Member Info for wasarunner

literally just needs news from the co. Silence is golden though. Brewing very nicely indeed. I'm not betting against significant news before Christmas. I think 'the players' have all the macro indications they need to take the plunge here IMHO. It won't hurt us either that GBP/USD is nearing multi year highs in the event we do issue equity (although dollar devaluation of course could mean the mine build is more expensive in $ terms...)

pickedpeck - indeed, and of course explains why it might complicate the discussions which are taking place at the moment. How to finance Araguaia Stage 1, if indeed there is to be equity and/or how to bring on other partners for the rest of the project(s) if parties are looking beyond this particular stage. And I am 100% sure Orion and Teck at least will be looking beyond this stage.

With the amount of resource available it is clear why Horizonte don't want to develop it all (up to 3 mines?) independently. But if we can partner with the right players, be it on the finance and mining sides, perhaps we can end up with 1 big mine ourselves fed from 1 or 2 geographical areas. I'm thinking one big Araguaia mine for us, the rest for Teck, but perhaps some ongoing royalties of the latter. it would do. Even at $29kt/yr if we are producing it, once we're relatively debt free, as we've stated before Horizonte would be a $1bn co+ at $500m turnover.

Whatever happens with this first phase I'll be trying to read into it where this is going longer term. Whether it is obvious from the next announcement we don't yet know, if they've divvied up the lot already, then obviously it will be, if we only really hear about Araguaia and equity, we will have to surmise what's coming later.

Ivor I guess an offer is always possible, of course it won't complete by then. Unless they're 90% way through the sale legals but forgot to tell the market :)
I'm starting to think 40p is cheap though. Never thought that in the past but when you start looking at what we've got....

Clearly, Orion love getting in on these opportunities with additional resource/optionality/mines at different stages of development and financing. It is pretty obvious they aren't just here for Araguaia Stage 1. Also be interesting to see what part Teck play in the future - whether they prefer a JV route or a full T/O. I could be quite possible that a JV for them is easier to setup than a full T/O where they could get into a bidding war with other parties. Whereas a majority stake in Vermelho might work for them?

I think re-reading all the documentation (and I think I will take more time over Christmas to try and go through the DFS documents and Vermelho PFS in more detail) confirms that, although many here are currently focussed on the financing stage as s de-risk to the company/project, there is so much further to go. Unlocking all of that value could take years, whether through Horizonte developing it or until the correct offers come which value everything we've got. My thinking is BOD would ideally hold out for $1-2bn if we don't stay independent - and that value might only be achieved a few years down the line. We all know an offer could come at any time of course. I would be quite happy to see Orion take an equity stake here in the first round of financing to block a cheapo takeover though.

All to play for. News before Christmas? Lets hope so...

Craig indeed, and obviously a masterstroke by Horizonte buying these resources from the various sellers (Glen/Xstrata/Vale) back in the day at bargain prices. A lot of contained resource which is going to be in high demand this decade.... but of course you already foresaw all this when you first invested all those years ago :)

I can see it on page 43 actually (Araguaia DFS)
So Araguaia North contains 'Vale dos Sonhos' resource. Serra do Tapa is slightly north west of this. Both appear marginally closer to Vermelho than to Araguaia South. Interestingly the Serra do Tapa dot appears inside the 'ANN licences' blue marked area. It is going to be interesting what happens with all the resources. You do get the feeling Araguaia stage 1 is really just the beginning...

Lets not forget Vermelho also has saprolite ore amenable to RKEF. At some point there must be a case for building a mine (RKEF)nearer the ore than trucking it 90km+. I imagine trucking is still not a clean business (yet) until all those rock trucks or whatever they use are made by Tesla.

What's clear is lots of options - for Horizonte or a buyer or a JV partner. Many deposits, many locations, and at least 2 processing routes available in our nickel district. Hopefully a few partners with deep pockets (e.g. Orion) to help us develop it. 3.5m tonnes of nickel that somebody is going to want to buy. GLA

Ok I found it on an earlier investor presentation:

https://horizonteminerals.com/2012-05-01_investor_presentation.pdf
page 8.

It does look like it is in the same place as 'Araguaia North' or thereabouts, but I don't think it can be the same resource. In the Araguaia feasibility study:
https://horizonteminerals.com/news/en_20181212_araguaia_ni_43-101_technical_report.pdf
page 19 and page 22 it is clear Araguaia North (ANN) has been quantified in the PFS.

I think Serra do Tapa is an additional deposit and the RNS announced the initial mineral resource after the Araguaia DFS was published:
https://www.globenewswire.com/news-release/2019/08/13/1900815/0/en/Horizonte-Announces-Significant-New-Nickel-Resource-at-the-Serra-do-Tapa-Deposit.html

So I think we have an additional ~850kt nickel which is saprolite and amenable to RKEF sitting alongside nearby Araguaia North and could be processed at either Araguaia or Vermelho wherever an RKEF is built. It does look closer on the map to Vermelho though (maybe marginally).

Just on economics a lot of upfront cost seems to be infrastructure like roads and power. Vermelho is meant to be well supplied with these/close to roads etc. so maybe not so daft also building an RKEF or two there.

>>~850 tonnes
850kt nickel

I've been trying to work out where it is. Although it is behind Araguaia and Vermelho it does add to the equation with Horizonte. At 70.3m tonnes ore grading 1.22% nickel ~850 tonnes nickel.

The RNS states '90km nNorth of the Company's Araguaia ferro-nickel' project. Unclear whether that is Araguaia North , or the planned mine at Araguaia (south).

That is interesting because Vermelho is also North (West) of Araguaia. I have a suspicion but can't confirm on a map that Serro do Tapa is closer to Vermelho than Araguaia. I think that may also be true of Araguaia North?

If true then there might be good reason to build a ferronickel mine at Vermelho (perhaps in addition to the HPAL mine should that get built). I guess the economics comes down to the economy of trucking vs economy of building mines but it would suggest there is enough resource for further RKEF facilities at the north end of the Horizonte mining district.

Perhaps academic at the moment lets walk before we can run but you can bet a major would be looking at these options when considering a purchase (of Vermelho, Serro do Tapa, or the lot).

If anyone can triangulate the distances between the various resources I'd be really interested.

Bottom line is its amazing. Makes loads at $14k/t. At $18-28k/t - printing money. We just need to find out now how we get there...

The plant will be duplicate but I think Stage 1 will contain costs not applicable to Stage 2. e.g. you only need 1 road. Presumably when you run power you make sure you've got enough for both plants etc.etc. Utilities cost listed for Stage 1 (Utilities and Infrastrucuture) is $106,918,000. You probably only need to spend that once.

If you look at the calculator all the income side is doubled up for Stage 2 - i.e. it subsumes the Stage 1 output. Stage 2 in the calculator is really (Stage 1 + Stage 2 - cost of Stage 2). Happy to stand corrected if others think differently!

What would be nice is a nice discount on building both stages at the same time. If you can order all the bits to make the plant, order 2 of them. 2 for the price of 1 like I got on my wine this weekend etc.

Ivor, I think Stage 2 is down on the calculator as $443m because it includes Stage 1 (therefore the cost is really the Stage 1 cost). The assumption being that FCF produces the additional capex, therefore it doesn't need to be stated as an additional upfront, but will reduce correspondingly the FCF over LOM for Stage 2 (but it doesn't matter because obviously it is producing twice as much nickel so still greater FCF overall).

So the $251m has been subsumed into the calculation. I can't remember if it was craigieboy who said once 'gateway debt' is repaid the company is free to raise additional funding and really, that's where I see the $251m coming from. It is attractive to state it in the feasibility study as coming from FCF because it reduces upfront costs which many worry about with junior companies. But I think with the likes of Orion around we don't need to worry too much about the $251m. It will appear when required.

There is still also the scenario that Vermelho goes ferronickel route. My understanding is it has better grades so if Horizonte stays independent, and say, they fancy another FeNi plant but can't be chewed with HPAL, you wouldn't bet against bringing that online. We will see!

https://horizonteminerals.com/news/en_20200602-investor-presentation.pdf

page 11
STAGE 2 NICKEL PRICE
US$16,400/tonne Ni
Expansion Capex (Y3)
US$251M

So expansion capex for stage 2 quoted in the Araguaia DFS is $251m. Anyone think Orion + debt can't raise that faster than 3-4 years post production FCF? Depending on how this gets sliced up I think Stage 2 will be producing well before 2026. GLA

Baggy, my thinking:
The financing of Araguaia is necessarily complicated by Vermelho because issuing any equity at parent company level to finance Araguaia the parties receiving equity would get increased stake in Vermelho. So if this is the route, it has to be thought about carefully - what is the value of Vermelho etc and what is being given away.

They can't finance Vermelho at this stage because I don't think you can finance a mine with no DFS. They literally don't know how much it will cost to build yet.

Araguaia Stage 2 is different. If we issue equity for Araguaia Stage 1 on the assumption that Stage 2 of Araguaia is built from FCF generated by Stage 1, then anybody buying equity now is enabling Stage 2 so proportionally their investment it is correct that they contribute cash now and receive, downstream, a return from Stage 2. Personally my view is that will never happen because it is too lucrative to get Stage 2 up and running earlier (3-4 years after Stage 1 comes online is 2026/27) - you could have this up and running much sooner if you for example take on a bit more debt. This debt can be netotiated now (if we have partners with deep enough pockets) or perhaps once the mine starts producing from Stage 1. But waiting 6-7 years for it, from now, seems pointless once nickel is $18k/t+. I think it will get financed via some other means - Orion or others.

There could be a bigger negotiation going on and we have all speculated about this. Either a full T/O or perhaps part sale of Vermelho to fund Araguaia. If you were going to do it, now is a good time to announce the JV partner, take on some cash, not dilute equity at all (can you imagine what that would do the SP - sell 50% Vermelho, no equity issue on Araguaia, and cash to build both stages to include debt). That would be some rerating event.

I suspect it might be the boring old 'fund Araguaia Stage 1 only' RNS though. But given how long we've all waited for it, and given it's the gateway to unlocking all the other riches, 'it will do' and the sooner the better IMO. GLA

>> Glencore already trade/sell nickel they don't mind.
mine, I meant to say. Hopefully they will be the offtake partner.

I see Glencore as the customer. Ready made. Everybody needs a customer. Glencore already trade/sell nickel they don't mind. GLA

We were watching the 121 presentation as window into our financial future and my partners first comment was that Mr Clegg was a fine looking gentleman. Honestly I ask you.....so Ms Dorri could do worse, apparently.

WYTT - indeed and with Orion circling (they have money, clearly), do Teck want them to have a blocking bid? There could be pressure on Teck, if they want to go it alone, to make the bid. Or, Orion and Teck could already be in discussions about how this plays. There are many scenarios, some of which involve people paying us soon for our shares and some which don't! 'Optionality' that Orion might be looking at all - they might mean which management team is running the mines :)