Member Info for wasarunner

I think sometimes in the debate we lose sight of Stainless Steel. So much of the current focus for nickel in the media is around EV and electrification and rightly so - it is the next big thing, which way will it go, what battery tech etc. BUT and here is the big but:

If Stainless Steel didn't exist, we can pretty much guarantee that financiers would be taking a very different approach with Horizonte. They would have to way up all the arguments for and against EV (rate of adoption) and all the arguments for and against alternative chemistry (e.g. the iron battery/cheaper alternatives, possible new and emerging tech as mooted 2030+ solid state etcetc). Then, they would have to decide if they are prepared to finance capex for a build for 30-38 years based on those facts, and those facts are shifting, opinions differ on exactly where, and how quickly it will move. The financing would be a riskier proposition, and Horizonte would have to justify it on things like being lowest quartile etc. This may still be a challenge for Vermelho I don't know - to produce a HPAL mine producing nickel sulphate for 38 years if there is uncertainty if that product will be required over that timespan.

But Stainless Steel is the bedrock, the foundation of this company. JM has been at pains to point this out on his interviews in 2018-2019. It is the here and now. Millions of tons of it is needed every year. EV/Vermelho/Optionality is all nice, but to get this mine financed right now AHEAD of the EV curve, we are financing it on the fundamentals of Stainless Steel. The EV boom is just icing on the cake, we all hope it will drive nickel prices up, but for Araguaia at least it is a reasonably moot point really.

Easy to loose sight of this at times. The financing here will happen on the fundamentals of Stainless Steel and Stainless Steel alone, and although nickel price is of course currently highly correlated with this industry as it currently consumes something like 75% of global nickel production, it really is a very well understood industry and in that context the financing of Araguaia should be highly de-risked, from the financiers perspective. Stainless Steel as a product of ferronickel is going nowhere it will still be being used worldwide when I'm long gone...and I'm still reasonably hopeful I can outlast 30 year Araguaia LOM (though they can extend this of course...). GLA

Good work SJ. A quick consult my equivalence calculator (reversed) shows you are in at around the equivalent of 2.1p on EUA. And look where that went. (sorry couldn't resist - will desist now). The only way is up, to the equivalent of 43p (101p). GLA

Flavour I don't get jealous (my friend is still invested there and I try to get him to switch to Horizonte on a weekly basis :) about their valuation I use it as a sounding board for ours. When you (in this case we) have $50bn+ of asset in the ground:
- can it be mined cost effectively (i.e. profitably) tick
- is the commodity price relatively stable (it hasn't just trebled/quadroupled and about to fall back etc) tick
- is the govt not like to nationalise everything tick
- is the capex requirement extraordinary or have similar capex' been built in the same commodity tick
- are there major shareholders who might know a thing or two about mining tick
- does it have cash to keep the lights on tick
- does the BOD have anyone on it who knows anything about mining
- did a major mine financier advance a tranche of dosh and are investment banks queueing to part with their cash
.....list goes on but eventually you conclude that mcap of £50m (first invested) and latterly £100m is pretty cheap for such a company. So then it is just a waiting game (which admittedly is harder in December with short nights, Tier 3 lockdown, no pubs etc.etc. for distraction). But we know we will get at least on RNS in the next 3 weeks we just don't yet know what it will contain!

Thanks Luke saw that I follow him on twitter as well. He was once invested in EUA but sold out even before I did! We can't all call every trade right I guess :)

I still always look at relative valuation and relative stage of progress and proven/unproven resources / jurisdictions etc.etc. and for me the positive thing to carry across from EUA is - if in a slightly (or much?) more risky jurisdiction, a similarly sized asset, but less well defined (we are at DFS/PFS complete stage respectively on Araguaia/Vermelho and they're not) can be valued at around 15x our mcap, then on the assumption we say fair play the're worth what they're worth, we are significantly undervalued.

But then we all know we're undervalued which is why we are all still holding/adding :)

Dj feel for you really do as I said once I did know some publicans back in the day and it has been a very hard hit sector I am really missing the social aspect of going of course drinking one can do at home but its not the same thing. I am lucky both dayjobs were relatively unimpacted and money kept coming in in those circumstances its easy to hold / add. Everyones circumstances are different we should all remember that.

This is a good company and it will get done. As I expected and surmised in March it is clear to some extent Covid has impacted progress, exactly how many months/quarters we can all argue the toss but it is the endpoint that matters. In the meantime for those with cohonas and a happy steady income or random house sale, the opp to add if so brave. If covid draws it out so be it I have to view it as an opportunity like I did city financial and like I did Richard Griffiths. Gla

If (and this is really if) deal isnt done this year I am going to try and motor our house sale through and as I said would add here. Feb. Would probably buy anything under 10p and it doesnt look like we are threatening 10p at the moment pre financing news. Gla

Fpn2 no, before, but I do like a gamble evidently as I am invested in AIM! Genuinely I dont know which side of Christmas but the impression I get is it has been a challenging year. I suspect if it wasnt for covid we would have been done and dusted around mid year and be building something around now....

As I said I've met him in person, top guy. Haven't met Jeremy Martin but heard very good feedback from others, and Jeremy comes across very well in the presentations. These are serious people, and Horizonte is a serious company with serious prospects.

Bwana yes a small stake in ACP.
It wasn't the right time today to mention to Simon about meeting PIs I do get the impression they are absolutely flat out. I will try to make that approach next year once the big news is out of the way and dust has settled. I am genuinely interested in the 'what next' as I am interested in the next few years journey. You need to meet the leaders of the company really to understand that.

GLA

I very much get the impression (and apologies this is my interpretation, not his words), that pulling off a financing deal / engineering deal like this in normal conditions is really hard. Covid adds another layer of complexity. So to be fair to them and cut them some slack, if it ends up not quite being this year but getting delivered eventually, we have to give the BOD a benefit of the doubt there these are pretty trying times.

I note the Pfizer vaccine was approved for UK. Surely the start of a better 2021 for all. 2020 was a pretty pants year, can't wait to see the back of it really....

Also, confirmed they will update the market pre Christmas in all cases.

Indeed it is a good board, we all have our off days. I don't think there will be too much premature back slapping here because (unless it sells like EUA is trying to do) there will be whole loads of progress in the future - mine building, Vermelho etc.etc.

I resigned today, so for me Horizonte is no longer an optional outcome, it needs to be nailed on. But pretty confident. Still have our business to fall back on so it isn't like I've given up a daily income but it is one step towards where I think this is going. One step closer to 2025 as it were.......

Oh and I nearly forgot. I spoke to Simon Retter this morning. He obviously couldn't tell me anything market sensitive but re-iterated they have made good progress on both major aspects - engineering a lot of work has happened to prepare the final capex and costings work and also on the finance. He did say it was a fiendishly complex process to line everything up, but then we knew that already. Noncommittal on timescales as one would expect. Did emphasise as they did in the last RNS/ market update that Covid had affected progress on certain pieces. But all in all, all good IMO and happy to be invested here. But I can afford to wait. GLA

It is just tracking EUA I think.

My EUA equivalence calculator is showing 100.72p is due here in short order. Come on Horizonte. Only another 93p odd to go...

Well the interesting thing about Stage 1 & 2 is really once 1 is financed the market (which should forward price) should also price in stage 2 if it is going to be built from FCF. Maybe not at the same value now, but it should factor. FWIW I suspect 2 will get built a lot quicker with more financiers money if and when we get stage 1 up and running. Why wait another 3 years post production to start building another profitable RKEF?

Your estimates are going up at the same rate as the EUA sp you invested there by any chance :)

My 'EUA equivalence calculator' can't keep up with the swings of the EUA shareprice but 40p touched there yesteraday I believe gives us 93.7p once % ownership of the resource and shares in issue is factored.

That's a worthwhile sanity check of the W.A.G. of 50p-£1 I just put below. If they're worth that much why can't we be etc? :)

>>Peel Hunt would be very busy trying to revise their Target price.
Well, at $14k/t (yes, $14k/t) the combined NPV of the two projects is ~$2bn. So at 2bn shares in issue $1/sh. But that's for $14k/t.

Even allowing for a discount for 'the mine isn't built yet' and a discount for 'we won't own all of Vermelho' but then adding premium for 'nickel is and will be higher than $14k/t' and 'his is a Tier 1 lowest quartile mine' then I suspect if Araguaia can command 33p de-risked we would be looking at something in the 50p-£1 range if both projects got kicked off through the financing round?

Baggy, sounds plausible though you might be mixing a few £ with $ there if we do end up issuing equity thre ballpark you state seems not unrealistic, always supposing the deal is done at company level and therefore Vermelho is slightly diluted, if not jv'd right now, by the deal.

I think if Vermelho is jv'd now then it becomes more interesting. The question on my mind is what part are Orion playing in all this. A share in 500m shares isnt that exciting for them. Even if they got half the shares it isnt that much - cannacord already have 150m. They generally play bigger parts in projects. They would like more. Might they agree to part finance Vermelho (for example provide debt with Teck leading.)

The really big question is are these major players carving up the future of Horizonte between them, and possibly with Horizonte remaining independent and being the centrepiece of it all, or, are we just going to get Araguaia financed for now, and all that to play out later.

You do get the feeling the longer the negotiation is taking it could be the former. Both are huge milestones in the company life but to agree the full package across all projects and get cracking on them now would almost instantly propel the company into a new league of would-be-nickel producer. And I wouldnt bet against it because these are big players and Orion clearly like our BOD, have very significant cash at their disposal, and I think everyone is focused on bringing these projects to production at earliest posdible date. A long negotiation for a rapid build out? We should find out soon....

main roadblock on sp here has to be unknown dilution.
I still don't see less than 10p likely, if Vermelho is included (i.e. company level).
If, for whatever reason, it is possible to finance less % of remaining capex via equity then the price becomes almost irrelevant:

A 3 way split Brazilian Debt / Offtake / Equity (as suggested on the other board)
That's $40m to find for equity
Event at current SP 7p that's circa 400m shares

And that's not a lot. Still less than 2bn shares in issue even including options and I'd take it today, just get it done.
Brazilian banks? $40m doesn't sound too much.
Offtake? $40m is 2.5kt of nickel at todays price. Or around 1/6 th of a year of production from A1

So the market pricing is wrong. I think if Vemelho is included (company level dilution) then the deal will be done at premium premium and 10p is really a minimum it should go, especially if Orion want in.

Could be close? Lets hope so.

Maybe, just maybe, do the final capex numbers (reviewed) need to be in before sign off of project finance? It must be nice to know your finance package is going to cover the cost, so if they've been finalising costs over the last couple of months and figuring out exactly where the power line is going to go, could we be on the verge of the deal now that in theory that might be complete.....intriguing....

Hi pickedpeck please confirm this is what you were thinking (it was hard work getting this out!)
- 'we are due to deliver a review of Capex and Opex in two months' - and as the article was dated in September, that would be around November/December time.
- "The biggest challenge is the implementation of the transmission line of 120
km, which will pass through several municipalities in Pará, luckily the licensing is going well, which demonstrates that the energy issue has been resolved, as well as the water grant."

let me know if you picked up anything else salient. All sounds good but it does beg the question why we aren't hearing about these things through the quarterly update which dropped in Nov? Even if incomplete - I didn't see mention of these with expected dates?