Member Info for wasarunner

It could be argued, on reflection, that the BOD delivered the finance package last August if, as I suspect, Orion really complete a big piece of the final jigsaw. If one looks at who Orion are, and how selective they are on their investments, and the extent to which they can finance (they can buy the whole operation) then getting them to commit here is a masterstroke.

That we didn't hold the SP that such a commitment signifies is, I suspect, to be looked at in retrospect as opportunity. I had around 14m shares in August '19 and after this morning 23.5m. I added a few around 5p post Orion but most were bought back at current levels in the 3.x p area. We should never have had this opportunity again, given who Orion are and what their investment here means.

I think the SP didn't hold for two reasons - the stated date for finance complete was too far in the future for the PI of a nervous disposition, and our insitutional shareholders progressively selling down which further erodes confidence (Griffiths, then JPM). Relentless selling never fills one with confidence.

My firm belief now is that we will have financing on favourable terms to existing holders, Orion will plug all the gaps which Horizonte invite them to do so, and the 'delay' if it can be called such is more of a logistical one brought by the virus and not really a financing delay. We need to be ready to build at finance complete so if there are on the ground issues in Brazil right now then right now wasn't the best time to complete. I think timing is being picked now for commencement but the deal is probably all but done. GLA.

Oh and we chose them from a list of potential suitors (and not the other way round) if JM is to be believed! :) Bodes well.

https://www.orionresourcepartners.com/orion-mine-finance

This is who they are:

Global industry leader in delivering customized financial solutions to base & precious metals mining companies
Later-stage investments
Debt: typically senior-secured with the potential for current income
Equity: positions undertaken in combination with other strategies
Royalty/Streams/Offtakes: production-linked cash flows
Global diversification

And we are listed on their site as the last deal they did. That means the coffers are hopefully refilled for further inverstment.

Their investment in us is small by their standards. There are plenty in the $250m+ category where they have gone Loan, Equity, Offtake, Stream.

Will have a very big part to play in Araguaia IMO and will plug any and all gaps left by the banks and our existing IIs. $25m is simply a seat at the table for these guys.

£10k for brother in law this morning. Spread the gain (or pain) but hopefully the gain.

I think $14k is a key psychological level for nickel and not by accident it was chosen for base case for Araguaia. It shouldnt matter, and probably wont to financing, but it does affect sentiment and short/med sp IMO. I also think $14k will go July/August. Gla

Vale planned a 46kt/yr operation at Vermelho.
http://www.vale.com/en/investors/information-market/press-releases/pages/a-cvrd-iniciara-o-desenvolvimento-do-niquel-do-vermelho.aspx

That was going to cost a fair bit to put together but if the price premium of Nickel Sulphate in the next 10 years won't justify the cost I don't know what will. Vermelho is just too good an opportunity I think for a major to pass up. Hence the 'for sale' sign effectively up in our window. Production payback over 3 years of a $1.5bn mine I think with nickel at or above $18k/t.

I still think the Vermelho PFS is pitched correctly for Horizonte but the big players all know what's possible and they will make their own call what to build IMO.

yes and although a buyer might not be considering 40 years LOM (because literally nobody can predict nickel demand in 2060) the sheer quantity of contained nickel means
1. you can get it out of the ground faster - build bigger mine (very easy to see a bigger mine than what is proposed at Vermelho. Teck could make this a 100kt/yr play, in total and get themselves into the top 5 nickel producers in the world)
2. you can probably be selective on exactly where you mine - get the best grades first, meaning better returns in the early years, very much as Horizonte planned in the PFS

It is literally a patience game. For me the end result is determined, the exact timing is uncertain (it is plus or minus 3 years and hence the patience game).

EUA touched £500m mcap this morning. May still go higher. For it to be good value market is pricing a deal in the $bn+ category.

It re-confirms my belief here (and no regrets selling yesterday). We have more resource, in a more stable commodity, which will be just as in demand in 3 years time. £500m mcap is where I see the bidding starting if somebody wants us, at current issued shares that's 30p, if we dilute a bit through financing, 20p. All to play for here IMO and I believe we will be taken out in 0-3 years at above £500m. GLA

Sorry forgot to add my 2 reasons why I think that will happen to us (more likely than for smaller cos):
- mine life and
- total resource size
Just can't see us being allowed to be independent for too much longer.

I don't think we will reach the peak in the case study here because we will get taken out much before that. The top 5-10 nickel miners in the world don't want a new entrant at 50kt+/yr production capability. The more the nickel demand the more the (existing) big players will want to control production/price. If a new big entrant wants to get into this space (I hope the Teck director is reading this) they'd better get on with it :-)

Price should rise in anticipation of financing I expect it to start moving around September on no news anyway. I think the swing traders will want to be in at that point people who have pots elsewhere presently. Horizonte still has relatively low liquidity I would argue for its mcap hence the shares can move on low volume (although my £50k purchase did bugger all to the price yesterday - in fact it fell a bit - I think we have a seller!)

5p seems a resonable first target in September even without news. Then a 100% rise becomes easily justified when the financiers cough up the $443m to 10p.

westie I've convinced myself (rightly or wrongly) that £300m mcap is very reasonable during the mine build at least in a favourable nickel price market. I expect worst case 2.5bn-3bn shares so 10p+ is reasonable pre production.

Now we all expect there to be a bit of hysteria at financing (no doubt the board will get swamped with new arrivals at that time!) and shareprice will probably overshoot. How high? 15p maybe?
FWIW I think finance equity will be set sub 10p but I no longer think this will limit the price, rather set the floor.

So I think if somebody is looking for an exit around finance 10-15p is the goal. For somebody here for the longer game, my target remains 30p area for the main tranche (and actually I wouldn't sell most of my holding maybe only 1/4 then as I see the dividend scenario here as compelling from 2025+ if we stay independent).

Westie completely agree with the sentiment, don't get me wrong on that one. Patience is hard for me to learn it isn't how I am in business life and it isn't what moves my business forward but for investing one needs bags of it.

What I am thinking is that by not announcing pre-news the impact of the news when it lands will be bigger. Whether that is an intentional thing or a by-product of how these negotiations happen is up for debate. We may not get any pre-amble just the grandaddy RNS at 7am one morning in November who knows. If they've ditched plans to need to move the SP ahead of finance complete (which seems equally likely to me) then that looks the way it will go. Doesn't mean it doesn't finish above 10p on the day of the RNS should suitable news be released and then hopefully investors - whether holding for the long game or wanting to exit that day - will all be very happy with the timing and quality.

That's my thinking anyway. EUA has arguably less resource and is on it's way to a £400m mcap this morning. Absolutely no reason Horizonte shouldn't be doing the same by the end of this year - $50bn nickel and $4bn+ cobalt in the ground says that's very possible and indeed very likely.

Just on finance I am hoping the 'delay' is because they are sorting a big deal out. Perhaps Vermelho being rolled into the deal and a major partnership gets announced. Some deals are worth waiting for, I hope this is one of them. Lets face it if they are talking seriously to somebody like Teck (or for that matter Glencore, Vale etc) then delay making sure all parties are happy with the outcome and can sign up to it is going to take time.

Still better to get the right deal than a quick deal IMO.

Indeed we want to be fully ramped up in 2023 and hard to see that if we aren't building it this year. Also 2 years from appointment of Endevour - that's a long enough runway surely? The capex was stated as manageable. We've had coronavirus but it hasn't disrupted the medium/long term outlook too much for Nickel demand we are lead to believe.

Just on Brazil I admit it is the aspect I understood least (and therefore it was always a niggle) but I am reassured by the fact that mining is such a key part of the economy. Sad to admit it but for mining I think you have to find a country that does care about the environment, but maybe not _too_ much (this bit pains me because I do really care about the environment) I justify it for Nickel because of course the plan is to make the world cleaner. Brazil is in that sweet spot of needing the revenue enough and having the resource. I usually fear far left in any economic situation seems to do most economic damage than the center or far right. Lets hope they get CV under control, Bolsonaro keeps his job, at least until we've financed/built the mine.

Also just on environment we are using clean hydro for the power to the plants. This is going to be key I think in the future as the environmental credentials of mining is further scrutinised. A lot of the big funds (including presumably Orion) will have their ethical credentials also for mine financing and this will be at least one criteria. This is going to be a sensitive topic also in countries like Brazil which get bad PR on environmental issues deforestation etc.

Westie then my buys would have cost more today give a man a chance to load up. Every cloud has a lining. I think the news is brewing if the debt is done it is a case of aligning the other pieces and they must be very close on that to promise q3 early q4. It is going to be big bang I think when the news lands. Gla.

Just on the 'build it' vs 'sell it' debate - I think JM has been really transparent. Words to the effect of Vermelho is a bit too much for us. So writing on the wall for Vermelho - huge asset (the better asset IMO), can be developed either way, looking for a partner / buyer. So we have one asset which will get farmed out to some extent - precise extent TBD. The test for the BOD is can they build the ferro mine. I think they can. They hired a pretty darn experienced mine builder. We believe they are on track with the finance. And capex is very manageable - the indications are the largest piece - the debt, is pretty much sorted.

So there are a few ways it could go but there is _no way_ there won't be huge interest in Vermelho and Horizonte have pretty much put out the 'come and make us an offer' sign. For all we know the offer is being negotiated right now. But what punters (sorry I mean investors :) will have to look back on is that JM was 100% transparent about it and indeed re-iterated it on the recent call. Nobody can say they didn't see that one coming when we get a big partner on board for Vermelho. Best not to be on the sidelines when that monster with the 1.7m or whatever tonnes of contained resource gets going. I just love that graphic profiling the different mines under development in the world where Vermelho is just that huge red blob in size and grade. Kind of 'ours is the biggest and best' type of thing.

It is quite literally the perfect setup (minus Covid). We need nickel to play ball, and a few other things to go our way, and this is an open goal IMO. The EV revolution is underway right now.

I doubled my stake here this morning with EUA profits.
09-Jul-20 09:21:36 3.3582 250,000 Buy* 2.75 3.50 8,396
I like the assets and opportunity we just need Gati to deliver! As he has plenty of skin in the game he is certainly incentivised to do so. GLA.

EUA haven't mined anything (at the main asset being marketed). But they did get a finance deal lined up as insurance.

I still believe we have a similar play in Horizonte going on. Do the financing, hire a mine builder, get all the groundworks laid, start building a mine perhaps. Then when the bidder comes you hold all the cards - as EUA hold now, as your fallback position is so strong. In the case of Horizonte (see below) this may involve having to build the mine, if nothing else, to achieve best value for Vermelho.

I said many times I don't think Jeremy Martin is here to mine. He is here to generate value for himself and shareholders and he does that by realising the best value we can for our assets at the best time. For my money that's 2-3 yrs+ from now when nickel is $18k/t+ and majors are all at the races trying to snap up the best assets. But if it is earlier - so be it - I'm not complaining. But JM knows he has to put HZM into the best position in negotiation at the time, and his best bet is - have several majors on the register (tick), have a finance deal in place (nearly tick?!), have an engineering team on the ground (tick). So he's doing not too bad at the moment with just the one obvious thing missing. Get that and we're at the races IMO.

JDF7 - market cycle is another thing. We are not in a nickel boom yet, but it is coming. With the lead time on project development and the size of the resource Horizonte will get snapped up. I want them to progress it, but if they sit on their hands and wait for the boom, a buyer will land. That's the insurance - in that scenario the ability of the current team to build a mine becomes irrelevant. Very little risk this is not worth (and realises) multiples (hopefully many of them) of the £50m mcap presently and that's why some (including me) have taken big position here.