Member Info for wasarunner

That's why I added '+'! Me too - £3 is really a minimum A1 producing I would reckon? without A2 + Vermelho...

Horizonte is down 10% from 1-2 month high. Everything else in my portfolio and everything else I even remotely follow is down by more, much of it a lot more. As soundbuy points out it's a poor day but even then it is a poor quarter. That we've held up pretty well shows most of the big institutions aren't selling (and we're agreed Horizonte is now around 70%+ institution owned?) As for PIs well when these **** times about who can blame them for taking some off the table or moving to cash or buying the share that fell by more or whatever. My 155p buys seem an age ago now but I do seem to be able to pick the tops (just to buy, sadly....)

On a 1-2yr+ view it's all noise. £3+ is what we're here for....

Cannacord were selling (see the TR1) and don't forget they have a huge holding - on the Horizonte website 12,700,000 shares. Not suggesting they'd be looking to sell all or most but even to sell a chunk of that holding is going to generate sells and possibly affect the price unless big buyers/other instis come in to pick them up.

We are possibly in a holding period now as institutions who might want in might be waiting to make sure the build completes on time and the remaining bank money is drawn down successfully? Those who were prepared to take the build risk are already in etc. Anyway time ticks on every month brings us closer to commissioning...

...or, by extension. If you miss the timeframes you previously announced you need to communicate. 'due to a shortage of testing labs in Ghana we have had to.....ship samples.....now expected Q2'. You don't need nonstop comms but a short RNS must take like 15 minutes to draft and then have reviews and costs what - few hundred £?

If we hear the drill results were taken in a heist we'll have heard it all. I jest of course but I don't understand why give such a precise timeframe on 30th December 'early Q1' - which is lets face it - a maximum 6 week window - and then miss it. Frustrating. Need to be able to manage timeframes / comms better and if there is material uncertainty - don't commit - is the professional way to go about it. Say 'Q1' or 'H1' or 'as soon as they are available and we will update when we have further news'.

yes - and if the banks agree to defer the debt repayment until A2 is complete it further improves the FCF. In theory their point of maximum risk is during the build of A1 - if A1 build goes totally pear shaped they lose (after equity of course). Once A1 is producing their probability of getting repaid is much, much better so in theory the decision to defer payments for 2 years should be ok for them (for a fee of course!)

Now the fly in the ointment is libor. When we got our finance deal we got a really good rate relative to libor, but now libor sucks. So the interest did get a whole lot more expensive....so lets hope the nickel price at production more than offsets that! GLA

Rover:
>>Could you not consider A2 as fully financed now?
No, because there is build and commissioning risk on A1. In that sense A1 is also only fully financed if the build doesn't go sideways. Both can be considered fully financed when A1 reaches nameplate (and nickel is > $14k/t but the latter point is hopefully a semi given?)

FCF + rolling of the debt I mean - the key being of course - no more equity....and probably no delay between A1 at nameplate and start building A2. We want that NPV to be realised sooner, than later on A2.

A2 was financeable from FCF at nickel $14k/t prior to the acquisition of the furnace parts which can be used for this purpose. Of course, that was before the capex for A1 ballooned and also expect A2 to have higher capex now (the inflation effect) perhaps offset by the availability of the furnace. But nickel is much higher than $14k/t and the banks should be receptive to a rolling of the debt if A1 is producing.

I expect A2 to be fully financeable from FCF always provided A1 gets to nameplate (but they won't pull the trigger on A2 until it does so there shouldn't be financing risk at that point).

OilyRags just on A2 - I guess the NPV multiple is dependent on timing. By the end of 2024/early 2025 A2 would be in _excactly_ the same situation as A1 is right now - if A1 is at nameplate and the banks have signed off, and producing, then in effect A2 is 'financed', has DFS, has permit, and Horizonte can start building.

We've seen from A1 that 50% of NPV is possible to achieve during the build so by the time Horizonte start building A2, you can on the same basis ascribe 50% NPV to A2, so a bidder may need to pay more for it at that stage because 50% should already be in the SP as trading open market.

Then I think it comes down to the timing of the bid. If the bid comes early, before A1 achieves nameplate and the banks have signed off (so in effect, still financing risk on A2) then we won't have the 50% of A2 NPV in the shareprice. So again IMHO - timing of the bid is everything. For shareholders here with patience we want the bid as late as possible to maximise value. GLA

In a total sale 10% of NPV would be just the +£1 on shareprice for Vermelho but I still feel we should have at least £2.50 -£3 for A1 and at least £1-1.50 for A2 at that stage so in a total sale £4/£5/£6 becomes the target range IMO _if_ this plays out at the end of 2024 with the A2 DFS and Vermelho DFS published and A1 at nameplate.

Vermelho is the biggest unknown in the 'what happens to Horizonte' equation. Unless a bid comes before the end of this year, I think my ballpark for what Araguaia is worth, how it can be financed (in a positive prevailing nickel market) etc. mcap/NPV/multiples etc I am comfortable with. I always assume total sale and so - the best Horizonte can hope to achieve with Vermelho is DFS + permit because capex is likely to be huge ($1bn+?) financing it in any timeframe or terms we can compute right now is very difficult independently.

The curveball (probably in a positive sense) would be if it does go down the JV / partnership route in which case we might derive more value from it than total sale. In a total sale I'm thinking 10% of NPV what do others think - is this reasonable? In a JV I guess maybe 30-40% is retained with the partner taking the finance and build risk then 80% NPV valuation of 30-40% retained interest would give us c. 24-32% NPV eventually at production? That might not sound enormous but at $4bn+ NPV 32% would be £1bn+ so if no dilution happens along the way another +£3 on the shareprice - this might be the best outcome for shareholders possible for Vermelho (plus of course downstream dividends) if we do manage to partner.

I guess the interesting question is what % chance to people think we stay independent and go JV with Vermelho? If the Vermelho DFS lands in 2024 I think we must surely have an answer by the end of 2024 because there will be industry pressure to get this significant mine built? So JV or total sale by early 2025 and be building Vermelho at that stage...

Hope so! But anything £3-6 would do me. Still hoping to add a few more this summer with new money, nothing big as I don't have any more big lumps coming in but with a bit of luck we are still around current levels before the A2 DFS lands and commissioning starts and it's an easy 2x-4x in a 1-2yr timeframe from there. GLA

Got to be 50% for A2. It eould be very different if Horizonte didn't have finance for it but if it can be fully fund from fcf of a1 in under 2 years to nameplate production there is no way you wpuld sell that for 20% of npv. You politely tell thr bidder to come back with 80% offer in 2 years time or maybe you will take 50% right now. So if the bid comes around when I expect it (a1 nearing full ramp up or reached nameplate) 80% a1 npv, 50% a2 npv, 10% vermelho npv looks reasonable....

>>Does it allow for a bigger nameplate tonnage?
True, I hadn't considered that. Will have to read back through the original DFS and see if there are different mineralisations in play. But I guess the updated A2 DFS will reveal all...

It must be at a premium if it comes off the normal flow process and needs post processing - otherwise why would you do it (spend more energy to get the same amount of kg contained nickel for same price). From discussions back in the day when Tsingshan were going to do this route from NPI I think it might have cost $4k/t or thereabouts (from NPI) to do the conversion and a huge amount of energy was required?

Fulmar - the more I think about it - the more I think you're right about the nickel matte. Logically, there is no reason to complicate the process flow if we are producing for ourselves - no doubt Glen are happy with further ferronickel offtake and we are competitive vs (and greener) than Indonesian nickel and normally, that's where the story should end. Sure there might be some marginal upside of producing a more premium product (so an economic incentive for Horizonte) if indeed nickel matte prices higher than the ferronickel per contained nickel but - and for me - this is the big but - I think you are right this stage is designed to invite as much interest to the production profile that Horizonte has to offer (across Araguaia and Vermelho) to nickel producers for the EV market. Which for me, is essentially a for sale sign. All IMHO and I could be wrong but I don't see a compelling reason to complicate the build or development for any other reason at the moment.

Yes my post was semi serious - if Vale end up being the winning bidder of course if they bid for the lot we won't know how much of it can be apportioned to Vermelho - but I will wager they will pay a lot more than $8m for it. Perhaps $800m for Vermelho at DFS stage, fully permitted - if the NPV is $4bn(+)? then why not... 100x what we bought it for (granted money was spent on it to get permits and feaso).

Just re-reading the acquisition RNS where we bought Vermelho. Did we really only pay $2m over 2 years with the remaining $6m due on first production? For just under a million tonnes of nickel mineable over a 38 year mine life that means we paid up front $2/tonne for it (there is also a small royalty/smelter fee). Very good business indeed! And really adds a lot to the 'optionality' for the eventual acquirer. If Vale buy it back off us I wander what multiple of what we bought it off them they'll end up paying :)

fulmar - could be. JM in the interviews always highlighted the importance of 'optionality'. If, for example, they think there is only around a 50% chance of staying independent post A1 commissioned and producing. Why not have 'optionality' available for the buyer on A2 to tempt majors looking for a different output. Will be interesting to see how much of the LIne 2 production could be used for Nickel Matte.

It will take a while for Line 2 to come online (my expectation is that they might start building it when Line 1 is commissioned - so say end of 24 early 25) with say an 18 month build & commission phase for production mid 26. But it doesn't matter. It allows lots of time to sort financing (they will have 1yr+ from DFS published to figure out how to finance from cashflow/rollover debt) and as it will be hopefully fully financed from FCF the shareprice should include a good % of the NPV for it by the time construction starts in 2025. The pieces are lining up very nicely. H2 2023 is not too long - max 9 months or so till DFS publication. GLA