Member Info for wasarunner

Oh and I don't know if he's invested (or waiting for something), but I'll put my money where my mouth is - I'm in for £730k and I'll eat humble pie (and work many more years) to retirement if I'm wrong!

We will see if he is wrong. In 2019 he wrote this:

https://masterinvestor.co.uk/equities/horizonte-minerals-very-long-term-investment-opportunity/

"So my conclusion is that over the next 2 years or so, the shares won’t be valued by the institutions for a cash raise (or by the bidder who some investors hope will appear) at much higher than the present, and for Araguaia stage one will be at well below 10p."

If he was right then, then equity will be issued at 4.7p (or similar - the price when he wrote the article) and the share price of the company will be at less than 10p in 2023.

I'm going to go out on a limb here and say:
- equity will be done well north of 5p
- shareprice will be above 10p in 2023 (or whenever Araguaia Stage 1 is complete) and
- if we get bought in the next 2 years it will be for more, per share, than 4.7p

If I'm right I'll start being a financial analyst 'cos I'm clearly better than some :)
Apart from ignoring some pretty fundamental points (like - expected demand for nickel, like - Vermelho) from expected valuation, I think his calculation is wrong. Maybe he didn't see the $325 debt coming.

TDT - and one hopes sets a floor under SP also. Last bit is psychological though. If the company shares in issue is 2bn (for arguments sake) it shouldn't really matter to the mcap whether the raise was done at 7p or 10p (unless the deal we got on the offtake was rubbish). But it will. So I guess the higher they can get the raise price the higher the floor for the build phase. That might mean a difference between say a 7p->25p trajectory finance->production and a 10p->25p trajectory finance->production. For investors at that point though it is a paper gain. For traders, it makes a bigger difference.

Don't get me wrong I want the raise at a good price. I'm providing the contra arg that if done at a lower price, for less $, it is close to the same thing. I think Craigieboy suggested single figures (pence for the raise) and I tend to agree it might be what we end up with. But the BOD have surprised and can do so again. We find out soon!

Nthoftheriver,

>>That would be great if the amount we need is lower than $100-120m.
I believe it has to be. If it isn't, then as you said (and DJR and others) it has to be raised at significant significant premium - 10/15p for the same end result. Raising $120m at 15p is the same as raising $60m at 7.5p (well not quite, the former is better as you haven't been tied into a specific offtake if you can raise more cash through equity at higher premium).

The BOD can't give away half of Vermelho for free, so there is no scenario in which we double the number of shares in issue - not going to happen. Still my best bet is modest 2-2.5bn shares in issue post finance and given the £250-500mcap Araguaia can command at all stages post finance up to production, you are then immediately into the 10p-20p range up to production (or higher). Then _any_ progress with Vermelho up to 2023 adds to the mcap over and above the 20p (x2bn / 2.5bn shares) which Araguaia can command at first production.
GLA

>> $100-120m
Think only half (maybe less) of the above will be equity. If that is done 7-10p, we're laughing (with what we have here).

What we could do with is USD tanking a bit. Less £ raised for $ needed to build the mines. If only they had a carp president over the pond who could make that happen.

SeanT all views welcome (and I appreciate the authors views may not be your views) and indeed robust debate is to be encouraged in any scenario :)

Another scenario I disagree with some investors I've had chats with is exit from this stock. I know Craigieboy and I are very much aligned that the proper money is in 2023 (and beyond). I believe TDT shares that view. I don't know what we'll see post finance - 7p / 10p / 15p take your pick. Will any of those numbers value correctly or accurately the company for this stage in the process - I don't know, they could value it over or under. If over then I guess sensible to sell and buy back in later or de-risk or whatever. But the real upside is 2023. The multiple on sale, for example, 50p (from 10p) is a higher multiple than the multiple from the average over the last 3 years (call it 10p from 3p). The bigger tranche of the return is still to come after this year. The only investor where that doesn't hold only bought at 1.7p and I don't think there are many of those. They can comfortably sell at 10-15p and call it a proper win.

dj we probably disagree slightly on the price the raise will be at - you think higher than me, I think lower (not than the current price, but what you think). But if we can do high single digits (anything north of 7p, maybe even 6p works) and not for the full remainder of the $120m or so, it is good enough.

The market is still pricing for (all of) the rest to be equity. I think that is nonsense. We can see 2 to 4 more channels of funding before equity comes into the mix (brazil bank debt, credit export agency, royalty, offtake/streaming). I still maintain by the time the BOD have maximised all other channels, the sp for the raise becomes irrelevant and you can do it using the standard 'trailing 2 month' or whatever they do average, discounted.

It isn't strictly true to say Glencore and Teck wouldn't like shares at low price. They would be buying significant chunk of a company which is substantially (more) de-risked than their earlier stakes and while they would be diluting their own stake they would increase significantly their % of this company. The protection against that really is a. the BOD won't do it - as it screws PIs and the other funds and b. the BOD with any sense will bargain up the raise to a level and play Orion off against Teck and Glencore to get best price and c. neither Teck or Glencore win if they both eyeing an eventual T/O if both get the same (diluted) price.

At the end of the day, you have to trust the BOD (or not invest). Some AIM BOD's by all accounts are semi-crooks (or actual crooks, I haven't had too bad experiences but others have). Horizonte's BOD are as straight as they come and have almost certainly spent the last 2 years working hard to make sure, specifically, dilution will be minimum and existing shareholders interest maintained whilst securing the finance. That they managed to do it (probably) without encumbering Vermelho is a super big win IMO.

Good things here, and soon. GLA

Disagree with the author:

"Subject to obtaining the loan, however, HZM will almost certainly raise new equity, which is when we will see whether the market will pay up to the mooted 10p. So my advice meanwhile is to track and to buy only if the shares drift a bit, but otherwise to wait and see."

If you wait and see you'll be buying at 10p. What exactly you would you be waiting for? JM has been very specific on: a. the type of newsflow which is coming and b. when it is coming. What would you be waiting for? To find out Glencore will take the first 100kt of product at $14k/t prepaid royalty?!

Wait and see is exactly what I wouldn't be doing. If I bought at 1.7p and thought 200% upside was a return, I'd be selling. If I hadn't already bought, I'd be buying. As a holder, I'll be holding. Literally the only thing not to do here is 'wait and see'. The writing is on the wall - JM has told us so so unless we think the BOD are numpties, wait and see is the wrong strategy. GLA

For the trader types:
37% upside to £100 mcap
100% upside to 10p

Given most will happily trade for 10-20% gains (as long as the expected timeframe is short enough) I think we will see them landing in droves. As I understand it they also look at recent SP movements to determine direction of travel and since the debt news we've had a pretty nice rise here. GLA

Do we agree resistance has gone? It is rare to see a Friday close at the bell above a resistance line (and I wouldn't think it is happening here because people expect RNS on Monday as I've seen on other stocks).

My feeling is crossing and closing above the 5p line is a very positive development and most likely the direction of travel is upwards from here?

Starting to believe settling somewhere near the £100 mcap range pre 'completion' of the financing news might happen but will probably need some more of the 'pieces' to be delivered on the way up. At £100 mcap most investors will fancy their chances that the SP will be higher post financing (whatever dilution, £200mcap+ will represent an SP upside from that level). I make £100m mcap around the 7p mark so that would be a very worthwhile target pre financing maybe September/October goal. If the 'trader' types are thinking the same way - 7p is still value for a 10p post financing, then we should see steady upwards progression on SP from here.

Not a trader so just speculating the on the SP here.

TDT - very possible - as I said before very inexperienced at what happens in the T/O scenario but just naively/intuitively if you like, it would always seem to me the major can do whatever it wants if it buys at the point of 'shovel ready' but not yet built. The counterargument which you posted which I have heard before also is that they don't like risk (2 year build) and don't mind spending 5x more in 2 years time. I guess we find out soon!

I know Horizonte isn't unique there have been other companies like it but it is a very interesting setup that the BETTER resource is undeveloped. It is kind of a perfect storm. You develop your first resource, whilst the second is the carrot. You don't have to sell - you are building a working mine. But you don't have to spend the big bucks needed to get the bigger mine online. Perfect setup IMO and the only question is does the buyer land in 2020, 2023, or somewhere inbetween.

I don't follow the twitter posters particularly but my feeling is they would look for a nice trade here up to and including financing. The more we overshoot by etc. - they know they can double their money from this level (and the smart ones were already in here long before this level).

So encourage your followers, ratchet another 10-20% that might not have happened and exit with more.

I'm not complaining ESPECIALLY if the equity issue price is done as an average discounted price over a period. The more buy here the merrier. Please keep tweeting! In 2023 it will find true value whatever happens. GLA

looks like I may have been optimistic to think I could buy 4.xp on 28/8 (I too got my bank hols mixed up - 31st is bank hol!)

Just to wrap up I think most on here are agreed:
a. a sale
b. big money. Small money need not apply
c. we don't know when we don't know who
d. multiples of Onca Pumas

I think that is a good conclusion to a days speculation. Fast forward a few weeks and we will have more insight. Good luck all.

bank holiday weekend is next weekend? Is that what you meant?

I suspect most here would take '3x Onca Puma' sale if it happens soon. Come on JM get a move on....

I make that £1.73bn or lets call it a round £1/share including options. Where do I sign to agree to the sale?!

nice that Sepanta Dorri would see any and all offers even the ones that didn't make it to go public. Suspect lowball need not apply would be the rule of thumb at the board meeting considering the offers...

hopefully financing gets us past the lowball offer park. Say post financing we are 10p / 200m mcap the premium offer would already need to be higher than that, then as the others have said Teck/Glencore/Orion(if holders) would stick their oar in and demand more. Still lowball numbers but less lowball than if we were taken out at a modest multiple of 1.5x todays SP which lets face it would be dire.

I don't mind 1.5x our SP at production - 30px1.5=45p. Or more. Bring it on.

Lets face it. It would be pretty exciting if we had one at 7am one morning. Bet we'd see a few posts on the board here that morning.... wild guesses to the buy price. I'm hoping Luke's guess would start to look way pessimistic!

If the T/O doesn't happen in this round (feels unlikely to me) then what will be fascinating as I said on a post the other day is who, and in what proportion, buys into the equity - i.e. by how much (if at all) do Teck and Glencore increase their % of co, and as a leftfield move does another miner join the party at this stage (would Teck & Glencore have to approve that though?)

Someone like Orion taking a position probably don't see them as outright buyers eventually, more buying in so in a sale situation they can remain holders, or the Major has to buy them out at the time. Happy to be corrected though I know Orion occasionally buy projects outright.