Member Info for wasarunner

Difficult, agreed, without knowing the shortfall but I was thinking about 'the opportunity' last night. The market * always * overreacts both ways, in times of boom and also, when a company is 'distressed' as Horizonte is, it will underprice it. Nobody really knows the outcome here and plenty of risk of course, caveat that.

That said, I firmly believe this is a 10bag+ opportunity from current price IF a funding solution is found and IF the funding shortfall is in the commonly discussed range - I would now call that $200-300m. I think there are solutions that can be found in that range that don't wipe out equity and I don't think equity wipeout is what any of the cornerstones want. Yes, you have to extend your investment horizons a bit and yes maybe wait for nickel deficit and mine expansion but, being LT investors here, we know that's the game right? My theory has become if you can't hold what you're holding for 5 years don't bother, so that timeframe now moves towards the end of the decade then what - well, we could have A2 up and running and V at least one stage up and running and how many multiples of todays SP might we be? I'll have a guess.

I still expect an outcome here where post finance we can get to 40-50p MINIMUM before production/commissioning. Better is possible but needs not the least good finance deal. From 40-50p then with A2 and Vermelho online and A1 producing at nameplate multiple pounds are possible £2+. Even at 1bn shares, and additional 700m shares issued at 20p (which would raise circa $175m just from equity), £2+ is possible with A1+A2 producing at nameplate.

So to the (forget the poster) who posted this is a rare opportunity I would agree with you. I've seen this on a stock I've owned before incidentally. TCG was trading at 10p at one point 'will it survive won't it' and I was invested. Stayed put and it got back to £2. Ultimately the company failed down the line but my point here is in a distressed state, 'fair value' for the risks we know goes out of the window and companies are often mispriced. One for the brave, or foolish, the naysayers will say foolish of course, but I'll see them at £1+. I've been putting my money where my mouth is incidentally and increasing my posn. GLA

So one thing that interests me - the dollar being the dollar being the dollar and the world reserve currency is all good but it has lost value since the DFS was published. The dollar is artificially strong against the commodity market (ie commodities are in slump) because of the economic fallout from the wars and other factors. So I did an 'inflation adjusted' calculation of what if base case nickel from the Araguaia DFS (published at the end of 2018 using $14k/t as base case). It is an interesting result the calculation shows that to 2024, ie applying the years 2019-2023 US inflation to $, the 'base case' nickel price adjusted would be $17100 (+/-)

It's interesting because effectively $3k/t should have been added to the nickel price purely based on inflation, without any demand drivers. Now of course the commodity cycle is the commodity cycle it will move at its own pace but it was interesting to me that we are essentially trading at spot nickel below 'base case' inflation adjusted presently. Of course, that's not great to secure financing.

The supply deficit will happen one day to nickel too because producers can't produce at these numbers (a lot of them having experienced inflation) somebody posted a link about that Australian project. We have to hope Horizonte make it to that point because there will be gravy then. GLA

B****cks.

Do some maths then show us your workings. The current SP either supposes total wipeout (but why did they put in $20m more just to lose it all), or a dilution of biblical proportions - I would say 20-30x shares issued. Why? Well if this was £3 at production without dilution at 300m shares issued then 'the market' (which always gets it right by the way) is supposing 10p = 9bn shares issued assuming all equity. Lets work that through. Another 8.7bn shares at 10p. Oh that means the shortfall is £870m. Of course, how did I not see that. $1.1bn USD. So darn Horizonte raised $700m for A1 when they needed $1.8bn. Of course they did.

The numbers don't add up - so the market assumes it's going to 0 - the $20m suggests otherwise. A stonking bargain is what it is at 11p but yes please stay away if you don't want to do the math.....

Much better I think. Covid cost us 2 years - I have it from very close source that they could have done the finance deal in 2020 (don't know if better terms, but certainly post Covid inflation was already a thing so the overall build should have been cheaper - we raised c. $630m against DFS $440m I think). Covid cost us 2 years in time - I wasn't complaining at the time because it also gave people a huge opportunity to pile in at 1.7p-2p on Horizonte (which I did, and it looked pretty good until now!).

We still don't know exactly what the reason for the overrun here is - maybe we never will? I suspect it is a multitude of factors and not 1 or 2 so we would probably be oversimplifying it but it would be nice to know that when they eventually do the refinance here they've addressed all those factors because it has to be last chance saloon for us this time round.

I'm not naive, I know there is some risk of 0 here, probably fairly low, and a bigger risk of a big dilution, wouldn't want to put a number on it, but there is also a decent chance of SP recovery in due course. Due course perhaps being a longer timeframe than people wanted and recovery being £1 one day or something not the £3-5 which looked eminently doable with 330m 'fully diluted' shares.

I still think with what we know the current price is cheap, once you discount the 0 option.

Hazbeen you're not wrong, but when Orion and La Mancha (each in their own right $bn PE funds) committed $0.25bn to the project at 140p and 90p it was a * reasonable * assumption they wanted to make money. So for most PIs that was a good starting point to speculate 'what if' and we know they don't generally part with cash for 1.2x their money back.

When Horizonte published a DFS for $440m that also looked pretty reasonable at the time. Note that was before Covid Saars 19 (who predicted that would happen) and Putin launching a full scale invasion of Ukraine (ditto). So yeah, I get it, mug punter PIs should hide their dosh under the mattress where it stays safe, or.....

As it happens now Orion and La Mancha happen to be in a bit of a pickle on this one and randomly, I think their interests are vaguely aligned with PIs which is why I stay invested. I could be 100% wrong though and we might get taken to the cleaners. We wait and see. GLA

>>Wasarunner you seem confident this will get over the funding line.

yes- I don't think institutions which put in $700m (debt+equity) will let that money go down the drain, and I don't believe the guy who has closed $68bn in deals would be the helm unless it were salvageable. It will get funding, it's the terms we don't (yet) know.

>>Topped up again, bringing total holding to 1.26M, averaging approximately 10.97p

wow I wish that was my average! It probably is, but pre consolidation numbers :) point taken about the filtering by the way I'll try harder to ignore the (obvious traders talking it down) wise investors warning me not to lose money. GLA

If you believe your thesis short it. How many you got short? None? Why not? What price you short from? What's your exit? Post your strategy so we can see if your wisdom plays out.

My strategy is to hold, 824843 shares, to be precise. Admittedly not worth a great amount right now, but in the future, how knows. The future is bright, the future is nickel.

>>a mine shaft flooding

hilarious. Never heard of a mine shaft flooding on an open pit mine but I guess it could happen :). As for jungles.... :) :) £2 is more likely than 2p IMHO (though agreed, both may be unlikely anytime soon).

YanaAlikhan - member since: 15th May 2023, first post on HZM: today, at 17.40

It's always good when people with no prior interest in a stock take it upon themselves to warn others of the perils of investing in it ;) One wonders the motive....oh hang on a minute, it might be obvious...

"The Senior Debt Facility comprises a commercial tranche of US$200 million and an ECA tranche of US$146.2 million which is being guaranteed by two export credit agencies (being EKF, Denmark's Export Credit Agency and Finnvera plc, Finland's Export Credit Agency)."

...and Finnvera and EKF just write off their $142m, just like that. And BNP Paribas et al their $200m. Not likely.

"This funding package is a demonstration from the Company's largest shareholders on their commitment towards finding a solution to complete the Araguaia Nickel Project construction. We are actively engaging with our cornerstone shareholders and senior lenders with the goal of unlocking a funding solution in Q2 2024." said the man who closed $68bn in deals over his career.

Yeah, doomed I tell you....

"So, he value of the operation as a whole is dropping with that share price. It also needs new capital. So, every time the share price falls another notch they have to sell even more of the company to raise that necessary capital. Dilution goes up with a falling share price."

Partly true and partly not:

- will they raise below 20p? If not then 13p is a bargain

- will a raise at 20p result in an eventual sp higher then 20p? If so then 13p is a bargain

- will Orion and La Mancha let their 140p shares get diluted to oblivion or find a.n.'other' way, and, perhaps raise less than 100% of the capex required as equity? Then 13p is a bargain.

Those are the bets, addiitionally, since that article $20m has been injected by the cornerstones which would tend to indicate funding of one form or another will be forthcoming. You places your bets, you takes your chances. GLA

Morningstar is wrong?

There is obviously a load more upside (assuming it can get financed, and now the big guns are running it, I'm sure it can) from A2, V etc assuming we live that long. So for any investor here taking shares at 18p with a 3-5yr window, I think it's bargain of the century personally. It is very possible that this will be multiple pounds sp once further mine extensions are built, I just think now there will be a cap (I'm not sure what) with A1 that's all. GLA

There's no right or wrong here we're all guessing to a large degree. I'm working on the basis that if 'the deal' means half the upside has gone, just to keep it simple. And pre deal £1.50 pre production £3 at production were the targets for A1. Then post deal 75p - £1.50. I guess I'm happy to contemplate a worse outcome so I'm happy to contemplate 1/3 of the original value then 50p pre production £1 at production become the numbers.

Yes with best case financing comes the best case outcome but we don't know what that looks like yet - above is what I can live with. I don't really think it will be much worse because I do believe the above is (just about) achievable with mainly equity and I don't think it will be all equity.

If $300m is required and it is all debt. It will still have a big impact on NPV. Sure it could be a more complicated financing deal or even a restructure of opco/holding co but either which way you don't suddenly run into a $250m 'black hole' in your capex cost and come out completely unscathed. If it were really easy to pull this off it would have been a 1-2 week process not a 1-2 quarter process which cost the previous BOD their 10yr+ jobs. All IMHO and btw - yes I think it's a bargain at 8p and a bargain at 18p and haven't a clue what it will be next week :-)

That bit's easy -> Angela List is CEO of Nguvu Holdings Ltd and Nguvu Holdings Ltd (according to Goldstone shareholder analysis and recent RNS) are 11.9% shareholders in GRL. So she doesn't own them personally, but is a controller of said shareholding. Nothing fishy about that bit (plenty of other fishy business going on though!)

The reason £1 will be hard to breach even with the best finance terms is the finance deal will have a 'cost' either to NPV or the share dilution every which way. So it can't immediately recover to £1.50 etc UNLESS someone gives us 'free' money and as we know in business, money is never free. All IMHO....

Theorist I don't disagree. I think the brigade that think we'll bounce back over £1 anytime soon are as unrealistic as the brigade that think 5p equity then bust. Personally, I've reconciled myself to a lower 'return' (if I can call it that given my breakeven is above) in both the medium, and long term. Long term great things are possible just how long you stick with it.

Personally do think within a year we will see the 40p-£1 range though IF within that year we complete a mine build and commissioning up to a decent % of nameplate. There's no reason that shouldn't be possible. But it is still less than we were pre commissioning pre October RNS. Anything over £1 for me in the next 12 months is a bonus.

The interesting thing about that though is how much upside that still leaves from the current price. If you believe those numbers (40p-100p in 12 months) it is quite a clear buy at 18p. (The reasons I think that range I've stated before - it won't be all equity and equity won't be done sub 20p IMO). I do think it takes time for a stock to recover investor confidence also - the current mgt team have to walk the walk with construction as well as finance otherwise we've seen it all before. But assuming they're up to the job this will look v differnt in 12 months.

It's obvious a lot of the £1 next 5 minutes brigade are obviously traders and IMO the 'banter' is all harmless enough as long as you don't buy it too much :) The real rerate will come when Mr Nasr next announces something significant.

I've had contact with him in the past. He did say 55p post finance (pre consolidation) so got that one very wrong as we were 7p post finance and even latterly only 160p or 8p in old money. Maybe a deal didn't go quite as expected with the finance. Who knows. I disagree with this analysis I don't think equity will be done below 20p. GLA

Mv01 I get you :-)

My strategy in that scenario is to bet the house at 50p and hope I'm right. In the past my mistake was not selling at 8p. (Reverse those numbers obviously as I'm long only). But generally my entrypoints have been good, and my exit points haven't , well, been at all.