Member Info for wasarunner

I just thought of a very simple way Vermelho can be used to help finance Araguaia. It is blindingly simple but I don't know if it will play out like this.

If you issue equity to finance Araguaia, and you do it at company level, you are in effect giving away the equivalent portion of Vermelho for free. That is undesirable long term for shareholders, but of course short term it could be used to leverage the buy in price - therefore equity price issued at. So shareholders give away a bit of Vermelho for free, to retain a larger proportion of the Araguaia asset by issuing new equity at higher premium.

In a way I quite like the idea because it monetises some of Vermelho's value earlier (effectively through production at Araguaia at less dilution - it subsidises the Araguaia build). I think this would be potentially very attractive to the equity partners - it wouldn't be surprising to see Orion keen on such a deal (they would be buying into Vermelho simultaneously, in effect).

We should find out soon enough. I think having Vermelho as a trump card creates a lot of options for the company in terms of how to leverage the two assets and all but guarantees Araguaia gets financed, imho. I'd be more than happy to give some of it away to get the first mine up and running especially if, as I've researched, we can get phase 2 built out of free cash flow without further dilution.

Incidentally eua being chosen to represent Russia at the mining summit is one of the reasons I think this might be happening. If they are making a deal with the chinese it is kind of an 'up yours' to the west to showcase the company to the world then do the deal with China. If it is to be part of an economic / political strategy and it seems the kind of game that might get played.

I am wondering whether due to the strategic nature of the commodity/asset, if it is a chinese buyer, there might be govt level negotiations to clear. So the two govts might be in talks and it could even be part if a bigger picture longer term economic deal making between China and Russia.

If it is the case then I expect very good price eventually, but maybe slightly longer timescales to get the deal done. Still think the suspension is a good thing and longer it goes the better the outcome, thinking we will have something by start if mining season at latest, personally. Gla.

pickedpeck I think they buy at financing. To them the project is only viable when financed and they would rather pay premium than current sp. What I don't 100% understand is why the Orion purchase doesn't give the nod to all II's that by hook or crook this gets financed and why they don't then start piling in!

jamesdean I nearly did this morning! Had a problem transferring the funds to the trading account, then finally gave up and decided against it. Was in the process of starting to add £100k in £10k chunks.

On the basis of the relative lack of available shares to buy, I'm pretty sure £100k could have made a big difference to the sp. Maybe enough to get us to 4p? Certainly if done in 1 day but the trouble is you don't just want the sp to rise sharp and fall, what we are looking for is a steady rise into news so hopefully steady buying continues now and the seller is out, with luck.

duster I think 1.45bn shares in issue so ~7p is the £100m mcap but of course if the equity is at premium then higher than this. I've based my (hopefully worst case!) calc on the exact threshold JM mentions and then assume equity gets issued at that price. A premium would of course be what we are looking for.

Main thing for me is even with 2.5bn shares, and even at Nickel $14k/t, this makes money, plenty of it, and furthermore even at those numbers they can finance phase 2 self funded. That means the binary 'does phase 1 get finance' becomes the important question and I'm sufficiently confident that the answer is yes that happy to be invested to a very large amount here.

Had planned to add more, and cash available as of this morning (£100k) but decided to (almost) call it a day on HZM investment. Not because I don't think it is a good prospect or the current SP is tempting - it is and I am pretty sure those investing at todays price will make money this year and into future years. Main reason is I am massively invested here - currently ~17m shares and I would rather hold what I can comfortably hold for a payday in years to come than commit funds I might need sooner.

My final add is planned for £20k in April in one of the ISAs then that's it. Hopefully we'll still be sub 5p at that point.

My view on where this goes next:
- 7-10p this year on financing, this is my conservative view. I am working on the basis of dilution at 7-10p range which then sets the floor on sp and I can live with 2.5bn shares as the equity of HZM. Mcap £100-200m
- rising towards mine complete to 15-20p range, mcap £300-500m on phase 1 complete.
- I am hoping we get Araguaia phase 2 'for free' - no further equity or debt required, hence a lot of upside there from Phase 2 and if it gets completed in 2-3 years after phase 1, I am very happy with owning my share of 2.5bn shares across Araguaia phase 1+phase 2 producing by 2025 (say). Lots of upside there in a strong nickel market.

Vermelho I am discounting, don't know what is going to happen to it, but huge upside obviously. Vermelho could still be used to leverage sp to get Araguaia financed somehow.

So that's me folks, solid hold for me from here on in, just need to be patient, and now much more relaxed about day to day movements that I don't intend to add (much) more. Think the co has a great future, I think Araguaia will get financed, and I hope all my estimates are on the very conservative sides, but they have to be for substantial £££ investment - expect the worst, then be pleasantly surprised by upside. GLA

I said soon after suspension if it's a deal then the longer it goes without a follow up RNS (i.e. the longer we are suspended) the better, as they want to agree terms before RNS to market. I still believe that to be the case. If we close the week with no news, I see it as positive. Then the question becomes, how hard will they work over the weekend so that at least the news that we have a bid can be RNS'd early next. Pretty damn hard I imagine, if the deal is happening and it is a big one. imho. I'm expecting news early next week, personally maybe Monday or Tuesday at least a holding type RNS which indicates that the company has been approached and is in negotiations and has possibly signed a contract with CITIC.

agree EthioEthio - I asked how long it is reasonable for the company not to clarify it's relationship with Citic (days/weeks etc) and you don't get an answer from people who might know, it was a genuine question. It does seem to descend somewhat the board after a couple of days - cabin fever from no news or something. I thought your post came across genuine and a good summary.

I think a deal is going down I just have no experience of how long we can stay suspended in this situation.

"So question is is there an unwritten rule of - don't hold this too long here"

I meant the company holding us in suspension without telling us their relationship with Citic. I didn't mean investors shouldn't hold the share hence it wasn't advice. Apologies if the wording was ambiguous.

I would assume there is a period of time they can reasonably not update the market on why we are suspended, I am just curious roughly how long that might be. I imagine weeks is unlikely - we should have news this week?

do they get to announce the bid? I know probably per stock market rules we can stay suspended a long time but realistically, at some point they need to say they have interest but can't disclose more at the moment, or disclose the bid. What do people think. Is a week typical (for silence) in this kind of situation? My guess (never having been in this situation) is it isn't good for the co to be suspended without saying it is because of a bid. It leads to uncertainty. If it's a bid then investors say, take your time boys, get the best terms, we'll wait patiently (unless we're short).

So question is is there an unwritten rule of - don't hold this too long here.

I haven't been around in previous years on this stock but around now, typically, wouldn't the co. be setting out plans for the mining season? There's an awful lot you could be communicating right now about how and where we will hit the ground running in April. What the scaling up will involve, where the resources will be concentrated.

Wonder why they haven't announced anything on that yet? Could it be we won't be mining it in April (ourselves)? Just saying.

Liking the idea that it's been a full elapsed working day in China (7pm in Beijing - they probably work late) since we suspended. Makes an RNS this afternoon more likely I think. There's a lot of i's dotting and t's crossing that can be completed in 24-36 hours, if the parties are willing.

nm

good hope he has a couple of weeks more to sell! Then handbrakes off into Q2 I say.

I would focus on these words:

Commodities trading veteran...He is also an investment banker....as mining & metals leader in corporate finance
former Goldman Sachs and Morgan Stanley senior investment banker.... background in cross-border M&A transactions

These aren't the guys with the shovels or gold pans. These guys know what they are here for, and their expertise is precisely in the kind of transaction which is now required ( or in process ). All imho

waiting - yes very frustrating share - I had to wait roughly 7 days to double my money from 3.5p to 7p. How long till it doubles again? Probably less than 7 days I think... that's the kind of rate of return I can be patient for :)

agreed. Huge volume yesterday :) relentless buying!

only saying that because I quite like the idea that a $1bn valuation without 'premium' for being unique, and additional uplift on 'semi-proven' reserves can only increase this. I imagine most people would be happy to start negotiating at 30p even if the eventual sale price goes (hopefully) much higher. Trying to find the floor for a likely deal then working upwards (and assessing what I can spend the additional money on).

If we were valued for sale without flaps, (just playing devils advocate), we have licence but buyer attributes no value, what is realistic? 2m ounces, 80% attributable at $2500 gross value in the ground is lets round it $4bn. Plus a few other metals/PGMs.

is $1bn sale valuation nailed on in every scenario do we think? I think that would be ~30p/share as long as it was received on the 80% (so gross sale value would need to be a bit higher + bank fees).