Member Info for wasarunner

Horizonte sp seems to be falling at similar rate to lme nickel stocks which is counterintuitive really. Fair play to those that called the pull back. If we went to 3.5p again though we would be valued around £20m gbp after cash which is just barmy so it would be nice if 4p could hold until vermelho pfs or further financing news? Just musings...

Lotto: agreed. My learning came with BKY which ironically was in a 'well developed'country in Spain. My investment there was based on - low point in U cycle, plenty of nuclear in EU, EU will want to secure it's own Uranium supply and not rely on Russian controlled interests right? Wrong. No permit (yet).

After this I decided (I had always avoided Africa because I don't understand it) I would stick to countries where mining is strongly established and supported, but are well developed or developing - I put Oz,Canada,Brazil in that bracket maybe there are others I should consider. I was already invested in HZM and by luck and not by design transferred my whole BKY holding at the low point - 1.7/1.8p area.

I would now have the same issue with investing in a Sirius (by the way, feel a lot for those that did) - countries like the UK don't really want to do mining (Spain doesn't want all that tax revenue from the U mine). You only have to look t the arguments around fracking. I'm naturally anti fracking cos I'm in north england and not in my back yard right?

So I'm no expert but the middle ground - countries developed enough where political risk is low enough, but where mining is already established seem the way to go. But I'm new to the sector and understand I still have much to learn!

One final risk I saw was the board aren't heavily invested. Mitigation for that is the shareholder register with majors - hopefully means PIs can't easily be shafted, for want of a better word...

Thanks Lotto, agreed. Main risk factors for me which seem mitigated (and hence I sleep easy with my holdings here):

- will we need nickel? There might be a better alternative in many years ahead but the automotive sector need to move now, so for next 10yrs+ investment in battery tech and build on the demand side I just don't see an alternative and once the plants are built, production lines etc. they will be making EV based on nickel batteries for at least the next 10-15 years.
- horizonte is now (as of end Aug) sitting on cash. No immediate risk of a raise, indeed it would appear that the Orion news pretty much indicates financing is going to happen. Normally I guess investing in AIM this is a big concern, not a concern for Horizonte
- as you say, the b/e cost of production. I've read extensively on commodity investing and all the advice is buying anything above lower quartile is risky because you just can't predict the cycle accurately - example I followed was uranium which has been in the dumps for ages. We don't know about Vermelho yet (but the grade is good), we know about Araguaia cost of productionis where you want it to be
- jurisdiction / political risk - this has unfortunately bitten me hard on another investment. Must confess its the area I understand the least, except that Brazil is a big mining country, it is clearly important for the economy, and again the Orion news (they do their DD to the nth degree) must significantly de-risk

So I'm sure things can still go wrong, but the big risks appear well mitigated and the management team appear very competent, at least at the pre-production stage. I was well underwater at 1.7p on what for me at the time was a huge holding but never really considered selling and was still relatively comfortable because of the factors above. The Orion news in August I think just removed any final doubts in my mind, and is why I put my remaining money on the table at 5p.

I'll add for anybody trading this share I say fair play - it would have been a good share to trade over the last 12-18 months. I made a few buy / sell but mainly to move shares between pots, generally I've been building a long term hold position than actively trying to make money. But clearly it can be done as there has been volatility, market led, sentiment led and due to the forced sellers.

For me I bought Horizonte specifically to move away from trading and to try and invest in something where I can sit on the sidelines and watch the story unfold over years and (hopefully) get rich without too much sweat and trying to figure out the market moves. My view is still that this is possible and hopefully now quite likely. I would think anybody in the same position, with time on their side, is going to do very well from holding. Watching the news and market rumblings is quite good fun at the moment and the newsflow over the next 6 months should be very solid - almost irrespective of where nickel or wider markets move...

I think what we're seeing is Horizonte is still buffeted by wider market forces. It is fair to say there has been a good tanking yesterday across markets. Poor US data etc. My view is it creates opportunity and there might yet be further opportunities ahead at lower prices who knows - I take all views and have no beef with anybody who says this can go lower. But anybody who wants in, and I guess if you are buying now after yesterdays news you would want to be in for the production scenario, can still pick these up at what today looks a decent price. Valued on fundamentals, mcap, 3m+ tonnes nickel in the ground etc.etc.

I called it wrong at 5p and topped up with my remaining cash as I didn't think we'd go much below 4.5p. I think my 1.7p purchases are looking safe, for the moment anyway! You miss some 'bargains' sometimes but it is hard to call the bottom, even the chartists don't always get it right!

I view the appointment as really good for the co, it means not only are they moving forward, but there should be more momentum with the construction over the coming months. Presumably we can start spending the $25m from Orion on something useful now which prepares Araguaia for build.

Would there be any reason not to release bank loan details when agreed? I assume bank finance is less tied to the other finance components (like offtake - which might impact equity) so might just get released independently when completed? Any thoughts? What I also don't know is - would banks make the loan dependent on other source of finance - would they already need to know where the balance was coming from? Or would they finance on the condition of additional finance to complete the package?

I'm just wondering if on the Araguaia timelines bank finance might be next.

Early indications are, they are actually going to build the mine! Also this looks good: "Additionally work on the Vermelho PFS has progressed well and is nearing completion, we expect to announce the results later this month".

Lotto, interesting the one permutation I hadn't really considered was partnering for Araguaia and then not for Vermelho. My feeling is that if Horizonte build any mine themselves, it will be Araguaia as it uses a well understood lower tech process. Without engineering support from a major. It would seem to make more sense to involve a major in V as much for expertise as financial resources, it also being the more expensive build.

Although the projects were or potentially are 12 months apart, I think this can be bridged rapidly. I can't see Horizonte having negotiated all the financing for Araguaia without at least half an eye on Vermelho. It can't be difficult to drop into conversation, say with Orion or the bank syndicate, 'by the way we also have this other mine we expect to be around 2x, what about some financing'. JM has also previously stated that the PFS could be rapidly followed by BFS because of all the work Vale had done. I don't know then how long permitting takes. My feeling was always the financing for Araguaia was designed to take a long time perhaps not only to get the best deal available (into rising nickel price) but also to give Vermelho a chance to catch up.

I don't know if Horizonte would ever partner with more than one major? It seems unlikely to avoid a conflict of interest. So a major for one, or both mines as partner?

My guess (and it is only a guess!) is that if they get a 'mining/engineering' partner it will be for Vermelho. And that they might use additional finance options to build the 2 RKEFs at Araguaia from the off, rather than involve another third party. All this if not T/O. There could also be further potential upside from the third mine or additional land/exploration on existing land so it might be attractive as you say not to dilute the whole co and to retain those upsides 100%.

Lotto, I quite like the idea (and it is obviously entirely speculation) that with a major partner they might be going for a bigger build, maybe something like Vale envisaged. Would a major buy in given what they now believe about where the Class 1 demand is going, to build out a 46ktpa with maybe Horizonte retaining half the income but the major fronting the capex which can't be covered by debt?

As I said, entirely speculation on my part but it can't be an entirely impossible scenario. The excitement at the moment is all for Class 1 and it would be a bold statement to say this massive future demand can be supplied at good tonnage from Vermelho. Would a major 'buy in' for half stake in a 46kpta Class 1 supply? We might find out tomorrow...

35p for me. I've decided I would be disappointed with less. No hard science behind that number it just feels like a good number...

"delay to the V PFS whilst we finalise commercial agreement with a major partner which has kindly agreed to finance the mine build and which they will commence immediately following the publication of the PFS". That might raise the sp, at least on the day...

yup, I don't buy the 'just tweaking things' case for Vermelho PFS because of the proximity and how ready it was already supposed to be even 3 months ago. It is just for fun, but I do like speculating on what the news really will be. I think more than just 'and here is the pfs sorry it's later than we initially suggested'.

My view is if it isn't next week we would get an RNS or indication of how much longer.

Lotto excellent post - I think this too, that the price premium of battery grade material should diverge over time as demand accelerates. I can't remember the exact figure but 1 or 2m extra tonnes of nickel are forecast in 10-15 years time for EV use. It stands to reason that if future supply for this market has to be met from a large portion laterite sources then there will be a premium as cost of production using current tech is higher (than ferronickel). Who knows what the price differential will be but it should increase - supply and demand.

The crucial thing then becomes where does Vermelho sit on the cost curve of production. I think the grade is really good, relatively (3%?), and I remember one of the board members on an interview saying that the nice thing about Horizonte is that they have both the grades, and accessibility. Many mines the grades are good but much harder to mine because of location. It would be fantastic if Vermelho could be bottom quartile of cost of production Laterite suitable for EV conversion, I think if that comes out of the PFS then BOOM.

MJB Agreed, I guess then billion(s) are added to the B/S and future cash flows of the majors, while a few hundred millions (hopefully) distributed to us in the transaction.

On another post I argued that (IMHO) closer we are to or actually into mine build, and the stronger the nickel environment, the higher a buy price should get. So you might end up with a scenario where you get a 'decent' (you will never get a full valuation for all remaining years of production) sale price, perhaps in the order of billion, like Onca Puma. So there is a chance Horizonte becomes a billion dollar co without actually producing anything - most PIs might actually take that happily! I probably would :-)

Lott agreed - I'm surprised as a result we aren't higher on the sp. It can only be the remainder of the $400m odd and where it is coming from that must be keeping new investors on the sidelines. My guess is current investors are probably, like me, fully loaded and not currently buying.

What I think most can agree on is this is either a billion $ company in the making (in time, not immediately, perhaps years) or it doesn't get finance. It is a fairly binary scenario. Factor in some potential dilution and present shareholders might not see the full billions, but will should do very well.

The interesting thing for me is the market is valuing towards the 'doesn't get finance' end of that spectrum yet we have fairly firm indications now which contradict that scenario. So one assumes this value scenario won't hold for much longer and the SP should re-rate. Barring a catastrophe with the nickel price which really doesn't seem to be an imminent risk at the moment.

understood the muir, I'd probably actually want to be buying at current level with t he proximity of news if I could, but I'm very much in the already fully invested camp.

Just on the SP I believe the rise to 5p and above was on the Orion finance news because of the signal this sent about certainty of financing/funding for Araguaia. It can only be the structure of the finance deal and whether it is successful that can be holding the SP at current levels. I just don't see anything about the Vermelho PFS which changes any of the above hence anything much below 5p now for me would signal buying opportunity. Adding to that that the PFS could be value added, plus the possibility of further financing news at any time, and I just don't see much below 5p as anything but value at the moment. Not to say Joey won't get his price and if he does I'd happily but at that price also, if I still had funds...

For people selling in case the PFS isn't 'as good as market expects' I don't understand it as I don't believe Vermelho has any valuation in the mcap, probably not even the amount Horizonte paid for it? So even if a PFS doesn't deliver the big good news punch people hope, I don't really see how it can do damage to be honest.

I get that people trade it (I've done it myself with mixed success, not too much on this share though) and fair play to them, it can certainly work as a strategy to sell before news. Firmly in the hold camp here...

I think you would expect a revised date if it is isn't going to be very soon (i.e. you might not announce a delay to PFS if it is going to slip by days, but you would expect one if it is going to slip by weeks)?

My feeling has been for a while that it will come with other news, or that other news will be hinted at in the announcement or will follow up in further RNS in weeks post PFS. It is just a guess, but my feeling is that might be the delay. I can't see how revising the nickel price would cause much delay, at the end of the day based on nickel price it is just a different net calculation (you wouldn't change a mine design because of nickel price?)

I wondered if an incentive for a strong board for a sale would be that they become the management team in a major to run the actual project. So for example JM might stay on and build the mines and get it up and running. In this scenario except for loss of ultimate control, I can see upsides to the board if they can then become bigger fish in a bigger pond and of course remuneration terms can be negotiated as well as new share options in the majors etc.

The counter argument of course is that some board members of junior miners often have worked previously for bigger mining cos already, and have chosen this path. Would they then willingly be re-absorbed back into a major?

These are just musings I have no knowledge in these things! One assumes the board would want to do well financially for any change of ownership transaction, in any case. And indeed any significant JV.