Member Info for wasarunner

Mv01 there is also a slider we don't know on the debt ratio because you can't do it all with debt, $500m debt would probably kill the NAV completely with whatever discount rate is applied based on whatever future nickel price is estimated (I don't know if the project can carry $800m debt). So there will be some equity and all of the factors come into play - what 'maximum' debt amount retains enough NPV to attract new investors and at what equity price to make the investment still attractive with whatever ratio of equity the cornerstones are prepared to put in to maintain liquidity.

It has to be a pretty complicated equation and given the total capex number is so high (higher than alluded to in the October RNS, obviously), I can fully understand the decision to pause the mine build while they sort it out. It is also completely rational of the market to assign some risk of bust - you can't argue with that really when the capex number remaining is bigger than the original capex number in the DFS! That said and like I put on the other post the 'non bust' scenario must be worth more than 3.5p I think in every outcome.

It's going to be interesting. For now I could live with a 20p raise as I think in due course we might then see something like 50p+ from Araguaia or Araguaia 1 and even though it wasn't what I invested for (my targets were £3/£4 in new money) but it would be a start. Worse is possible of course but as we both believe, not really in the cornerstones interests. GLA

Mv01 - and we know that doesn't work for La Mancha. They do not want it to be illiquid. They had exactly this problem trying to do a deal with Glencore+open market on the other Brazilian nickel project hence pulled the deal. So they have to keep it liquid. Keeping it liquid means getting other investors in - the challenge is how to get other investors in at above the current mkt price and not wipe out their prior investment. I don't know the answer but I absolutely agree with your thesis (and it's why I added even down to 3p area).

Oh btw I think by your maths we also agree on something else - which is that the current SP prices in a big lump for 'bust' because the maths struggles with the current equity price even with the huge capex required.

The 'it's not bust' scenario I think immediately leads to some kind of correction - it has to. I guess the question is does it lead to enough of a correction to make a 20p raise possible.

My feeling is the 20p raise has to be engineered by the cornerstones if that's what they want to happen (i.e. nobody will buy at that price unless they underwrite it all). But that feels very doable if La Mancha et al are seeing the long game, I guess the question is are the 3 aligned...... time will tell.

Take your point I was ignoring 'existing equity'. 'existing equity' is irrelevant if the raise is done for full capex at 3.5p (as it pretty much wipes out existing equity), but very relevant if it is done at £1 because it remains a much more significant portion of total equity.

I guess I was narrowly focusing on the 'how to raise £400m and what does the debt ratio do to the mahts'.

Like you, I'm rather hoping there is a sweet spot around 20p where equity could be done that would suit the cornerstones, if they can convince other investors for putting in at the same number. But I'm not confident enough in the theory to buy more even at the current price. One thing I'm pretty confident about is not too long to wait till we find out, I can't see the mine build not restarting by around mid this year OR, the other outcome. But obiously very much hoping for the former.

Technically of course this is true of any sp, 10p, £1 whatever it is. If the fund raise is 100% equity then by virtue of the fact that the amount required (£400m GBP - allowing for overheads) is roughly equivalent to the mcap pre crash (£400-450m GBP) then if the equity raise is done at prevailing price and no discount and 100% is equity then roughly speaking the equity price should fix at the raise price initially.

However, if say the raise is 50/50 debt/equity, and for now ignoring drop in NPV due to additional debt, SP should double from the raise price to get to mcap £400m after raise. Might not happen overnight as confidence needs to be restored that the project will succeed this time.

My point here is really that whatever the sp is at any point up until the raise, it is pricing either some bust and/or 100% equity. If you believe that those two scenarios are unlikely, then there is upside from the prevailing price as soon as the fund raise is done.

£400m to find, raise price 3.5p = 11.5bn shares in issue (all equity)

11.5bn shares in issue @3.5p is mcap £400m which is around the mcap pre 'crash' and if the raise was all equity of course NPV should be unaltered.

That means the current sp prices an 'all equity' raise. I can't see an all equity raise, personally, but even if it was all equity there would be upside at production from the raise price.

Much more likely the current sp is pricing a big chunk for bust, which means if it isn't bust, the current sp is way low.

All IMHO DYOR etc etc

Banks will want their investment back so their time horizon is the term of the loan, which I think initially was 10yr? They probably don't give a hoot about nickel after that and frankly they're right because nobody can predict the price 10yr+.

Initially I think La Mancha/Orion stand to lose the most. I've been mulling this a while now what their situation is. New equity at current level preserving their investment, but not increasing it, effectively wipes out $250m of their existing investment. Can they recover it. Yes and no. If their share of any equity and the share of equity as a proportion of debt/equity for $500m additional raise is similar to the first capex then they put in say $150m. Now they need $150m to equal $400m to breakeven but the total debt on the mine is around $500-550m so the NPV is lower.

I think it's doable and that's my fear to some extent, that Orion and La Mancha can breakeven here irrespective of the equity price (once producing, i.e. down the line). I still think some equity and debt is required and I think a finance package will be achieved. But on what terms.

Completely irrelevant what I think of course because people who wanted to sell have already sold and people who want to buy have the opportunity at 3p for a punt. I still hold now circa 900m shares, admittedly not worth a great deal but fingers crossed for some kind of 'fair' deal which balances the need for the $500m additional funding with the need for existing investor to vote it through. FWIW I do think a no vote in whatever we will get to vote on will make the shares worth 0p but I do think we will get to vote. Kind of a hobsons choice :)

I don't think anyone comes out of this great - banks, La Mancha et al. It's a bit of a how to save face and how to save money exercise now. Lot of reputations will get tarnished. How the F was the capex out by -> the capex. ?! GLA

If the 3 of them split all new equity they maintain better liquidity by raising at a higher than market price. But I don't think they will (because even at a higher price, they end up with too much of the company and that doesn't suit for e.g. La Mancha who want liquidity). I don't think the 3 of them owning 90% is good for them (except Glen). So I think they will try to attract other equity and I think that's the really tricky thing here. I guess the negotiation with banks is now also difficult because of the sum required. I don't know what will happen but I think they will want to find other equity to come in and the fear has to be the other equity wants to come in at market price (or lower). That's not good for existing investors (including the cornerstones). Lets see! I would say fun and games but clearly it's not fun (if you're an existing investor) :)

Mv01 I think the issue is if you don't want to own the mine (which I don't think La Mancha do, I don't think Orion do, and Glen might) and maintain liquidity you need others to step in and take the equity you're not taking. You can protect your own previous equity by issuing shares at price x, which is higher than price y, so less diluttion. But you have to find other investors to take up the 30% or 49% of the rest of the placing at a price and I think this is the challenge. I don't think Orion and La Mancha think 20p is a bad number just how do they (and can they) find other equity investors who will pay that for the remainder. If they can't then they might have to do it at market, and currently that's what the market thinks will happen.

The alternative explanation is that the market thinks there's an 80% chance (4/5ths chance) at 4p that equity will be wiped out, and a 20% chance that equity will be done at 20p. So the market might consider this a binary bet between 0p and 20p but weighted towards 0.

I don't know the answer. I do fear the dilution and I think the challenge in this market is getting others to invest. Orion/La Mancha might have a long view and so do Glencore but who else can they get to the table? We've had at least two institutions now selling in size - Fidelity and the other one more recently. Not easy to get investment in this market.

As I said last time I continue to hold. GLA

Incidentally I don't see a lot of posts, even the ones with my moniker as the title :) so they don't upset me.

I think there's an important difference between JM and KN. JM was a geologist CEO of HZM, representing HZM. KN is, a financier by trade, and inexorably linked to La Mancha. The reputational damage to La Mancha from getting their investment wrong, and putting their CEO in charge of it, should it go south from here, is enormous. That might mean he's in under duress - La Mancha trying to salvage reputation but the impact on La Mancha of HZM can be much bigger than the loss of their investment in HZM. Who invests in funds which balls things up?

So I think it is very significant that he is in charge, I said so at the time of the appointment. As I said on the other post, doesn't mean his job is easy and we don't know the outcome. But we know La Mancha's intent. And it isn't to balls this up.

Billy it's even simpler for me. In the interview he clearly states they don't throw good money after bad and that they believe in the project. A couple of months later he's the ceo. Now why would he take over as ceo if it wasn't financeable? They knew the original overrun fogure 2-4 months ago. They knew if they suspended operations the figure would go up. So La Mancha knew the numbers yet put their main man in charge.

Doesn't make it easy, and doesn't mean it will be great for existi g shareholders, but I do believe it will get financed. Top line at average nicjel price of $20k/t for a1 is around $8bn in todays money (then add some inflation over that time). It is worth putting another $500m in for. The second mine gets a mention in the interview too. These are strategic investors for strategic value, Glencore the same. Orion may be after quicker money out but they're stuck to an extent with the situation.

We will see...

Https://youtu.be/twt9TBsR9tM?si=LIYjZioh8-6Bh8gX

Granted, this interview was before the latest capex estimate has been published (but after the October RNS). 25mins+ is the interesting bit. It gives clues as to why 28yr/40yr mine life is worth financing for for a fund like La Mancha. This chap is now running Horizonte (but wasn't when this interview was recorded).

It will get funding. The terms, we don't know...

FWIW I still think best case scenario now - equity at par (20p), how much is anybody's guess but the best case scenario is equity at par offering upside, so they can't issue an amount of equity at 20p which makes 20p not an attractive end price because investors will have to see upside from the number. So I might be barking up entirely the wrong tree but 20p would preserve some dignitity for La Mancha/Orion (as it would to some extent protect their existing holdings though they would never make money of course down the line, with those holdings.

The shortfall is massive so a lot of debt will be required. So maybe 1bn shares at 20p and the rest debt, that would be around 50/50 maybe better is possible.

What's the long term upside? 50p-60p maybe. The problem with so much debt is it has to be paid back and the top line has to cover it.

As I said above is best case scenario IMO. Worst case scenario is clearly 0. I don't think it will be 0. Maybe something inbetween who knows. I could live with the best case above but maybe I'm in dreamland obviously today the SP will tank and tank big.

Here's some things that smell, to me. In no particular order:

- guy comes on this board a week or so ago and (effectively) accurately predicts the shortfall. $400m he says is needed - how does he know? Lucky guess?

- big short positions and sp tanks to 8p, again, leaky leaky

- now we got La Mancha ex CEO and La Mancha ex CTO. They are either positioning to defend (against who, Glencore?) or attack and make an offer on the cheap? All the same you don't want all one co at the helm.

- $454m. I mean. FFS. 35% cost overrun?!

- where the f did the gold mining company come from, who hired them, why, and why have they all 'got the job'? What do we know about them.

I mean, it does all look pretty bad from here guys what I say will make no difference and I won't sell (what's the point not worth anything at this price anyway) but I've long suspected it's not a level playing field in the casino and sadly agree with the guys here who think we are being sh afted and royally. But nevertheless the sun is shining outside so GLA.

>>they need 400 millions to make it

source? didn't think so

Hi Dee - I'm not putting any more money in (ACP or BKT) until one of the graphite miners gets the go-ahead and actually starts building in Tanz. Hopefully that's BKT and hopefully that's soon then we're off. I'm holding my ACP shares. Just think one of them building needs to be the catalyst and yes I agree until we know the terms on BKT. There will always be (Lassonde curve) a good investment opportunity when the initial investors leave and before build is complete where you can buy in for some return.

They'll have dilution but ultimately they'll also be successful as the size of operation and the backers (Posco). I@m tempted to buy some BKT, not instead of, but as well as. Which turns out to be the better long term investment we will see but I 100% agree with Dee on the fact that we need the major player to move first and until they do, we can't. Or, we can add $40m or something to our own capex but what for?

BKT are a bit screwed by the resettlement costs too which we won't have.

>>If you can’t spot they are sells then you should not be investing. 10.55 was the price to sell early today with the buy price at 10.62 , shortest spread I’ve seen for a while so I decided to jump in.

Not necessarily true. I briefly glanced at the trades (were they yesterday) and they looked a lot like the trades the other day to me, transfers (put and transfer or whatever). One buy one sell executed by the same broker to transfer shares.

As I pointed out I've done this before for quite big amounts - £50k at a time. The broker typically offers you a price near the bid to execute the transfer, so for example for the ISA this means maximum amount of shares can be transferred.

Example: I have £50k cash in ISA

I have £50k Horizonte shares outside ISA

I call broker - they transfer £50k of shares into the ISA by selling them in trading acct and buying them back in one transaction in the ISA. They charge a small spread and a fee, hence (IMO) the slightly different prices on the two sides.

All IMHO but I've done it before and no doubt will do it again....

Look suspiciously like 2 sides of 2 trades to me, i.e. a transfer. On a very narrow spread 2xsale 2xbuy of 500k shares. Could be wrong but I've done that before myself moving cash/shares between ISA and trading - put and transfer I believe it might be called. When they've been outsized mine got reported late too (not necessarily on Horizonte but generally).

Technical reason but they are privy to information we are not, like the shortfall technical report and their negotiation with the bank and indeed the funding package they are designing. Buying open market ahead of the publication of such details would be closed period I think.