Member Info for wasarunner

SJ if they can't develop it they can sell it. It clearly has value (or will clearly have value when the mine a few km up the road is developed) and we have the same resource. How much would we get for it - a lot less than it is worth developed, clearly, and a lot more than the current mcap, also. We'll more than make our money back but - I still think it will get developed. When I asked this question directly to MB he said it is too good a resource/opportunity (not many like it) to sell it so you can make of that what you will. I make of it that they will develop it. GLA

but who knows - re-reading my post there it's the kind of thing that gets posted up when we hit the biggest stock market crash of the decade/century and afterwards people laugh at you. So nobody truly knows which way markets will go so you have to do the best with the money we got, some prefer under the mattress approach, some prefer the 'security' of the banks (ha ha) and some prefer to put it all in HZM. You makes your choices ladies and gents!

Slurms/Rich nothing wrong with selling locking in profit or even selling at loss to manage risk. A rise is a rise and there has been relatively little to cheer about in 2022 (certainly in my portfolio!) I wouldn't begrudge anyone taking a few.

Risk management everyone has a different threshold - it's obvious some think 10% is OK on Horizonte, or 15% of PF value or whatever. Craig thinks 100% is OK, I used to think 100% was OK but got absolutely slated by some on this board for reducing to around the 35-40% area when my risk sensor told me it was better not to be single asset single jurisdiction single commodity single management team when the funding didn't quite come in as I expected. For I guess many investors 35-40% in a junior yet to build their first mine would be 'overweight' and over exposed, I'm comfortable with it.

I'm very bullish on Horizonte's prospects. On macro, I might be 100% wrong but this is what I think will happen - inflation won't, and can't be controlled in this cycle - the fed will make a lot of noise, tighten, Amercans (cos/individuals) will go bust, but they won't tighten as much as people think and we are already seeing the beginning of that with gold rising another one I follow. This means with inflation not really under control, commodities over time will rise in $ terms. I am also pessimistic on GB, it is one of the reasons I put a lot my 'wealth' into assets priced not in GBP even if the companies are quoted in GBP, I intend to live in the UK but ideally draw an income from commodities/gold priced in $. I might be wrong but if it goes the way I think it will go this decade then nickel (and gold) will go up in $, $ will go up against £, and if you're living in the UK that's a reasonable way to be positioned. Could be a curveball or two but that's broadly how I see this decade going. On Horizonte we 'just' need that mine built and all good sale value will be established IMHO. GLA

Hi Tardis I think there will be more components than just debt as they have 3 chinese partners in phase 1 and now Urbix in phase 2 build in parallel involved I imagine mix of offtake possibly equity and then debt. Their capex is up on the initial estimates plus they are building two phases in parallel so they need to raise a lot of money. The composition of the finance deal will give us clues as to how Armadale can finance our build. So their capex is c. $180m+ and ours from dfs stage was $40m it is reasonable to expect ours is now a bit higher due to inflation but they are going for a bigger mine from the outset (each phase was bigger tonnage than our phase 1).

Timings - from the De Vries interview I think bkt mine build is 18 months so if we assume they start build in q1 2023 and finish q3 2024 and start producing then infrastructure has to be in place and some of it e.g. access roads should be in early to enable proper site access.

What that means for us I am not sure but if bkt got financed and started building in q1 2023 I would hope we could be financed say 6 months later and benefit from their infrastructure and be completing our build at a similar end date (with a shorter and simpler mine build). This would look like elements of finance package coming together in h1 2023 and gov% agreed then.

There will be a strong demand driver to getting these mines built that is what I am hoping and a strong geographical link with a near neighbour which is the first graphite mine to be developed in Tanzania will be a huge asset to getting a deal with financiers. I think ACP is waiting on more than just infrastructure in place - if financiers are prepared to finance $180m capex spend, same jurisdiction same commodity in same area it has to be easier to get a $40m finance package away on good terms. We will see - frustrating as the lack of progress is it is also an opportunity I think. Gla

>>But if you sold when the financing was initially RNSd you would of course have been selling higher than we are today a year later.
On this I mean the main financing RNS. We were above this price when the RNS dropped - around 8 - 8.5p if I remember correctly? That's 160-170p in new money which I guess will happen in 2023 but you were underwater for 2 years in that time. With hindsight (which is of course a wonderful thing) you could have had those shares back at 5p. I opted to diversify from that level and not really look for a cheaper entry time will tell whether that was a good thing or not but mixture of jurisdictions/commodities etc. is generally a good thing all 1 share is a pretty risky play. You can win big but of course lose big also. Admire Craig's conviction here and I hope for all of our sakes it works out for him! :)

Hi CleverThoughts I've had some contact with MB (a couple of calls in the last 6 months) but nothing material and nothing that isn't already known - that they are talking to the gov on the free carry % and on graphite fundamentals there is money for graphite development certainly the Chinese are keen and obviously recently we had Urbix on BKT.

He can't say as much but my feeling (which I've posted here before) is they're waiting for BKT to advance - I know this is AIMToDeaths view also. It makes sense (in many ways - both on cost and also on risk).

Right now there's only 1 thing I am watching for in December which is BKT sign their deal. Rumours were November/December but I don't have any solid source just what I read here and there.

In the meantime despite the opaque market it is obviously deficit is looming and prices are rising. The recent article by Credit Suisse highlighting Tanzania as an area yet to be developed are all positive and pointing in the right direction. What we have to remember is when all the ducks are lined up this mine can be built in a year (or less) and that's not a long time to wait. Those are just my 2 pence I would rather the right outcome and I have time to wait for others it's different I get it. GLA

Just on selling it is a really interesting point. Many (me included) saw the most recent raise as a bit of a kick in the proverbials, obviously. I think as a seasoned investor you have to assess and re-assess all the time because sometimes bad news is game changing and sometimes it isn't. i.e. sometimes 'sell on the day' to avoid a catastrophic collapse in a share you avoid taking an even bigger loss (plenty of examples on AIM where I guess people will have wish they sold the day the bad RNS). Horizonte is clearly one (with hindsight) where the temporary drop in shareprice was probably a blip but the fundamentals remained sound (and indeed the $70m all but nails on the finance for the project). I didn't sell any at that area I bought a few. But if you sold when the financing was initially RNSd you would of course have been selling higher than we are today a year later.

There's no right or wrong formula but for eg DJR selling on the day of the recent RNS here has proved, in time, to be the wrong move. I think patience is a thing - both sets of dilution were worse than I hoped/expected but the fundamentals remain really strong and a very decent return is possible here. And if the strategy is investment then I definitely follow Buffet on this you have to be prepared to be down on your position before you see the return. It is a long game, at least the investing strategy is. GLA

TG333 everyone has their own strategy, I'm not selling (any more) Horizonte because I think we are very close to the final de-risk step and I expect a much higher price in future but there will be those that look across AIM and see a lot of value to be had (AIM is still relatively on its knees) and of course Horizonte has given a decent rise from the lows. There will be traders and there will be investors who see potentially better return elsewhere.

I'm a mixture of pleased with the rise and frustrated as my next money is in Feb and I *hoped* we might be at or around £1. That's unlikely to happen especially if as Craig says drawdown happened in Dec and in the New Year with <1 year to go till commissioning and first metal other institutions start buying. We might be looking at £1.50-£2. Unless there is any bad news I will still buy because it still won't be priced as a producer but obviously the return on the new money will be a lot less than it would have been from 85p!

Still hold 500k+ shares here and looking forward to 2023 (and beyond). GLA

Again, apologies if this has already been discussed - I noticed in the most recent presentation Page 5:

https://horizonteminerals.com/news/en_20221007_corporate-presentation.pdf

Vermelho production profile is stated as 35.1kt/yr noting 3.5kt/yr Ni equivalent of cobalt based on current pricing of the two. I assume this means the 1.25kt/yr cobalt from the PFS is equivalent to 3.5kt/yr of Nickel in $, which is fine, but I wonder if this gives us a better feel for the DFS numbers they are targeting - as 35.1 - 3.5 = 31.6 kt/yr which is a lot higher than the 24kt/yr in the PFS.

~7kt/yr may not sound a huge amount but it is 0.5xA1 (which is $1-1.5bn NPV depending on nickel pricing) so it sounds a decent extra 'win' if this goes to DFS stage? Has anyone else noticed this - did the company state they were going for a higher total output (perhaps some Ni matte) in the Vermelho DFS?

Helikon 'bought the gap' or 'bought the dip' between 97p the day before funding announced and the 90p they paid. Looks like good business now in the 115p area! I suspect they are here for the same jam that Orion and La Mancha are waiting for, one day, and not the quick flip, certainly the size of the holding suggests they have more than passing interest here.

Sorry if this commented on yesterday but I haven't gone back through all posts - I note from their coverage they are going with nickel being $30k/t+ in 2025 - obviously it is notoriously difficult to predict the price and typically participants and banks get it wrong as often as they get it right but goes without saying that at $30k/t+ per pickedpeck post we will have an enormous NPV, FCF and IRR and should be valued higher than any of my estimates. I'm generally working with mid $20ks/t seems a safe ish bet. My preferred timeframe is 2024 because I still think by the end of that year >50% chance we are sold/bought.

price is rising so posting positive stuff about NPVs must sound like pumping (if it's possible to pump a £300m mcap stock!) My posts are meant on the back of the BOA valuation yesterday which is very in line with what I'm thinking. Looking at the back end of 2024 for a decent return here and that really, really isn't far away.

I don't know much about corporate marketing but surely BOA starting coverage has to give more exposure to the stock? GLA

>>Araguaia Stage 2 adds between £750m (original HZM estimate) and £1.2Bn to the NPV. If they get that far, which seems unlikely, then in 2026 the company valuation should be 650-700p based on Araguaia alone

The key is to get some of that (say, 50%) upside from A2 built into the sale price when not built. So that would end us up with around £4.50 sale price without Vermelho. I think we should be able to get that so I am rather hoping for a sale around the £5-6 area factoring Vermelho which is ~£2bn.

>> £3-6 target by the end of 2024 as long as we have no more dilution and the mine gets build and nickel is mid 20s.
Which is of course, 2-5 bags in ~2 years from today. That's not a bad return in anyone's book!

I'm looking at the up to date corporate presentation dated 07/10/2022. I think they had to leave the assumptions on the basis of the DFS so these are unlikely to be completely accurate (for e.g. capex is still stated as $443M) so there could be a slight overstatement of return but -> I think the nickel prices are conservative to what we could be selling at so these could even out. For e.g. the assumed $23k/t (page 11) could be light - we could be a lot higher in 2024.

https://horizonteminerals.com/news/en_20221007_corporate-presentation.pdf

(EBITDA stated $462M from Line at $23k/t incidentally I assumed $28k/t below to get to £500m GBP so reasonably close)

Looking at NPV $1.6bn @$24k/t. (As I said I believe this is overstated because it uses the DFS, but understated by my assumption that prevailing nickel price will be higher) Debt will be $300m. Thus NAV will be $1.3bn. £1.13bn GBP. Trading at 80% NAV would give us mcap £904m gbp fully diluted 330m shares £2.74. In fact BOA are assigning a higher valuation - their risked valuation at 0.5x NPV (not NAV) at £1.90 is £3.04 at 80% of NAV (say, fully de-risked).

So I see a lot of valuation models all end up around £3 if, as expected, nickel is mid $20s/t, no more dilution and we successfully build A1.

Huge upside obviously possible from Vermelho and A2 built should at least double those figures - not least because there will be no additional debt to fund. From my 'back in the day' conversation with the CFO you should also get a higher value for A2 pre build, when A1 is producing, because the market should value the feasability study of a mine expansion differently for a producing miner. Hence I'm comfortable with my £3-6 target by the end of 2024 as long as we have no more dilution and the mine gets build and nickel is mid 20s. GLA

Hi Billyboy sure I've arrived at this number a couple of ways. One was EBITDA measure (from a post a few days back):

"If we see $20k/t GP at production (for e.g. a $28k/t price on a $8k/t opex) then we have c. £250m EBITDA on the 1st line of Araguaia and £500m if considering the two lines. That equates to 75p/150p/sh EBITDA assuming a fully diluted 330m shares.

Yes tax, interest and capital to pay, but we should be trading at multiples of EBITDA at production. The fact that line 2 can potentially be financed from FCF is very exciting indeed. Looking at Glencore they look like mcap can be ~4x EBITDA. Same for Horizonte would be (with 2 lines operational) £2bn mcap ~£6. Without Vermelho from the numbers above. Tasty numbers indeed (30p in old money)."

Glencore trade at probably a slightly more 'diluted' EBITDA multiple but they may get a lift from being bigger. Horizonte being pureplay nickel when nickel in demand I would guess the two factors could cancel out (we're smaller, but mine only the in demand metal) so if you get same EBITDA multiple you are looking at £3/sh for Line 1, £6/sh for Line 1 + 2, and a shedload more if we ever build Vermelho (which I think we probably won't, independently).

I am actually looking at another valuation metric right now I'll post it on another post.

**which must equate to a big de-risk step either specific to the company or wider macro
Of course I'm forgetting that the $70m raised is of course a big de-risk step for the financing of the mine build - so is Horizonte specific. But still, we didn't immediately rerate - maybe the market takes a while to absorb that news and move on. Perhaps disgruntled shareholders, bit of churn etc. Certainly DJRyan sold and Helikon bought, is what we know.

It's very interesting to me that we are 10% higher SP today than before the 40% dilution was announced. I remember it well because I bought a load the afternoon before the TSX suspension!

It means the market is valuing us closer to 50% higher than immediately before the financing, which must equate to a big de-risk step either specific to the company or wider macro. I assume the company because I'm not aware of anything on the wider macro that has substantially changed (normally that would be something like interest rates, the war, or something related to China?) So assume it is Horizonte related. Maybe the market is smelling the debt drawdown getting near and is factoring a smaller chance now of not delivering the built mine from current funds.

As I said, interesting, I've never been through this whole lifecycle before with a miner. It's an eye opener for an investor! GLA

Fair point I think we've had that discussion here before. I guess it should mean a current valuation based on everything that is known, factoring in the risk that things don't get done as expected. For example - with A1 and A2 and V producing, clearly that price target looks very light. I guess £1.90 factors in the probabilities that those things don't happen or that they don't happen from FCF. So the valuation should increase as the chance that those things don't happen decreases with each project milestone hit.

It values the company at around £600m fully diluted in any case, the £1.90. Which might look like 60% of A1 NPV, give or take.

Assume that's a 12 month target. Wonder if they have started coverage as (give or take) we are set to be at near producer in 12 months (commissioning). Must say personal targets £3 at proper production (sometime/by end of 2024) so a £1.90 would suit me just fine at end of 2023. It isn't meant to be a straight line but all things being equal we should be starting our journey up the ramp bit of the Lassonde curve about now....