidity to buy/sell open market. To do that they have to offer terms attractive enough to the new investors because the new investors aren't in the 'we're going to lose $250m if this deal doesn't get done' scenario.

And therein lies the challenge. I think La Mancha/Orion/Glencore could finance this themselves but it doesn't suit them to do so, and ironically, that makes financing it harder. All IMHO.

Because this (should?) be a profitable mine? As I understand it the new caledonia mine never was. Unless the opex estimates here were wildly out and the debt balloons through refinancing making this un-financeable, but the due diligence should discover that if so.

If this mine can't be profitable, then agreed. But that's what being bottom quartile on cost is supposed to give you - security against low commodity prices.

Well, I wish they had made the offer back in 2020 (or earlier) to buy the company pre prod at even a modest +% to prevailing SP when the company was £50-100m mcap. You would like to think they could have made a better job of the build and, given that that is typically what happens to juniors with Tier 1 assets (they get bought out for their assets, by a major) we'd all have grumbled a bit then looked for another AIM casino share to squander the gains on.

But, the BOD here wouldn't have got their 'get the finance deal done bonus' and couldn't monumentally screw it up so we ended with 0. It's only the risk that La Mancha or Orion end up with 0, as you say, that still gives any hope to the company because they'll be working hard to try and make that not happen. I don't know anymore but I'm with BuddhaBob on the timescales - April interim finance is crucial, because it makes a deal relatively likely IMO, and then hopefully a deal in Q2. If no April interim finance then the large lady sings I expect.

The other thing about the lowball bid is Orion and La Mancha have to agree it. They're unlikely to agree to a 99% loss of their shares (i.e. the current price) UNLESS the possibility of a finance package and getting the mine up and running are effectively 0 because they can't do it. Then it may be that Glencore step in make the offer at a number they think Orion/La Mancha would accept.

The point is then Glencore or the buyer has to assume: $200m debt already drawn down + $600m to complete the project + $m they had to pay to La Mancha Orion and existing shareholders. Not saying it can't be done but it can only be done if Orion and La Mancha agree, and they will only agree I think if they can't raise the money themselves via the financing package.

If Glencore was already going to offer them all their money back (i.e. $250m) for a full T/O they would have done it already, I expect. So Orion / La Mancha (and other shareholders in at the £1 level) stand to lose if a bid comes, probably. (They probably stand to lose also if it gets financed - no doubt about that).

Also it's $600m USD. The same amount as the original capex (give or take) which took 2years+ to negotiate and from a less distressed angle.