Member Info for wasarunner

Think anyone jumping in with Vermelho will need to see the DFS finalised - doesn't mean they aren't already at the table having a chat of course.

I don't know how you again finance a big capex independently but I hope not with big equity and Vermelho is likely to be a big capex. So maybe a financing partner who takes a portion as JV at the project level even if it isn't engineering (i.e. not another miner).

Either way you need a strong financier(s) at the helm to negotiate the deal and obviously JM & SR have proven they can raise the first $630m with the 3 CAs, consortium of investment banks, big equity partners - no small feat. I think SRs promotion to the BOD is probably partly thanks for what he's helped achieve as well as preparing for the next chapter where you are going to need a strong CFO to negotiate the deals.

I have a feeling the total T/O price bumps massively if a JV is agreed with a financing partner and funding is secured for Vermelho. In my opinion only (and I could be 100% wrong I don't have experience of such things) -> there may be a narrow(ish) window between Vermelho DFS published and finance is agreed - (say 3-9 months?) while the parties who Horizonte are already talking to agree who's in. This window is also likely to be when A1 is ramping up heavily, mid next year, perhaps approaching nameplate. I feel this is the maximum point of risk for full T/O - a buyer gets a producing mine at or near nameplate, + another fully permitted full DFS but as yet unfinanced Tier 1 nickel mine.

It doesn't mean the principals here would accept the bid but if we get one surely it will come then - H2 2024 - Q1 2025?

I feel once we have Vermelho financed and start of build the price tag for the full T/O at least doubles. We should also be building A2 by then.

I don't mind either outcome - staying independent returns the maximum win long term I think though. I wonder what Glencore think. GLA

"The company was established in 1946 and is one of the largest asset managers in the world with $4.3 trillion in assets under management, and, as of December 2022, their assets under administration amount to $10.3 trillion."

Cannacord reduced their two funds by 1m shares across the two funds in June. Maybe coincidence but we saw two trades 200k and 800k shares go through at 1.48p the other day. Perhaps fidelity bought them. Though I think the time period was July (unless it was late reported).

Anyway wealth is being transferred - from the impatient to the patient!

Really tight.

If we now add fidelty at 5.1% and Cannacord at 7.5m shares se get 76% of the company augmenting the latest presentation figures.

I hadn't realised Cannacord (may) still have so many shares left but at the rate the other institutions are building those could be absorbed.

It is going to be hard for new entrants to build a big stake if we assume the existing insti's don't sell.

I imagine there are advantages to being registered in the Caymans (if it's good enough for Rees Moggs - and he's running the country to have his hedge fund there then why not eh?) and Ghana is where our assets are so it makes sense to have companies registered there. Per se I don't find that odd or sinister but agreed I hadn't realised they hadn't been established that long - look like VC type people to me. We'll see in due course I guess....

*and the management team of course.

If a major shareholder comes on board for the long haul to finance/develop the assets then they like/trust the management team.

Think the main reason 'the competition' can't do this, and why La Mancha are keen on Horizonte is the resource tbh. 3 rkef lines at 14.5k/t nickel at 30 year mine life requires 1.3m tonnes of nickel. Double it for 2 tier 1 resources you need 2.6 million tonnes of proven reserves. I think that is really hard to find as I put on another post back in the day - it's around a year of total global nickel production at the moment. We have that already (3.5m tonnes+ proven) and a lot of additional district not yet drilled so LOM at tier 1 production numbers shouldn't be an issue.

Ironically of course it is also what makes us an obvious T/O target. So it will go one way or the other!

Fulmar:

>> It may not be a 10/20 bagger

Not impossible. When I spin the numbers - say Vermelho goes RKEF (Horizonte will now have expertise) and both mines build out 3 lines. (See salmonn's post on the other board where he discusses that La Mancha want to enable Horizonte to become top 10 western nickel producer ex china / russia and keen on a 3rd line at Araguaia).

IMO with their convertible bond La Mancha now own 30%, consider the convertible as good as converted. So they can't acquire more shares (unless their ratio of further dilution is the same as other parties).

Also consider that each rkef line can command a $1bn mcap which divided by 330m shares is £2.40 (assuming no further dilution). 6x £2.40 = £14.4/sh which is just under 10 bags.

In practice the outcome is unlikely because even if we can finance Araguaia (2, 3) from FCF + debt there is still the initial capex on Vermelho to consider. Initial capex should be a lot lower at Vermelho as it was already close to road & power being in an established mining region unlike the current Araguaia mine.

So more likely perhaps - find a project level funding partner for Vermelho and retain say 50% then the attributable mcap to Horizonte might end up at £10/sh. (4.5x$1bn mcap)

In theory - this is what La Mancha are in for. If this comes to pass - yes it will take time - but the multiple here is pretty large but not only that - if we remain independent with 4.5 attributable rkef lines generating lets say $100m/line/yr post tax profit over 330m shares - it's over £1/sh distributable profit. And you can buy into that right now for £1.50 - at some point the market will wake up to this I think.

So maybe not quite 10 bags......add that divi and it rapidly becomes 10 bags. All IMHO (and still think more likely we get sold but would be over the moon with this outcome described above).

i did a quick back of the *** packet analysis:

took all volume data since 1-june (so ~5weeks)

subtracted a million shares from the 2 days we had over a million shares in trades - assigned this to the 'cannacord' bucket

that leaves me with 3.3m shares.

keep it simple divide by 2 (buys/sells) 1.65m shares.

that's 0.6% of the shares in issue bought in 5 weeks.

so -> if you're fidelity and cannacord have gone. at the same run rate you will need 2 months to add 1% of the total mcap assuming there are no other buyers of shares.

so it isn't going to happen - there simply won't be the shares to buy (unless another player like cannacord decides to sell - orion may be the likely candidate but i'm sure they'll wait till production at least).

the squeeze is on imo.

Key now will be volume. Do we see institutional buying (with no PI/institutional selling) - that will determine the shareprice trajectory and what price will institutions pay?

I'm not very seasoned at watching trades / volumes because I always buy on fundamentals but if someone here can decipher the hieroglyphics of what is pushing us up - I'd be grateful! It isn't me buying today btw...

>>If we're building both A2 and V1 in 2 years time and assuming they give us $500m mcap each -> that's $2bn.

By which I mean - during construction. At production they should be worth $1bn each. 14kt/yr nickel per line is worth ~$300m usd revenues and that is a lot of money.

Kkkr I would almost agree except we should be worth 2-3bn usd in around 2-3 years time.

Araguaia1 is worth mcap $500m during construction. At production it will be worth mcap $1bn.

If we're building both A2 and V1 in 2 years time and assuming they give us $500m mcap each -> that's $2bn.

If we're still independent when A2 and V1 complete I think it will be a different number again.

I'm expecting $1bn+ mcap by end of next year (£3+, A2 permitted and DFS complete, V permitted and DFS complete)

It will get built by the current lot (or sold) for three simple reasons. Graphite demand, mine economics, graphite purity. There will be hurdles but this is the investment case. My guess is building mine in 25 production in 26. Any earlier is a bonus.

JL nice summary! Just on one point:

>>Finally, chance of a bid coming in is quite high to me. They are just so undervalued compared to peers. If Albemarle can bid billions for Liontrust (?) why would they not want to snip up All for a fraction of that? Could they hold off a bid if they went hostile? Not sure they could, so this is a key risk for us PIs.

In my experience PIs like short term returns (not all, and I appreciate there are long term investors on most boards, and indeed I have held some AIM stocks going on 6-8 years now) so although this is a risk for long term value out, if you did a straw poll of PIs 'double your money next week or 5x in 3 years time' most would take it. There is no right or wrong answer really but there aren't loads of companies that will 5x your investment so I always prefer if we stay independent, get to production then get bought out for a premium on 5x not a premium on todays price.

If it is an early T/O (and I think a buyer would want to see it fully permitted already?) it should be at a nice premium in any case. But it is definitely always a risk with a company that has Tier 1 resources and is massively undervalued relative to peers that a cheeky bid takes it. It's why the BOD have to get value add as quickly as possible so when/if the bid comes it is at a premium to the higher price.

I think this is also a higher risk in a predominantly PI held company than one with a strong institutional register. I'm not sure the distribution here but I think there is a lot of PI holding. They sell out easier I think (bird in the hand and all that). GLA

I'm only seeing half the messages because I've filtered the nonsense but I surmise people don't believe 20p is possible?

The reason I have 20p as a stretch goal (and I'm happy with 10p btw) is at 1bn shares (nice easy number to fathom) it's £200m mcap and on the npv basis that's around $300m except of course we expect graphite to be more expensive because in a deficit price goes up.

1bn shares - can it be done? It's 400m more, so if you could raise at 10p you'd have capex covered but it ain't going to be done at 10p. But you also don't need to raise £40m through equity you can raise a lot through debt. I don't think Posco even blinked when they did $10m prepay offtake for BKT. For a company which wants to spend $92bn (let that number sink in) on building out it's commodity portfolio a $10m prepay offtake to secure a whole bunch of graphite production is chump change.

So yeah I figure 20p is possible. Is it probable? I don't know but my average is somewhere around 3.x so 10p would do ok. Upside from 20p is possible too....

Anyhoo. The current plan is for a modest mine, which touches only 25% of the resource. In a massive graphite deficit (where Posco want the entire global production of flake graphite currently), you simply use all that free cashflow from all that free cash you generate with your £200m NPV mine because you don't have to spend it on your modest £40m capex to expand to -> a £400m NPV mine. Hey presto! Your shareprice goes from 20p -> 40p.

I doubt we will make that step because I think it will get bought long before that but as long as we get to working mine 20p and then get offered a premium for the buyout, I'm happy. 20p is 16 bags from current ask.

Anyway 6p is 5 bags from the current price am I missing something? Why isn't everybody buying?!

80% NPV mcap = £200m (adjust for gbpusd)

@6p = 3.33bn shares in issue

current shares in issue 590m

shares issued 2.74bn

capex estimate $50m = £42m

average raise price 1.53p

So to 'only' hit 6p at production you can cover the capex entirely (no debt, no prepay offtake like the one BKT got) by issuing 2.74bn shares at 1.5p.

But I expect it to be financed a different way ;) So I'm buying more. GLA

Waimea agree with what you say and add in BlueGold investing £2.5m recently - very unlikely you shaft a new investor so soon after they buy in. However (and for me, this is the big however), you run things on a shoestring up to the point where you can't generate enough gold to hit your b/e at which point your sp plummets at which point you need funds because you don't b/e etc etc it is a spiral we simply have to break out of. If we don't, the next raise will be at 1p etc. I'm really liking the idea that we can, and we get to a point where we are covering costs but the 250oz last quarter was a bit of a shock tbh. They should have been much more upfront about stopping production while they install the new plant because then at least we could have been prepared for that number.

Also Akrokeri is all well and good but spending money drilling it then raising to cover opex costs at Homase does not make business sense to me. Get Homase producing at b/e then start drilling Akrokeri. I understand that there is ambition to produce more but you have to walk before you run IMO.

Latest presentation (at close 31 May 23) v website (28 Apr 23)

Helikon 9.1% v 8.03%

AzValor 3.7% v 3.21%

Fidelity 3.6% v 3.05%

Rest unchanged, Cannacord no longer on the list. So it does appear some of the larger insti's on the register (but not the principals) have been buying Cannacord's shares and I expect this continued through June so as I surmised we should have +70% institutional ownership (71.2% across the top 7 institutions listed in latest presentation).