Member Info for wasarunner

Luke I think the nice thing here is it is already worth that (say 15p-20p if sold today) at current issued share capital. The next 2-3 years adds enterprise value I would say so a sale in 2-3 years you end up with a better sale price (in pence per share). My feeling is they just don't have the capacity to build Vermelho (if they did, and could, then the sale price goes through the roof, probs looking at 50p+ sp even including dilution). I also don't see them leaving Vermelho idle for 5 years while they complete phase1+phase2 Araguaia, say, over 5 years.

Partial sale of Vermelho is a possibility but what's the point? A big player, Glencore, Vale, Teck, would want 50kt capacity add, not 25kt/yr I would suspect. Big attraction to the buyer of the scale of resource here. And it makes sense to sell Vermelho at a point where it can go either way to suit the buyer - Ferronickel or EV.

>>Araguaia NPV is $1.2bn including phase 1*

including phase 2, I meant.

Araguaia NPV is $1.2bn including phase 1 at Nickel at $16.5k/t (using the calculator on the Horizonte website). At a point where phase 1 is up and running, if there is interest from the buyer, Horizonte can leverage that in negotiations. Sure there is the capex to pay but we can say 'if you don't buy us we build phase 2 from free cash and NPV is $1.2bn'.

So if you were setting up the company for a sale, and don't have the resources to build Vermelho, in my view the sweet spot in the timing is at around phase 1 Araguaia complete - nickel is taking off, still time to build Vermelho by 2025 EV demand, you can use Araguaia phase 2 take it or leave it in the negotiations.

Leave a sale later and Vermelho isn't hitting the big boom in EV demand at production. A sale earlier and you might not get full value, but of course, if the buyers know what's coming they might sweeten the deal and get in earlier (though to de-risk they probably want phase 1 operational).

I think all things being equal (nickel demand, EV uptake, Araguaia project development) there is a very sweet spot for sale 2022-2023.

A takeout at $1bn, even diluted at 3bn shares is worth 25p. It is probably a relatively pessimistic scenario but most would probably take it from 3p today if it happens in 2-3 years. Less dilution, higher takeout price, phase 2 Araguaia, better nickel prices, Vermelho interest etc still all upside from these numbers.

My view is Horizonte will get Araguaia built, get Vermelho to permitted stage, and most likely at or around that point a buyer will land. Plus or minus a year (a year before production or a year after production).

Being a small company they don't have the resources (or probably skills) to do both builds. Having one working mine or thereabouts gives a very strong hand in negotiations. Wait for the start of the Nickel boom to sell, at a point where prices are north of $16k/t and looking to stay that way. What is the company worth at that point? A lot - Araguaia should be valued at much closer to NPV, and Vermelho is a huge potential asset to be developed by the buyer to feed the EV boom. Can't see it going for less than $1bn at that point. I see it as the most likely outcome - company gets sold in around the 2-3 years (plus or minus a year) timeframe.

Less likely is it goes on to build and operate both mines.
Less likely is it gets sold because can't finance Araguaia.

All IMHO.

I've got just over £650k invested here, much more money than I ever thought I'd have available and more than I thought I would invest. Just the way these things work out. Fraction over 20m shares at an average price of 3.27p.

I'm lucky that if it goes t***s up I have other means and not relying on this at all. They say only invest what you can afford to lose - it would hurt - but I can afford it. Upside massive IMHO and will come good. Demand is going to be there, the asset is proven (and not just by Horizonte, by Vale, Glencore etc before them) and going to be in demand. Companies are going to want to diversify geo risk they won't want it all to come from Indonesia and Philippines. Orion did the DD on Brazil, there is of course geopolitical risk but Brazil is generally favourable to mining (minus the odd disaster).

Just patience needed now. I can afford to wait in a bad market. I don't intend to sell any except to move between pots until Araguaia phase 1 production at the earliest. I think that is where the first proper payday is (or 6-12 months after start of production) but also, the next 3 years IMHO a massive window for a takeout. All to play for...

£500 at 2.99p that's the holiday money spent :) Holiday cancelled anyway dues to the virus...

and by cheap we might still be talking numbers that current holders particularly those with finite time horizons would find reasonably attractive. 15p/20p and upwards - still cheap for the assets contained but maybe in a depressed market, many would take it - and knowing this the majors make their move.

Here is the risk of being out. Not what happened with EUA, but, how do we know in a market where Horizonte are perhaps struggling to find finance, one of the big boys doesn't consider it bargain territory, table a cheekly little bid, one which the board have to consider (versus current position) and share suspends. A number of parties could make this happen, some of them are already shareholders (Teck / Glencore) some already on the finance (Orion).

It is one thing trying to get out and buy back in but when the big news lands (like it did on EUA), it is no good being out. EUA was slightly different in that all things being equal it was only a matter of time - company made it very public, and the institutional buying confirmed, that a sale of assets/whole co was likely. Here we are likely to get very little warning IMO if it happens. You're not going to get JM coming out and saying 'change of plan we are going to try and sell the company'. I think you will get a vulture hovering to pick it up on the cheap, ahead of the predicted nickel boom. All IMHO.

scratching around also and I spotted that interest on corp tax (late) payments to HMRC are charged at 3.25% per annum. Sounds like a damn good source of 'borrowing' to me for anybody running a company who wants to plough the 2019 corp tax set aside into some decent return making shares. In our case that's 0% to 1st October 3.25% after 1st October 2020, surely we will have a result here in those timeframes?!

I don't think they will announce news in current climate as it will get lost in the macro hysteria. So maybe a couple of months to wait on significant news (but obviously some update in the March annual report). It buys more time - I really didn't think I'd get a chance to play the EUA->HZM switch (and may not yet) but if it works out, it has been a fluke!

he'd be selling close to cash value. Not surprised he doesn't want to sell at that level!

It appears our seller doesn't like the price below 3p that is offered to sell the round numbers of 100k multiples. That might also help stabilise us here. Maybe even RG doesn't want to sell under 3p.

agreed would love to have another spare £80k! Unfortunately can't find much left under the mattress now :)

very hard to time the bottom and I don't even really try any more just look for value where I see it and these are value at all the way up to 5p imo. Pretty happy with my purchases yesterday, if it wasn't for my bank being c**p I would have bought the same amount of £ at higher sp last week! Not often one thanks ones bank...

All things considered it is holding up relatively well (touch wood) and I am sure there are others, not just me, who will bargain hunt should it go lower!

I still have a chance here of a real result if EUA gets sold/bid/relists and comes back onto the market while we are still tanked here. If that happens, and a good result there, I will have 6 figures more to invest in my favourite share!

Other than that I'm good for news now so I'll give JM the nod they can get on with it, we're fully loaded here.

well mcap approaching £40m and cash we assume is still circa £30m so you're getting a good slice of the mine at current prices! £10m valuation on $2.5bn NPV. hmmm - disconnect

Guess today could be brutal day on London markets, probably following other markets down. I think people selling today are either expecting to buy back in lower, or taking a loss and moving elsewhere (maybe other even cheaper opportunities) or are longer term holders who were here (like RG) from much lower levels. So short term there may be some pain ahead.

Longer term I re-did my sums last night. Assuming we get financed and nickel is around $18k/t in 3-5 years time. Assume a relatively bad financing scenario ends us up with 3bn shares:

2m shares you own 0.067% of co
20m shares (my holding now) you own 0.67% of co

$10k/yr gross profit / ton on stage 1 production 14-15kt/yr = $150m gross profit attributable to shareholding is $100k and $1m respectively. This is still more than the current purchase price, ie investment

Stage 2 doubles this. If Stage 2 gets built (for free, out of free cash) company can distribute the above per year (half of gross profit).

So I think even in a poor financing environment, assuming the financing happens, we end up with a situation where you get your money back invested today every year. Ignoring Vermelho which presents further upside.

Need to play the long game here, ignore the noise of the market today, and hope Endevour and the Board are very busy and ideally very close to getting the deal done.

On a serious note, of course, 3p may not hold. It is hard to know exactly how the virus, nickel price, etc. will all play out in the next 3-6 months. Share often goes down after I buy and it doesn't concern me significantly. Really, you try to buy on a long term view (fundamentals excellent here) management team (hasn't done much wrong, believe they can get finance over the line) and try to pick low points in the cycle/price. I think we must be at or around the low point now. It could go lower, of course. But on fundamentals, it is worth much much more. Happy to wait it out!

I saw the annual report tends to come out around the end of March. The last significant news here was the Vermelho PFS mid Oct so it will be getting on for 6 months, maybe we get an update then on what is going on with the financing. At a minimum I expect we might get an update on Araguaia 'on the ground' progress from the engineering side. The project director for Araguaia (Pedro Rodrigues) will have been in role around 6 months.

I've just checked Glencore sp and decided I'll take 1:1 share swap if we sell to them. Happy with that outcome.

I figured mid march when I did a back of a fag packet calc. But I don't think the selling was steady, some days were more some less and of course no guarantee it's all him.

I'm pretty sure he'll be out in March. That might coincide nicely with a general market reversal (touch wood) especially if China is stabilising and the industrial engine re-starts. Plus there will be anticipation of the Q2 news here so hopeful Horizonte SP will start to climb into April.

I guess it's all PIs at the moment and maybe some want to see reversal to buy. I don't see II's buying until financing announced but that will be a huge boost when it happens. The financing getting done at sp X, should set the floor, but if we then get institutional buying to follow we could move up from that level. Hopefully this year. I'm thinking 7-8p financing price then 10p on institutional buying.