Member Info for wasarunner

Agree LG - I think we are building our mines the right way round though. The first mine, Araguaia, to supply the existing established stainless steel industry and be competitive with cheap south east asian NPI. The market is here and now and there is plenty of demand. The second, with optionality (see what I did there) pending a direction set by the battery market for an end product or intermediate product to go into batteries. And probably the direction the second mine goes will be set by the partner (or the buyer) we engage if it isn't going to be run by Horizonte. It is attractive for a buyer to be able to drive that decision and that is why I don't think Horizonte will make it.

It is a very nice setup and personally I expect EV to be in full swing by 2023-25 and already the direction for Vermelho I expect to be set by then if not before. But lets walk before we run and get this finance deal over the line first....

Always worth being aware of the bear case. Article below also reinforces the Wood Mac view.

https://www.reuters.com/article/us-metals-nickel-electric-ahome-column-idUSKBN27C291

Still feel we are low risk once finance is agreed. As many before me have said, lowest quartile on cost is always the place to be. And when I spoke to Simon Retter in Feb I specifically asked him if the ferronickel production at Araguaia would be competitive (on cost) with Indonesian NPI and he was very specific that it would be.

On the EV side my view is, while the jury is out on exactly when and how quickly, but it is coming and these things tend to happen faster than people think. Wood Mac might have to tear up their forecast in a couple of years time and rewrite it.

Indeed! I'm trying to find positives at the moment of moving from full lockdown -> tier 3. What a depressing December awaits, unless JM wants to deliver a Christmas Present. I asked for 15p from Santa....

I wonder if there is mileage keeping powder slightly dry on Vermelho for the time being until it is clear which way the nickel processing will go for EV.

https://www.macquarie.com/au/en/perspectives/electric-vehicles-push-nickel-into-the-limelight.html

There are alternatives to HPAL. At the moment HPAL wins apparently on cost, but it is a more complex setup with environmental impacts. If battery manufacturers start processing via nickel oxide route.

"The add-on costs from ferronickel to nickel sulphate are estimated at $3-5,000/t. NPI is now a proven low cost technology delivering nickel units to the stainless steel industry at a cost of under $8,000/t of nickel. This technology could deliver nickel sulphate units to the battery market for $13,000/t cash costs or less. This is of course significantly higher than HPAL operating costs (sub-$10,000/t after cobalt by-product credits). "

With Vermelho being relatively low on the cost curve to mine (and decent grade) there is probably optionality around processing route to achieve the same outcome - namely battery grade nickel sulphate. Obviously at the time the PFS was done the BOD decided to explore the HPAL route and opted for a modest mine to keep costs relatively low. But I wonder if as the cost conversion of the tech improves to turn ferronickel into nickel oxide whether this will start to be a more competitive commercial route.

Of course anything which reduces the necessary capex to get Vermelho up and running is likely to see it into production sooner. Plus anything that reduces the complexity of the plant will shorten the build time.

That said Woodmac are fairly pessimistic here:

https://www.woodmac.com/news/opinion/how-long-can-nickel-prices-defy-market-fundamentals/

"The near to mid-term outlook for nickel may appear to paint a fairly bleak picture. But, with the growing industries in China and Indonesia – together with the global shift to electrification towards the end of the next decade – the long-term view beyond 2030 is a more promising one."

I'm hoping for something positive this side of 2030 ideally :)

Some commentators have been saying the whole nickel price spectrum (i.e. the range) could re-rate in anticipation of what's coming this decade. That would imply potentially a higher low base and higher highs, almost irrespective of demand and what is in inventory at given point in time.

That certainly needs to happen to encourage investment to meet future demand. So if nickel price stays low, or moderate, on moderate LME stock, it doesn't encourage supply to be developed leading to an inevitable shortage down the line. The price incentive etc.

Either way the laws of supply and demand will play out eventually. Big nickel deposits need more often than not big development costs. People are only going to part with the cash on the expectation of a future nickel price which warrants it. As LumpyGravy you point out being lowest quartile is where we need to be - we should be able to attract the finance even on a modest future nickel price. Also think a big factor here is proximity to existing infrastructure (roads, power), this not only drives our cost down and gets us lowest quartile, but it is also attractive to investment as in theory it should be able to bring a big asset (like Vermelho) online relatively quicker than if it was located in the middle of Siberia etc.

Your link has been removed but I would be really interested in it if you have another way of posting it.

Did a similar thing in my youth, ski'd from resort to resort in France doing restaurant/bar work. Hardest I've ever worked in my life but amazing fun. Plus not many people can say they skied to work, which I did when working at high altitude resto. Had time and health then just no money...... :) obviously should have put my hard earned french francs they were at the time into apple shares. GLA

https://www.buyoutsinsider.com/mining-investor-orion-nears-halfway-point-on-fund-iiis-2bn-target/

$900m already in the new fund to fund opportunities in base and precious metals.
They also completed "US$1.33 billion deal with US petroleum company Occidental to gain access to mineral rights on more than five million acres of land in Wyoming, Colorado and Utah. " earlier this summer.

Right kind of partner to bring that $2bn+ NPV online.... and still maintain $120m required to complete Araguaia finance package is small beer for these guys. They're here for the bigg(er) pie.

TheITCrowd true, but don't forget gold also. With $ devaluation seemingly inevitable, it is potentially going to get even more valuable as an income stream.

I sold half my stake this morning but not because I don't believe in the fundamentals here - I strongly do - but timing issues around other money becoming available into next year/personal circumstances. My hope was that Pembridge would stay low in Q1 for a chunkier investment on my house sale. I kind of hope for other investors though the price passes me by :) Plus I have my half stake still here for the long haul.

I do believe this is an excellent investment at current prices and is suffering a bit here from history and confidence, which is understandable for current holders, but won't be an issue for new entrants once it appears on the radar.

There just aren't many copper/gold plays about on AIM and we're already producing and buckets of the stuff for gawd's sake. Some of the others are still drilling around trying to find the resource.

Thanks Flavour. You're a case study then which fits my hypothesis :-)

Share your joy of travel and happily (Covid aside) had enough money to do it but not enough time. One of the downsides of starting a business (of course depends on the nature of the business) but it is tying. The holy trinity of time, money, and health, which sadly nobody seems to have plenty of all at the same time in life....maybe Horizonte can make it happen for some.

Thanks Bwana - yes agreed, I've come round to the idea that the PI sellers will be mopped up as the de-risking event should attract further investment from participants who were previously not able/keen to touch it. As an additional - if the financing terms are better than the market is expecting (and at 6.8pence, I just don't see a scenario where they aren't), even with the inevitable selling there should be decent upwards momentum until we settle into a pattern. Longer term nickel price will be the driver and of course no 100% guarantees on this in 2021, but longer term (and with $ devaluation inevitable I think), nickel will rise.

Agree it is underpinned also. At least some of my thinking on my switch just now was to do with the slight drop. I also think Q1 is the latest the finance deal will be done. Not long to wait now.

bugger sorry to hear it ng. Sounds like a doubly bad 2020 for you (out of interest has anyone had a good 2020?! was that possible even?)

FWIW I just added 159,618 shares, now 99.4% by value Horizonte. Mainly because new money coming next year which I expect will miss this opportunity and can be diversified elsewhere. I'll hang on to the last 0.6% non Horizonte though as my rainy day fund! Really like this on anything like a 3-10 year view and of course the sale can happen at any moment.

one final point, and I may be completely wrong here. I think there is an optimum 'age' to be a PI.
The youth of today are almost certainly under pressure to make $$$ today. Jumping from stock to stock to try and make it happen. Some will get it right some will get it wrong, good luck to them.
The wise 'old' investors with money carefully placed for the long game for that rerating event want it out. They're watching with beady eyes for the RNS to finally pay the caravan off or whatever (nothing against caravans here, I've got one :)

There's probably an optimum age inbetween where you don't really need the cash, and can wait a decade for it to happen. I'm probably around that stage now, which is what makes something like Horizonte (where to see full value I really believe we are looking at second half of the decade) a very very compelling proposition.

I've probably now offended everyone on the board (both young and old). Apologies in advance :)

Dollar devaluation seems inevitable. Gbp devaluation I guess also very possible with brexit, stimulus and the debt situation facing the govt.

Nickel would see a good hedge, if we can borrow a fixed amount of $ to build the mine now, but the price of nickel appreciates against the dollar. That only considers the currency value vs physical commodity and not the supply/demand ecomics of the commodity itself which will also be in our favour. This is as good a place to be imo as any for the next decade, perhaps with a few gold bars hidden under the mattress for additional (dis)comfort.

On balance I would like Horizonte to stay independent as I like it as an investment over 10 years maybe more. Right now not sure I see many better places to put money. I do like the dividend scenario I must say. Gla

SJ if it helps we sound pretty similar in the investment side. Success on FTSE (I had good success measured over decades), terrible at short term trades (for me on AIM, at least) but I'm very confident on my AIM conviction plays - Horizonte and Pembridge at the moment. But I'm only confident because I know I can give them years to deliver fully - and I do believe that's our advantage over the average PI. Your advantage over institutions becomes - you can get in earlier and take a bigger risk. Your advantage over your fellow PIs becomes - you can hold your conviction on interim price drops and measure your return over a longer timeframe and stay in the game. And add where possible. Their impatience makes your fortune. I just love the Warren Buffet quote "The stock market is designed to transfer money from the active to the patient". So true. Never more true than with Horizonte. GLA

>>I suppose my strength is my weakness and vica versa then?
SJ I believe so. I've been 'adding' for 2.5 years now since I first bought the story. I'm either very right or very wrong. Almost the entire 2.5 years I've wondered 'why are these shares so cheap'. Most of the time it was because of the ii sellers but sometimes also general market disinterest or the occasional market panic.

And so were fortunes made. I'm (like you) either very right or very wrong here. I'm amazed it can be done by patience alone but it appears to be possible. I do believe this also applies to the next 3 years incidentally. There will be an awful lot of PI selling post financing and fair play to them. But for those with patience much greater riches await I feel in those kinds of timescales.

Doesn't make waiting any easier of course. Not when JM has tantalisingly dangled the 'hope to be complete in Q4' carrot. GLA

SJ in the past when we wondered that time later proved we had an ii seller. My suspicion now is that it is exactly as AIM calls it - people think they have time to get in here as they please because they dont see the progress going on behind closed doors. And I mean this sincerely you see a lot of 'big' pi's on twitter and so forth 'topping up'. Well unless they have bottomless pit of funds (which I dont) I guess they sold earlier bought something else then sold and bought back. Of course, it's what makes the market tick, no complaints. But one day, and hopefully soon, the music stops the rns lands and there isnt getting back in or rather - getting back in will be a lot more expensive :).

I dont think we will get pre amble now (maybe a holding rns if it isnt complete by Christmas) the next real rns will be 'the package'. Company has gone very quiet which means it is happening imo. Patience will be rewarded here.

Speaking of coal fired nickel, here is a deal from today (Australian $)

https://www.miningweekly.com/article/nickel-mines-in-a490m-deal-2020-11-24

As part of the deal they are building a coal power station to power the plants. Of course we don't need one of those as we have hydro.

I really hope we can keep Horizonte 'clean' when we get our JV/buy in/T/O. Would be nice not to go down the Chinese route as I believe they don't really care about ESG.

hmmm not sure Luke! Coking coal is essential I think to steelmaking where our nickel (at least from Araguaia) is headed. As opposed to the substitutable one - heating coal! So yes, a bit evil, but a necessary one if we want steel I believe....

You're even less diversified than I am - that's quite something. I'm 98.8% HZM (by value).