Member Info for wasarunner

Then there's A2 to come but survival is the name of the game for now, A2 is long grass stuff. The one thing I will say about A2 is, I think now no coincidence this is due to be released this quarter. The 'pitch' to both the cornerstones, and any potential new equity in this raise has to be - you are buying A1 + A2 if you subscribe for shares now. So buyers will have half an eye on the NPV possible from both stages of the mines. So the only way A2 helps us now I think is if it makes it more attractive for investors to invest. The flipside is, if trust has been broken (e.g. Fidelity bailing out) then will new institutions believe the BOD can deliver A2 when they subscribe. Until now, A2 has not been 'bankable' but now it can be - and hopefully all the lessons learnt from what A1 will _actually_ end up costing will be factored into the A2 DFS so that it can be a solid representation of something that can be built for the price.

I don't know what's going on behind the scenes but has to be a chance the CEO's position is at risk here IMO, but maybe only after the dust has settled. Needless to say this is last chance saloon I think for f***ups, I think if in 6 months time we find we need another $100m it's curtains.

And no I'm not selling - I'm locked into production or bust now. I never intended to sell (this tranche) before production but obviously now there is the unwelcome % probability, however small it is (and there is some % even if it is small) that it's bust in a few weeks time the big players not having reached agreement.

The raise could be more punitive than 200% dilution (i.e. 3 times as many shares in issue) too but I hope not. FWIW I am including the convertable loans in the dilution because they dilute - my pre dilution calc therefore is 315m shares not the current shares in issue and if you treble it you get close to 1bn shares in issue. With NPV $1bn+ at production then depending on nickel price you start to see £1/sh area as a possibility. Again hopefully worst case, maybe better than that is possible here.

Hi SJ - no, my worst case is raise at 25p (if you raise at 6-7p no way you get enough $ needed - if my assumptions are correct - these assumptions being around $200m needed some of which will not be equity). 20p is bananas pricing at the moment (but given there is an existential threat to equity not that much of a surprise). I think the equity price has to rise into the raise, and it should do once the cornerstones have 'underwritten' the raise because they don't want to be wiped out here. I guesstimate without going precise La Mancha and Orion put in $200m-$250m already and that's toast if the banks take it - and they won't let that happen.

So the raise IMO will be somewhere 25p-50p, after which I think the SP goes back to 50p ish as this will represent the new mcap of pre-debarcle, so £1.50 old money will now be 50p new money. Which means £1 at production, not £3 at production which was what I was expecting.

And that way Rover, and I, and you potentially can say we kept our shirt walk away and 6 years after investing in it (in my case) get our money back at breakeven or, if you're brave, then there's upside from A2, Vermelho etc. but do you think they can deliver when this has gone this badly wrong. My guess is a lot of long term PIs will exit at a relatively early opportunity, those who didn't sell in the initial sales anyway.

Risk for me remains the big guys take it private but it is a very complicated consortium now - 8 major lenders, 3 cornerstones, I think it is unlikely to happen. I also think nobody will buy it at this juncture just looks unlikely until mine is complete now.

For the raise to be 25p we need sp maybe 30p. For the raise at 50p we need sp at maybe 60p. As soon as it is obvious that equity will survive, the shareprice will go up, at least on this bit billyv and I are agreed! I think the company will have to announce news in the coming weeks that makes this obvious until then everyone is guessing - survival/non survival. At that point those short here/de rampers will be gone IMO because there won't be money to be made to the downside.

Rover I think you will get it but not in billyvalentine timescales. This is the number I am interested in too £1+ breakeven - I do think we get there but it will take time. My thinking is best case a1 producing/a2 finance plan will see this number worst case a2 also producing will see this number. It sucks because it's a couple (or more) years to breakeven and I have already forgotten my dream of £3/£4 etc. I am expecting sthg like 200% dilution and anything better than that would be a good result. The company is not in a strong position here and the parties will get the best deal for themselves. So a few nervous weeks to wait till we know.

I've looked back through the RNS' (I can't find Orion's royalty payment but think it was c. $25m and I'm not sure who put in for the Vermelho DFS again perhaps Orion another $25m?)

Anyhoo -> if the above 2 are right, then Orion + La Mancha have put in c. $250m between them already. They don't help fund this, that's toast. The amount required might be similar (or might be less, if they can get debt as well) but Glencore also are at the table and also lose out on both equity and offtake if they don't help fund. The three principals will save this but this is the rub - they won't do it for free. For every share they put in at say 140p they will be looking for a price now which one day will average their holding to a sensible overall return. So we don't expect any gifts. My best guess right now is the 30p-50p ballpark (which is why I've put my worst case and best case estimates at 25p and 50p respectively) and PIs won't get a look-in.

I can't see Orion/La Mancha being overly happy with the situation. Will the mgt team survive. Time will tell. But first the company has to survive. GLA

>>Devils advocate, but what's stopping the banks foreclosing and Glencore buying from the banks?

Almost certainly Orion and La Mancha,

No buyer / no financing deal agreed -> game over. But not going to happen. The reason I don't think it will be a third party buyer (e.g. a Vale) is I don't think Glen/La Mancha/Orion would accept it and if they did, they'd want at least the money back they paid for the most expensive share they bought - £1.40. And probably a lot more. If they can make more money by financing it and holding for production they won't sell. The 3 have enough shares to block any bid - and that's important.

Right now I'd take a £1.40 sale all day long because then risk is gone and I think it will take a long time (production and maybe A2) now to get back to that number anyway. Not ideal as, like Orion, I wanted a multiple too and not my money back but also Orion will be making at that point on whatever price they put in the funding now and I can't put any in. I think people buying 20p now for the long game are getting a bargain. Just my view though.

>>If Orion or La Mancha have been selling…..then game over

Absolutely. They'd be taking a near total loss though given their entry prices (140p and 90p). Much better to stay put, fund it per the rough calcs I've done, and one day see £1-£2.50/sh. Assuming they got the spare $200mil

I think the funding package has to land PDQ (along with cost estimate which the contractor is working in) because you can't be in this situation long. The cornerstones will not be happy with a perilous situation of the covenant breach and there is a risk work on the site stops then you go into a downward spiral of more delay, more cost, and eventually it's unfinanceable. I think this is round the clock work to get sorted but they have to know the funding gap which obviously they didn't know exactly when the RNS was released.

If you've got 3 equity holders who all lose if there isn't a package, it's who blinks first. The company said on the RNS they're supportive - of course they're supportive the banks take it all if they're not. Don't get me wrong I'm not sure any of them want to be in this position, probably the opposite. Fidelity clearly took the hump and exited stage left. If one of the 3 did that now it would be game over.

It's a lot of money that kind of area $200m ish to have to find unexpectedly but I think all 3 have more to lose than to gain (with the possible exception of Glencore) but I think Orion and La Mancha will guard their turf. We know at least La Mancha are here for the long game and expansion to 60ktpa and why risk all that for whatever % of $200m they need to stump up now? I'm hopeful a deal can be done but obviously it's not a given or the market wouldn't have decided 22p is where it's at. Just my thoughts - nobody should buy or sell based on what I think! I've still got around 600k shares, haven't sold any as I usually get trading decisions wrong anyway, and am in for whatever the financing deal brings (or doesn't) and what happens after - but my timelines always were, and remain, several years from now which may not suit every investor. One of my concerns is does the funding package for this deal prohibit development of A2 on any kind of FCF basis because then my investment thesis halved. If that's the case then with the expected dilution it halved and halved again which is relatively unpleasant and leaves a loss overall (for me). GLA

And if it was just Glencore I'd agree with you. But you forget then the amount that Orion and La Mancha put in (which they then lose). 3 cornerstones saves the day here, IMHO. If it were 1, we'd be toast....

If your exit point was A1 producing because you don't want to wait for the BOD to deliver (or not) A2 or A2 can't be delivered from FCF then my estimates for that based on the expected dilution I have are 66p (worst case) - £1 (best case) based on 80% of $1bn NPV from A1. I can live with that (I don't breakeven) but in that scenario I would hang around for A2 to produce if there was a sound funding plan. But it might be a good long wait....

Vermelho is off my radar at the moment but if you can't deliver an RKEF which is about as standard as it gets and overshoot by 35% I think Horizonte definitely shouldn't try HPAL themselves. Has to be with a partner if it is HPAL but for now survival is the name of the game...

It follows if my estimates are reasonable that you'd see your investment back in the worst case (ish) at A2 production. There is risk of course that the BOD who got A1 wrong get A2 wrong. Also, you can't get A1 wrong again. Once this is funded it has to deliver or its curtains. A2 is a bit different because once you have cashflow from A1 you can survive while you fix problems. The reason the co is in deep doo doo is it has no revenues pre production. If this happens pre production, you're screwed. But Orion are just as screwed as us right now and probably working on the fix as we speak. GLA

For info my best case estimates are eventual 660m shares eventually fully diluted (including CLNs converted) for a placing of around $160m USD equity at 50p, and worst case 1.05bn shares fully diluted (including CLNs converted) for a placing of around $200m USD equity at 25p. I can live with both but would prefer the former.

I think this all becomes a lot clearer when we have the amount of USD required which I guess we will find out in the coming weeks/months.

Rover - I went through this thought process too in the days and it was grim. But for various reasons none of the worst outcomes are likely (see my posts around 6.30am ish this morning if you can be chewed to read through them all).

$400m equity is in this and $300m debt (already). If it folds, the banks own the half built mine. The banks don't like owning half built mines.

Secondly, Glencore have an agreement for around $3bn offtake from Araguaia 1. That's a lot of nickel when it starts producing. Will they ditch the $3bn to 'not prop up' the co for $200m? And La Mancha and Orion kiss goodbye to their shares? Not going to happen.

I thought about consortium taking it private, unlikely - but a risk.

So the question is what do we end up with. That's an unknown, and for sure dilution, how much. My best guess at the moment is around 100% best case to 200% worst case. Because my exit point was A2 built it's the number when A2 built that interests me. I get around £1-1.50 worst case, £2-2.50 best case. So I'm sat here at 22p reckoning we survive and come out with those numbers eventually, maybe 2026-27.

But risk of course. The banks don't want it and the equity doesn't want to lose it's shirt and $200m is chump change for Glencore. Glencore can't buy it for peanuts because they have to offer La Mancha and Orion 140p for the shares they first bought so for me 140p is a line in the sand below which right now, it won't get sold.

20p is a bargain to buy but got no cash :)

Zebbo the bond holders are the banks. Do they want to own the asset and complete the build? Probably not. If the bondholder was glencore I would agree with you. If the banks take it la mancha get wiped out. Do la mancha want to lose their investment? Probably not. It won't get wiped out. What pi's get is unknown however. Buy in the fullness of time (mine built) a lot more tha 30p is my guess.

And with that I hand the board back to the traders 'will it go up 20p today or drop 5p'. No criticism intended good money to be made here from thr volatility until a picture emerges just I'm rubbish at it so would be guaranteed to trade it wrong. Gla and especially those who have waited years for an outcome here - it isn't 100% nailed on but I feel a bit more reassured we will be ok (albeit eith less overall return than we hoped)

From orions point of view for eg £1.50sp at a1 producing is still rubbish. They put in thr biggest tranche of investment at 140p albeit the cln sharepruce lowering puts their cln well in thr money at this point. But eith all the risk all the additional funding as it happened along thr eay thry just aren't here for 1x 1.5x 2x I am sure they wanted more and la mancha too. Sure they benefit now from raising low but they are also diluting their previou holdings in so doing.

Possibly the worst outcome here is glencore end up with a bigger %. The big problem with that is you can park the idea of a bidding war one day with multiple majors at the table bidding it up if glen own near 30%. They just won't sell. I saw an eventual sale as the likely outcome that perhaps becomes less likely now unless it gets sold instead of financed, at this point.

Hheader I don't think they can raise at 30p because with the clns in play (which also have dilution rights) orion and la mancha already own a greater% of the co than is currently visible on the shareholder register it eould take thrm well over to raise any decent amount of $.

They can take it private but I don't think they want to particularly.

I just did maths on raise at 50p assuming 80/20 debt equity and it ends you up with 100% dilution at $200m raised, glen need to take the bigger chunk as the others approach limits due to clns, clns also dilute ending you swhere near 660m shares fully diluted. That gives me a1 producing at 100% npv around £1.50/sh in due course.

I might be hugely wrong but I am hoping for this kind of finance package now. £1.50 a1 producing £2.50 a2 producing if it can get financed. Thats at 50p equity 100% dilution.

Orion glen la mancha aren't charities. They will support thr co and their own investments but they will also take what they can get here.

Yes must admit the technical complexity if this kind of financing is way above my pay grade but I don't see it going down (ffs I got like 600k shares so that would be a bad bad outcome). C. $400m equity is already in and c. $300m debt. So what's needed in effect is a 50% extra equity equivalent. Right now I would take that all day long as an investor even if I couldn't participate to save the mine but the problem is if the number is $200m (haven't done the maths but will do) thr price point at which the cornerstones can do it and not go above 30% each is way above current price. I will try and do some maths on that to cime up with a sensible price perhaps assuming a 50/50 ewuity debt split.

I have literally no more money and went in too early with what I had otherwise I would have been buying all day long last 2 days.