Member Info for wasarunner

have to say an offer makes a lot of sense to me. Assuming:
- debt is about to be signed
- Teck are the buyer
- Glen will be the intermediary ( so, they may offtake from Teck)
- Orion will help to finance both mines in exchange for ongoing royalties/revenues etc
The thing that pushes the timescales buttons are:
- Horizonte _will not_ advance Vermelho. So if a buyer wants to hit the sweet spot (and lets face it with Elon jumping up and down that time is sooner than people think) for EV, they'd better be permitting Vermelho soon.
- competition. The sooner Teck seal the deal the relatively cheaper it will be and possibly for them they may be hoping less competition from other buyers

The triumverate of Teck/Glen/Orion sets up a game/set/match scenario for a sale here and I think Vermelho is the thing that might just push on the timescales forward.

But it is just one outcome, I would take 50% discount to eventual sale value, say in 3 years time, if it is done pronto so personally happy with the 25-30p area mainly because I can put the funds to work elsewhere at the moment which long term gets you to the same return that this is worth.

Will we see it? Find out soon I guess. GLA

Saving grace is we arent diluted (yet). If its £500m+ then its 30p min including options. Less than £500m would be a bit derisory for what weve got and how long it took the co to get here (in terms of the work that went into araguaia etc). Lets see! 30p this year or q1 - I would take it..

News from the company could land thick and fast if it is all going to be wrapped up by yearend - not so much time left now. I can live with it taking longer but you also wouldn't be surprised now by a string of RNS' landing in short order. It has been good fun speculating what next but of course we'd all rather be debating the pros and cons of the great finance deal they will just have announced! And watching a health re-rate taking place of course. GLA keep the faith.

I also (personally) hope araguaia p2 can be at least part financed by sale of vermelho rights if horizonte stays independent. Whats the npv on araguaia if you double capacity at $0 capex? With nickel $20-30k/t? And you realise production sooner than in the current p2 npv forecast? Huge, I expect. Given that Horizonte probably cant develop Vermelho it is a best case independent outcome imo.

More if you factor araguaia p2. The npv is much higher and must allow already for capex (to be paid from fcf on p1). We should really concentrate on araguaia as its total potential because that is what a buyer will be doing. If you are an investor and you can wait 5-8 years you will see p2 come to fruition and also institutional investors will invest on that basis. Of course whether we are independent - debatable - unlikely. But sale value will be for a 29k/yr operation or more imo.

Another way to look at it is take your shareholding and expected dilution and divide the value of nickel in the ground.

My numbers (rounding to keep things simple):
Todays nickel price: $50bn in the ground nickel
Shareholding post dilution: 1%

I own $500m of Horizonte's nickel

Sadly, I accept, I will not see that figure in my bank account ever. But what's realistic value to realise, either by mining it, or by selling it? 1%? That's $5m/£4m. 10%? That's £50m/£40m.

What if nickel doubles in price (as some commentators are saying) is likely to happen? $100bn in the ground.
1% = $10m/£8m, 10%=$100m/£80m

Knowing all the above leads me only to 1 conclusion which is - I don't want to be selling a single share until my porftolio reaches 8 figures. Only because I consider it an equally likely outcome that it will do so, whether we go on to produce or sale. GLA

It is a big deal (not just metaphorically speaking).

At the moment, it looks like we are negotiating $120m piece, but in reality of course, the stakes are so much higher. We are negotiating about something that affects (if we assume co level equity), the birth of a $3-10bn NPV nickel PRODUCER. We are talking about getting $50bn+ nickel out of the ground and anybody who is going to be involved in the financing, offtake, JV, equity, is really haggling for a piece of that action. As PI's we are heavily focused on the COST side (how do we get the capex) but these financiers are looking at the downstream INCOME side - for every % of the equity they own, what is the 5-10-30 year payback.

That's why it takes 2 years to negotiate, in reality it isn't $100m that is being negotiated, it is $bns (in income).

Big deals take time. EUA investors (I was one of them :) jumped on board last November with 'deal by Christmas', then 'deal by March' then 'deal by the summer etc. The deal isn't done yet. I hope it gets done I hope it is a big one but the reality of how big finance works is, if you value things in the $bns, it takes time.

We have $bns of assets here. It is hard at times to stay patient but we need JM and co to keep a calm head and negotiate with these big boys knowing the value we hold, and the value we want. It takes time. It may even overrun end of this year then those of a nervous disposition may sell out on the cheap. Plenty of cheap selling going on as we speak. Hold for gold. GLA

The big re-rate lets face it will come when insitutions invest. Apart from the odd 'add' like Cannacord recently, lets face it as a % of holdings institutions have reduced here in the last 3 years. I believe institutional investment is what is needed to push us up beyond 10-15p because those guys naturally look at the long view. Too many PIs with too short time horizon will never fully value a company like Horizonte correctly.

Agreed as a minimum with upside for less shares issued. I think they can do it for 2bn shares in issue (or less). There has to still be other avenues not yet released - govt debt (brazil and credit export), brazil banks etc.

2bn shares is 17.5p at £350m and could easily be valued higher say £400m to include the obvious potential of Vermelho 20p.

But all these valuations ignore what the market believes nickel price will be at production (as pickedpeck said yesterday). IF one of two things happen - nickel producers and explorers start to be rated on those expected pricing, or the actual price starts to track to those prices, say $18k+/$20k+ we should be valued a lot higher than £350m/400m?

Each project achieving a valuation of 15-20p in the next couple of years would do me fine so comulatively say 30p min. Lots of upside post production but will we get there?

If people are looking for a sharp exit say Q1 next year to sell their Horizonte shares they should see a decent return but with all the upside potential still to come I still think they will be selling out at less than a third of what these will be worth even on a 2 year view. GLA

pickedpeck thanks, very interesting.
I guess also we are highly leveraged to nickel price (as costs are relatively fixed minus exchange rates et al, whereas nickel we know is a volatile metal). But better to have C1 ~$7k because that of course produces a huge range of profitability.

It follows that NPV will fluctuate reasonably widely with changing nickel price but as you say you add discount (or opportunity) if you think it will rise.

This gearing is obviously highly played out by a single/pure play miner (and I mean commodity here rather than number of mines or jurisdictions) like Horizonte. For the minute putting Cobalt to one side.

Taken all those factors then you have to say 'right place at the right time' we are. The numbers are staggering even before we really factor in 'what if' with Vermelho. Thanks for the analysis.

That of course would require the market to price us at NPV based on current nickel price (and not base case $14k/t). You are of course saying the market if pricing correctly should forward price us on expected nickel price in the years of production therefore a higher NPV but of course there is discount to uncertainty to the future nickel price (presumably this is baked into the NPV calculation though).

It will be very interesting to see how it plays. Not many weeks to find out, hopefully!

Thanks pickedpeck, amazing stuff, I hope you're right.

My maths (please correct if wrong): 0.7x NPV @16k/t (I think you are using Araguaia P1+P2 estimate here) gives me mcap ~£600m which gives me sp ~30p with 2bn shares.

You're also saying that in effect the dilution % doesn't matter a huge amount in the grand scheme of things because the NPV is currently so huge relative to the mcap that whatever % gets diluted (and we all hope it is small) there will be a significant shareprice rerating event.

None of this yet adds any value for Vermelho.

Wow, simply put wow, if you're right. We should see 20-30p then in Q1/Q2 (say it takes a couple of months for the dust to settle and financing is done on time) and I guess many present investors here believe this based on the estimates.

I had a similar range in my investment case but I expected it 2023-25. I'll be really happy with Q1 Q2 next year, fizzy wine all round if we see anything like 20-30p. Thanks for your numbers.

At what point (realistically) are you expecting to see that NPV based valuation? At finance, or at production?
I haven't invested in a miner through the whole lifecycle but my guess would be we don't see the full valuation at NPV until production (or thereabouts) so question becomes what is a realistic % of the valuation to realise at finance complete? 50%? Less/more?

Or that it is stainless and makes a lot of money in just about any nickel market....

Possibly but it's not really how mining works. You have to prepare the deposit (in this case Copper Keel with the better grade), ramp up your production, and cross your digits for a good commodity price at point of payment. All three are happening so the future profit is what we should be looking at.

My biggest investment is in a miner without a mine. It too isn't making any profit, but it will make a s*****d in the future which is why I am invested there. I am also invested here for the same purpose. Things are going in the right direction and cashflow issues should have eased dramatically post Sumitomo facility. GLA

Yes I don't know if by high value transaction they mean things like buying Vermelho. $9m is a decent value transaction but I'm really hoping JM delivers a $1bn transaction here in due course :)

We have a very professional board, there is very little b**l, little leakage they get on with their work behind the scenes and land the big deals (like Orion). I quite like the fact JM has other interests because my hope one day is his goal is a financially lucrative exit from Horizonte, which will align his interests very well with mine. Being a 'founder director' of Erris may mean he has a longer game plan there.

It certainly doesn't hurt to have a CEO who is adept at wheeling/dealing and doing deals. At this stage of the game that is a very valuable skillset for Horizonte to benefit from.

I have no doubt we will get 'Erris' type action here in due course. This from the Erris website:

https://www.errisresources.com/jeremy-martin

"Jeremy has been involved in the formation of two AIM traded companies and has completed a number of high value mineral project transactions. "

I like the sound of 'high value' and 'project transaction' that our CEO has a history of completing. I have no doubt whatsoever that he will be completing one or more here. GLA

>>Araguaia $643M + Vermelho $1,645M = $2.3BN!

Araguaia NPV8 is $1,115M at $16k/t including Stage 2. Any prospective buyer is likely to look at the $29k/t (or more!) capacity so we shouldn't really ignore that from the valuation, even if it would take Horizonte a few years to get there after Stage 1 is complete.

You're looking at close to $3bn NPV at the current pricing and that ignores the Real/$ exchange rate swing in our favour. We won't be £100m mcap for long IMO. GLA

Yes and nobody thinks Nickel will stay (as low as) $16k/t in 3-5 years time. So, if the market was future pricing us on expected earnings, valuation should be higher.

Reality is we need to hit the critical financing milestone event for a proper re-rate but it is going to happen IMO - company would be flagging any delay by now, and with supportive macro and even more importantly all the nickel forecasts on demand side remaining super bullish in years ahead, financing must be close to 'in the bag' perhaps minus some i's and t's. All good here just patience required.

pickedpeck you ain't having mine.....