Member Info for wasarunner

I we have a Vermelho DFS and if we have hit nameplate or near nameplate by end of 2024 I reckon about 25% chance we are still independent. A low nickel price will simply reduce the offer price (and the prevailing mcap) but make Horizonte no less strategically important to a buyer. It will need to be an offer that is compelling i.e. no lowball but I think with high probability a sale will go ahead once a bid comes. The sweet spot for the bid is H2 2024 if the Vermelho DFS lands as expected.

Yes inflation is a problem which is why I think we may not wait to self fund a2. Possibly a mixture of debt equity and fcf (or sale part sale vermelho) then lets get building in q1 2025.

Tdt V dfs is due mid 24. If we assume it isn't horizonte building it I don't see why it eould take > 6 months to agree a deal for jv (lets assume they could already be talking to people right now). The mine should be permitted in same timeframe.

If Horizonte are not managing the build I don't see why Vermelho can't start building q1 2025 in parallel with A2. Not saying it will definitely happen but must be a possibility...

Thanks velcro. Just to put some numbers on that scenario.

A1 is worth £3/sh (assume no futher dilution). From the recent call £1.40 = 40% npv so assume 80-100% npv range at production.

Then to be on thr conservative side a2 is worth £2/sh. Assume a modest dilution from higher base to get this expedited and don't wait for pure cashflow - everyone's interest to get this into production as quickly as possible. Sp at a2 producing £5.

Then assume for V Horizonte free carry 21kt (capex funded from sale) and just to keep it simple assume same npv/kt no premium for class 1 nickel and assume horizonte still has opex on owned portion. This is then exactly 1.5x a1. Assume no dilution. Horizonte portion of V is then worth +£4.50/sh.

It is a tantalising outcome just shy of £10/sh at production. When might that be? Assume vermelho starts building q1 25 and 2 year build + commissioning end of 2027. 3 3/4 years for 6x current sp.

Still think we get bought but I would very like not to, based on the above.

"In addition, the Company is also advancing other financing options in parallel, including potentially bringing in
a partner at the project level as a less dilutive option than equity. Black Rock has been encouraged by the level
of interest received from industry participants, OEMs, mining companies, mining private equity funds and
sovereign wealth funds. Macquarie Bank was appointed post quarter end to manage the partner process."

Their capex has gone up so interesting that they have project level finance options being explored to avoid excessive topco dilution. Will be good to see how that works out. Their capex is so much bigger than ours (even if ours will have inflated somewhat no doubt).

BKT quarterly report:

https://blackrockmining.com.au/quarterly-activities-appendix-5b-cash-flow-report-3/

key takeaways for me:
- MOU on the rail siding and access to the deepwater port
- proximity of hydro power
- Tanzanian embassy staff visiting Blackrock at Perth. This is perhaps the most interesting item (I didn't know)

Make no mistake, Tanzania will want these mines to be built. Many countries are scrambling to get their resources into the energy transition and reap the rewards. Very interesting what happens with Blackrock this year - yes clearly they are delayed against their original timeframes but it could be close.

https://source.benchmarkminerals.com/article/tanzanian-graphites-growing-global-presence

"By 2030 Tanzania is expected to produce 11.4% of the worlds graphite up from just 0.6% last year....."

I like the shape of the graph...

OK I'll make it easier for you. Your original question:
"Ffs how much longer until they actually mine! "
my most recent answer:
"Watch any of the last 3 presentations by the CEO where he clearly explains a. when, b. what is required to get there and c. the risks involved and d. what happens when we get there"
I did, I liked the answers so I bought more today. Even though we don't have cashflow...

No - you asked for cashflow. I politely explained that the reason for buying a pre production pre licence lithium miner sitting on a huge resource is not for (immediate) cashflow and there were other companies out there that might satisfy your 'must have cashflow' criterion. Watch the presentations here maybe - the management team are confident of production in 2025 (perhaps sooner) then you get casfhlow. Until then, there's no cashflow so you (or we) invest on that basis.

you invest in Atlantic LIthium today precisely because they don't have cashflow. That's why today the mcap is £200m. By the time they generate cashflow - you can add a digit to that number. So if you want a company that is producing cashflow today have a look at BP, Alphabet, Vodafone et al. but don't expect them to 5x in the same timeframe. I want candy today too but I'll just have to wait a couple of years etc.....

Yeah just on capex - Araguaia DFS was Oct 18 $433m, actual cash requirement was $700m 1.62x. Vermelho DFS was $650m Oct 19 (before covid + war inflation) and it may be targeting a bigger production profile now too with the DFS. Just applying the same multiple we get to $1.05bn. But even the DFS will take another year (+ inflation) let alone when it starts to build.

It will need deep pockets. La Mancha may have some cash. Glencore definitely have deep pockets but they might want it all and not just the capex. We will see! I expect the final DFS number to be well over $1bn personally.....good to hear on the call that the risks associated with HPAL are seen to be decreasing in the market as projects are successfully delivered in Indonesia and so making these projects more investable.

https://horizonteminerals.com/news/en_20230424-corporate-presentation.pdf

Ok fresh presentation is up:

"Vermelho production profile represents average production over first 10 years once fully ramped up and includes ~3,500/t of Ni. Eq. from cobalt (assuming base case commodity pricing as per Vermelho Technical Report)"

64ktpa (total production) - 29ktpa (Araguaia 1 + Araguaia 2) - 3.5ktpa (Vermelho Cobalt nickel equivalent) = 31.5ktpa.

So that's +7.5ktpa on top of the Vermelho PFS - could that be one or two matte conversion lines either at Araguaia or Vermelho, or, perhaps a third HPAL line at Vermelho.

salmonn yes I remember that it would just be strange to include cobalt on a slide where you are comparing yourself in total nickel produced against other nickel producers globally. i.e. glencore's nickel figures wouldn't include cobalt (or would they?) My feeling is they know where that extra nickel is coming from perhaps some comes from the A2 DFS some from the Vermelho DFS.

Just on will we build the HPAL again just a guess but the mine is going to be really expensive. Much more expensive than Araguaia. Yes they could raise money for it - they've raised $700m for Araguaia but again just my feeling the partner would fund it (if JV) or it gets bought.

As I see it this is a nailed on £3 +by the end of next year, with multiple upside catalysts from that number, if no black swans.

According to JMs words in the presentation - completion of the build, then completion of the ramp up (i.e. nameplate). On the call they said we are at 0.4x NPV A1 whereas from previous presentations we're told similar nickel companies trade at 0.8x - 1.2x. Just taking the lower of the estimates and splitting the difference then lets say 0.6x at build complete (that would be £2.10/sh) and 0.8x at commissioning complete and ramped up (that would be £2.80/sh). Upside from A2 DFS, Vermelho DFS. Obviously doesn't happen in one jump so some kind of rerates to those numbers and beyond in the next 18months.

I missed that was probably typing here when it got mentioned (A3). Is A3 a matte conversion at Araguaia or an RKEF? Or perhaps it's a matte conversion on the end of the A2 process line I think I've seen that mentioned before - we should find out quite soon as the A2 DFS is due to land Q3 I think.

Yeah loads of options of what to do......but only until the compelling bid comes ;)

fulmar - would be great. If we stay independent (which I doubt) I'd be over the moon. The long term return from the investment in terms of income are far greater than the take out price and of course the amount of resource potentially warrants further expansion/lines etc. A cash generating monster....

It feels binary to me by, say, end H2 2024. Either we partner on Vermelho or we get taken out I can't see an alternative (i.e. we're not going to build Vermelho alone). I also think it's unlikely we would completely sell Vermelho and keep Araguaia. Still think highest probability is full T/O but stranger things have happened....

From the presentation just now, target is 64ktpa capacity Araguaia + Vermelho. This is very interesting. Araguaia is 29ktpa (A1+A2) so doing the maths leaves 35ktpa. Is this what the Vermelho DFS is targeting? Reason I find this interesting is it splits the difference between the PFS (24ktpa) and Vale's plan (46ktpa). Now it may be that 35ktpa is made up of 3 stages or 2xHPAL and 1xNickel matte perhaps but it is clearest hint I've seen yet that Vermelho is targeting a bigger tonnage than the PFS. Very interesting....

Theorist yes thanks I do read all posts don't always comment - I'd be really happy with £2 end of year and it seams a resonable target if the mine is built but not commissioned and we have the A2 feasbility study. I would really like to see £3 mine commissioned and up to high % of nameplate and Vermelho feasibility study published (Q3/Q4 2024?) Then as far as I'm concerned we enter the really exciting 'unknown' territory of - what / who is interested in Vermelho and how that is going to proceed and also whether anyone is interested in taking out the whole company before A2 starts building. I don't know what happens at that point but I very much hope £3+. I don't personally think we will be independent by end of 2025 but I thought that when I first invested here so all that matters (to me) is that we get fair £ for the company which I feel should be in the £1-2bn range if we can get far enough down the line....

When I did the calc on dilution (I ignore the Vermelho royalty due to Vale and the royalty due to Orion on Araguaia) I arrived at 330m shares +/- (it is impossible to work it out exactly because the convertible accrues interest so the precise number of shares issued will depend on when the conversion happens). I can't remember if I considered other options (for example, the BOD options) in the calc but they are relatively smaller compared to the $65m loan. The loan diluted with the second round of equity finance hence the share price of the conversion dropped.

Based on my calcs 140p today equates to 114p fully diluted so close to Tony's figure.

I'm sure the nickel price will have a really big bearing on future valuation and the all important question will remain whether we make it to production and expansion independent. That is quite likely to affect the eventual price much more than the shares in issue. It also remains to be seen if A2 can be fully financed from FCF or whether equity is required - if it is required it would be really nice if it was at a much higher level and for a much smaller $ than Araguaia 1 (which I'm sure would be the case).

I don't see the replies but I have him filtered - anyway my comment on the institutional shareholding really is - it's a good thing. Institutions will value horizonte on fundamentals and other macro metrics and not on whether to sell because another AIM junior happens to be cheaper next week. Surely it is a sign of the company growing up and getting to production that we're 90% institutionally owned even if the diluton does hurt - but $700m was raised and that's no small feat as it enables us to get to production well financed. Looking fwd to the investor presentation. Gla