Member Info for wasarunner

Hi Luke2 I don't have much if any experience of previous investments in AIM so I don't know if around 2% of co shares under option (JM) is a lot or not, an incentive or not. For something like a sale at 50p of co, JM makes ~£15m GBP. Again I don't know if a CEO of an AIM listed co would take that happily, or if they are in it for more if the co goes into production and they can either work out their time or move onto even bigger things.

I've got just around half of JM's options in shares, so I'm hoping his targets align with mine etc!

Luke2 my hope on a T/O is that it becomes more expensive the further down the line we are. I see two potential reasons for this:

1. the more work the BOD put into moving the project forward, the more reward they expect for that work from a deal. So if they go the hastle and time of negotiating financing, building a build team, potentially even building the mine, with x years of additional work, then the T/O price will have risen by some factor at that point and

2. if we believe the nickel market is going the way predicted, the more months pass towards the expected point in the market, the more the sale value of the co rises into that market. So in a year time the T/O value could be a lot higher than today if nickels stocks are down another years consumption etc

So my feeling is the more time that elapses from now, the higher the purchase price is. For the PI's waiting for a quick sale this might be a good thing, because it could force a potential buyer to move early to secure the asset. Either way I imagine the board are in a relatively strong negotiating position with the way the current market is going.

I must confess the one thing I don't understand is what incentive the board have to not recommend a sale at a given price because I'm not sure what's in it for them from a sale (except perhaps for the option price on shares on option). But I guess as others have pointed out, the shareholder register of majors makes it unlikely the company can be given away for a below market value sale in any case. I think around 50% of the shares is held by institutional holders or major miners?

Joey not convinced. Nearly 2 years ago nickel was $6/lb, today it's $8/lb and rising. 2 years ago no permit, no feasibility, today permit and feasibility. 2 years ago no dilution free royalty deal, today royalty deal. We are nearly 2 years closer to EV boom. It's all good IMHO. We may get 4.1p again but it will be temporary if so (IMHO)... Plus as others have pointed out Vermelho has nearly no attributable value in the mcap. I think most people are agreed that is set to change, relatively soon.

Bloodshot thanks - 28 years (lets call it +2 for mine build round up to 30) I will be happy with, at a push I might see say another 10 years of 'lower grade' material. Horizonte having to move onto low grade ore with me still being a shareholder will be a nice problem to have and I look forward to it, reckon I will have taken some decent ROI by then...!

FWIW my targets are 30p min sale, or ~3p-5p div from year x onwards, which would do me for 28 years if I see it out. I reckon both of these are reasonable goals on the asset base.

I think 30p min asset sale equates to the low end of a valuation based on current resource only which you calculated.

Either way as a PI you're left hoping for a '10 bagger' or your investment in dividend per year - neither is a bad outcome. May be pie in the sky but lets see...

Thanks Lotto. It's the classic jam today vs tomorrow dilemna. I wonder how many PIs will sell out if the company goes on to become a producer, after the initial re-rate once this news is firmly established. So I wonder how many might leave with say 20-30p in year 0, vs wait for 50-100p+ in year 5+ (+divis over many years which could be substantial).

I think the thing that favours institutions in these scenarios is they can afford to be patient, PIs (me included) tend to be twitchy. My thinking at the moment is that if Horizonte becomes a producer, the real big returns are many years down the line but could be eye watering numbers. I'm hopefully young enough and fit enough to wait it out...

Hi 600Thieves, my view is that the PFS will move the price much more if announced with a partner. My feeling is that the delay to PFS (lets call it a delay of around 3 months since original timeframes) might well have been orchestrated to either agree some kind of deal, or, potentially design the study around the requirements of another interested party - maybe a major.

JM has already said they wouldn't try to develop two assets themselves, alone. Therefore it would seem to make sense to me that the more complicated asset (Vermelho has more optionality but potentially higher processing cost to make battery material) be developed with a partner. It stands to reason that if you already know this, you design the PFS with a partnership in mind - if a partner wants a big build, you design it around a big build...

I might be wrong though and the PFS is designed only to invite potential partnerships.

My feeling is the sp might not move much if it is pfs only. But that it will move a lot if pfs+partner. Suddenly the whole feasibility of building mines becomes real if a big partner is onboard. I think the co should already be valued in the £100-150m mcap range on assets alone (the brokers tend to agree) and it must only be uncertainty around financing holding it below this range.

Anybody have a view on what the absolute baseline sp is now? My feeling is that no matter what happens (nickel drops, PFS not quite what anybody expected etc.etc.) with all the news we now know about Horizonte we won't see below 4p again. But I might be wrong.

I ask because I have an average just over 3p (much more by accident than design, most of my intial entry was around 4-4.5p but I had to take some stop loss elsewhere and decided to switch these at a low point around 1.7-1.8p). My thinking is therefore that anybody with an average of 4p or less is probably onto a 'free bet' scenario here? And that there will be a lot of PIs with such an average, hopefully. I note the most recent board options are 4.8p which is almost coincidentally around the price we've been bouncing last couple of weeks.

I have no more funds so need to sit patiently now and wait for whatever happens, I'm invested for a tad under 1% of co...

apologies for posting on wrong thread...

Thanks AIMtodeath, I concur. My feeling on the T/O was that a major might well want to rejig the plan (for example, is it hard to put a third RKEF at Araguaia if the amount of ore available supports it) and would want to buy pre build for that reason. No idea how long it takes to change the engineering plan, possibly resubmit for permitting, then build, but I assume a major can do this quite quickly. Therefore the sweet spot for T/O would be pre build.
My own thinking was that the relatively ‘elongated’ window for Araguaia financing might be designed specifically to allow Vermelho to catch up to BFS stage. We are looking at up to, or even slightly more than 1.5 years (post BFS) for Araguaia to complete financing. One assumes that is a window in which Vermelho can achieve BFS. Therefore the two mines might be offered as a ‘package’ in whatever equity deal is negotiated with either Horizonte retaining a holding, or not. Just my thoughts and I’m not an expert by any means but they are all exciting scenarios and will become clearer soon…

Sorry one final point, I think when JM repeatedly refers to 'scalable resource' and 'nickel district' it sounds, at least to me, a lot like 'at the right price you can have all this...'. So some of the language over the last year has at least to my ears sounded like they would do a deal for the right price. I don't know if this is what all PIs are here for but I would be happy with the alternative too, albeit it would take some years to materialise.

Agreed. I don't fully understand the mechanics of how a partner comes onboard with one or both mines (particularly how equity works in a scenario where they have interest in one, but not the other). I always thought there was a good chance of partnership or T/O (personally over the last year I have thought this >50% chance) but again I don't understand how a relatively small co like HZM can partner up with a 'major' and retain a holding, so I assumed a T/O. Somebody a long time ago pointed out that you wouldn't dilute the whole co to finance the first mine (Araguaia) it just doesn't make sense to give away a percentage of Vermelho for free...

Oddly the outcome which most people thought the most improbably was Horizonte doing everything themselves but it looked increasingly likely as time moves on. Personally I think the stated financing period seems critical - if there are financing terms which prohibit T/O then that is when we might know that they are going on to production. From what others have posted it also appears that this is a point in the development where T/O is potentially most likely, as for example a major might want to immediately build Stage1+Stage2 of Araguaia instead of using one to finance the other.

Does anybody think the outcome won't be known in 9 months? I am just interested.

Thanks Lotto, very interesting. I guess most people then expect if Horizonte got bought out for a sale value somewhere between the two numbers you've highlighted - around £350m - £1.5bn (at the Onca Puma valuation).

My feeling coming at it from different angles was that if a T/O happened at a low point in the market it might look like the lower end of this range, which I guess probably satisfies many PIs who would hope to then make the x times multiple and move on. At a higher point in the market Horizonte might sell for a higher valuation within this range and I guess the more patient are hoping for the sweet spot in the nickel cycle for the T/O if it happens, which might still be a couple of years away?

For my money we will know a lot more about which way it is going in the next 6-9 months or possibly as early as next week. I can't decide whether I would prefer a T/O or going to production so I'm happy not to be making the decision...

Lotto I found your numbers really interesting. I guess than pre-production a better valuation might be based on some numbers derived from the resource itself, rather than adding the complication of future cash flows based on mine build costs / financing options which are as yet unknown (which might then constrain future cash flows in ways that can't be foreseen in the current SP). I'm guessing also that these valuations might produce a basis for some kind of 'sell the resource before you build the mine' valuation but I note that when the comparisons are drawn with for example Onca Puma there are some multiples in there - although I take your point that nickel price cycle is important and a year ago we were at $11k/t for valuation purposes. All very interesting and thanks for the numbers.

Thank you Luke2 and Lottohopes. To invest I assumed a medium-longer term range for Nickel around $16-$21k/t at production, this seems a reasonable range given the various longer term forecasts. I understand it is volatile and it is also hard to smooth this over, say a 10 year period in a mine's life.

I've also assumed some dilution may be possible to get it to production, I have in my head that we have 2 mines hence even if there was say 50% dilution from here, we can call the end result one 'undiluted' mine if Horizonte goes on to produce. Maybe these are all conservative numbers but I'm trying to figure out what that looks like in value terms in 5yrs time. It certainly appears that it would be some multiples of todays market valuation which does not seem to be valuing anything near NPV as others have pointed out.

To qualify: I'm interested in long term hold hence trying to put a value on this share in, say, 5+yrs time on the assumption that Horizonte finances Stage 2 of Araguaia from Stage 1 production. I do understand that a lot can change (and that potentially many people are hoping the company is taken out much earlier). Maybe financing Stage 2 becomes easier, and hence is expedited, on a high nickel price, as others have pointed out.

So my price targets are for 5yrs+ but I'm pretty inexperienced and haven't invested in miners before this so looking for feedback on those numbers. It seems hard to value a company with 2 big assets at slightly different stages of development and financing (but obviously many are invested for the large potential upside?)

I'm new to posting but have followed with interest for a couple of years (and the 'other' board). Originally I followed ii but as many there have pointed out, that board is now pretty dead since the changes. I've been trading this and that since early 2000s with mixed success. I saw Horizonte as a really good potential but it seems hard to 'value' with the unkowns, hence I'm trying to work that out in my own head. Vermelho is less well understood than Araguaia but it appears Araguaia is still hard to put a value on?

Morning, new to the board but been following a long time (around 1.5 years this share) and built up a large holding (for me) over this time, at all prices between 1.7p-5p.

Wondering if somebody with more exprience than me can look at these numbers and comment. Working on a $5k or $10k/t profit margin on the Araguaia Stage1+Stage2 in steady production (29kt/year). After forex call it £110m/£220m profit a year. I'm ignoring tax, dilution, payback of capex.

P/E 4x on this would imply a valuation of around £440m/£880m therefore at current issued capital around 31p/62p.

This ignores Vermelho. Am I massively out here? Caveats included...thank you.