Member Info for wasarunner

I was wondering if the weird trading patterns (up and down for not much reason) can be attributed to traders trading the volatility on other AIM stocks at the moment, some big rises and falls elsewhere. The volume on HZM is pretty low all things considered in steady trading so this can influence the price - what is going on on AIM at any given point? Assuming traders trade a bunch of similar stocks that is...

Cool either which way - 2023-2025 is forecast to be quite a big EV demand. I think the 'curve' really starts curving at that point if such forecasts are to be believed (I forget how many millions of vehicles per year by then forecast).

Someone will want all that Vermelho Class 1 that nickel online by then, for sure :)

If Vermelho goes jv does anybody have a view on when first production could be? Are we potentially looking at a couple of years to agree jv, do dfs, get permitting, secure finance (or does this come with the jv) then a couple of years to build mine so circa 2023-2024? Could it be done quicker? I think on current timelines araguaia might be set for first production 2022 and stage 2 2025 if funded from phase 1 production so vermelho might go to production between those rwo milestones?

of course we might not be waiting for financing at all, we might be waiting for a crunch situation in the Nickel market which makes our compelling assets too compelling for the buyer with the deep pockets in which case I say bring it on and lets be patient...

So JM would like £100m mcap+ to get the equity on board for final finance piece for Araguaia. So far the Orion finance news, Vermelho PFS, and Orion money cash in bank have not significantly shifted us towards that position (pre Orion news we were low 3.x now we are high 3.x). Nothing particularly wrong with the Nickel market but SP doesn't really seem closely correlated.

I can only see one of two things significantly altering the shareprice at the moment - announcement of partner for Vermelho, or a significant announcement of project finance for Araguaia (by significant I'm thinking something that eats substantially into the $440m capex). Question is will we have either piece of news in what remains of 2019? Orion news was 2 months ago, 2 months of 2019 remain. It remains a chicken and egg for me - need stronger sp to get the finance done, need to get the finance done for stronger sp :)

Thanks Luke. Another reason I guess in current environment not to sign offtake is if you think the Nickel price will rise, as stocks deplete/EV starts to gain traction. Why sign an offtake agreement in a $17k/t scenario when you can wait for the $20k/t scenario - if you think it will play out in the timeframe that you want to sign the deal. In that context it might be relatively crucial to the final finance package what the Nickel price is Q1/Q2 next year? Lets hope it's high!

Wolfie similar numbers - one things I've noticed is often people bound the numbers around but I'm never sure if they mean $ or £. The commodity is priced in $ so when I do my own calcs I always do everything in $ then convert back to £ for the final answer when I want to think divi/sp. I've seen the Onca Puma number quoted in £ many times and there is a big difference between $ and £ today, and an even bigger one when that deal completed!

But roughly speaking for Araguaia (ignoring Vermelho - that's how I get the 50% that you get, I divide number of mines by 2!) I was working on around £200k GP being worth around £800m mcap and therefore 50p (ish). I also figure that if the company is making £200m GP even after debt repayments and the like it might be able to shed somewhere like todays SP (or even slightly higher) in dividend PER MINE.

So my base case remains Horizonte have around 50% of the current assets under ownership and in production, for my 50p 3p/5p scenario and anything better than this is just toooooo good (but possible?)

1. does anybody know of any examples of offtake deals with upfront component which might be relevant to the Horizonte scenario, I could look at or read up on (so for example a commodity metal) and
2. once such a deal is done, does it typically make sale of co much less likely? Because I'm assuming at that point an element of future profit has been tied down or fixed it becomes less attractive on the upside for the buyer?

I'm assuming any offtake deal will want to have some kind of upfront payment to help fund the capex? Are there any significant differences between the royalty agreement with Orion, and such an offtake deal?

Sorry that's 3 questions actually.

Thanks woflie and agreed - I'm sure many people would have imaged that post Vermelho PFS post Orion and with Nickel knocking on $17k/tn we might be slightly higher SP than 2 years ago but hey ho that's the market for you. I keep telling myself it is an opportunity but as other posters have said, it would be nice now if the opportunity to keep investing in this share at well below where it should be can start disappearing please.

I've not really seen a £1 sp as a possibility (but I guess in a very elevated nickel market, maybe $25k/tn+ and shortages etc) maybe anything is possible. On the understanding that miners generally trade at relatively low p/e valuations (but are very cash generative at good points in the commodity cycle) I am hoping for a full valution more around 50p with a divi of 3-5p (at currently issued equity, obviously if more is issued then these numbers might be lower, but still a very good place from where we sit today at 4p....)

Of course, if we can have an Onca Puma scenario with Vermelho and sell say 40% of the asset for $350m (using similar valuation to Onca Puma) and build out 100% of Araguaia without further dilution, happy days. We end up owning 1.6 mines with no equity dilution (and producing Stage 1+ Stage2 on Araguaia in 2.5 years time). But that seems just too good to be possible endpoint...

So I have been mulling the following hypothetical scenario. 100% interest in Vermelho sold for $350m, cash. Maybe some ongoing remuneration also but that would just be icing on the cake. Then I think debt raise on Araguaia ~65% of $450m lets call it $300m + cash from Vermelho sale $650m would get us close to building Stage 1 + Stage 2 of Araguaia.

Nickel anywhere north of $17k/tn and C1 cost around $7-$8k/tn you can pay down $300m debt in relatively short order, with a 29kt/yr operation generating $10k/tn pbt. After that, juicy dividends forever (well for life of mine).

I know it is unlikely to play out exactly like this and also there are good reasons for not selling all of Vermelho / upside but do the numbers make sense at all? Would a buyer pay $350m on top of the finance needed to build Vermelho, for the asset? I keep coming back to a scenario where we have two assets, but if either were 100% owned and operated by Horizonte and go into production would seem a very good outcome for Horizonte and current shareholders (assuming no further dilution). Hence personally I'm happy with the scenario where 100% of one, or 50% of both mines is retained without further dilution and goes onto produce as I see anything like a decent nickel price, shareholders are then in the $$$.

Interesting Numis valuing around £200m mcap, presumably it is a 12month target? My (very unscientific) target range for post finance Araguaia (but pre construction) was 10-15p which this is bang in the middle of this range, but my guess assumed some equity financing for Araguaia, but ignored Vermelho. I still think 10-15p range is realistic when the financing deal is announced, if Vermelho hasn't gone anywhere in the meantime. And one assumes per the timeframes we have had from JM, this will happen in the next 12 months. So in short I'm with Numis on this one (but Vermelho presents further upside IMHO)...

I have it that appointing Endevour was announced t 31/10/18 - thats nine days short of a year ago. First $25m was announced end August 19. Syndicate of banks was announced a good while back. Do we really think no more progress has been made on financing? I don't think so - it just isn't public yet. We might all be right in a shorter timeframe than certainly the current sp suggest :)

now that's what I call top slicing...

Interesting - that suggests a derisory offer might propel the SP and get some momentum for equity funding. If only I had sufficient funds to put in a lowball offer I would have a go myself...

On the other topic being discussed I'm really grateful for all posts and the technical side I find interesting if inexplicable to me. It so often plays out and I know it is to some extent self fulfilling (if people trade on technicals then they are more likely to happen etc) but what I like above all is people urging caution when it is clear that things don't always move in a straight line up. So to this extent I find the contributions by Joey and Geng to be as useful as my long term musings!

I guess many here are invested for the day when the RNS lands that there is a serious bid, and it is probably almost impossible to time this. Hopefully with the Vermelho PFS published we enter the period where this is now most like (I believe so) so for those who are waiting for this outcome this might be the best chance in the coming months.

Luke - I haven't been through a T/O in a share I've owned. Are the board obliged to announce an offer to the market, or can they negotiate first - i.e. bat away a lowball offer if they don't think the shareholders would buy it? Without announcing to market? I get that a serious offer would be announced and then may/may not get the go-ahead. Just wondering at what point the board have to release it via RNS.

At the moment I guess the institutional holdings are probably keeping a lowball offer away, but I wonder if we might get a 'middling' offer, whatever that might mean. To me something like 20-30p for the lot, which is probably less than it is worth but somebody might try their luck if conditions for financing are proving tough for Horizonte.

Westie I haven't seen mention of anybody specifically who might be in the data room but the Teck guy on the board is in the data room by definition (as a director I imagine they have access to the data as it is produced). So that's at least one major who are de facto 'in the room' so to speak.... :)

Nthoftheriver concur - all the noises are (JM has mentioned many times now) looking for partner I would say 'rather than' instead of 'as well as' progressing Vermelho. IMHO I don't think they will commit much more funding towards progressing it. And because the opportunity for EV is right there right now to start building a mine, I think from Horizonte's side if there is interest it will happen quickly (i.e. Horizonte won't delay it). What interests me is would they announce interest ahead of an actual deal - my guess is maybe not, and these deals are probably hard to tie down. So it could be that talks are already ongoing with interested parties but until there is at least agreement in principle, nothing gets leaked to market. Again - all conjecture but it is interesting in the context that JM has been pretty clear on the intention with Vermelho.

Westie if it is any consolation I hold some shares in Horizonte for somebody who will probably want to cash earlier than I will. My feeling (and it's a feeling only) is that there will be an opportunity to do so even if Horizonte doesn't get sold, if you can wait till begins producing or maybe slightly ahead of this time. I think for those who want to hold through production it is for 'full value' but as JM says the share should already be worth multiples today really, so it depends on your time horizon and reward ratio you are looking for. I guess there will be some who favour production because a sale would obviously not net the full potential value. It may be a question of cashing at a lower multiple of todays price if you need the money than waiting the years for full value. Many are convinced it will get sold in any case, we will see! If a sale is on the cards it would seem to make sense in the next 12 months most likely.

Cash in bank is worth ~2p unless my maths is way out, atm. That makes sp stripping out cash around 1.85p. A bargain, methinks...