Member Info for wasarunner

>>are 14000oz production worth 5p hmmm
10-15p, if it was repeatable, sustainable. My calc and assumptions:
- $11.2m ebitda / £10m (based on a clear $800/oz gross profit over above opex)
- after tax £7m at P/E 7x is £50m mcap ~10p at P/E 10x £70m mcap ~15p

So 'base case' 14koz with no improvement in gold price, but sustainably delivered year on year, with no/little debt for the company to service is worth at least 10-15p. Upsides then from:
a. increased Homase production
b. Akrokeri production

Just need to produce that 14koz sustainably, that's base 1 really, and hopefully majority of the companies efforts are in getting that right right now. GLA

Amtech as was I to the uranium party. I thought 'how is the world going to move off oil it has to be nuclear right' so I started buying uranium stocks, or rather a specific european one around 2016-17. They still don't have the licence, and probably will never get it, even though in the meantime uranium did happen, kind of. So timing a whole commodity bull run, and making sure you are invested in the right company to take advantage of it, really isn't easy. Especially when on the macro you have a global pandemic and a european war to contend with.

Another bullish sign for me on graphite recently is the meeting with Biden and Xi. If war can be averted over Taiwan (surely to god China has far too much to lose), hopefully Russia can be contained and at least on the conflict front the world can move forward, even if there is a necessary recession to get out of the way in the next couple of years. GLA

I like the setup - Glencore - Orion - La Mancha. It appears Helikon do too. I don't think it will be cheap but of course, a precondition to successful outcome is that we build the mine on time and on budget. What I particularly like is that I don't think we have that long. Mine fully operational is 2 years producing nameplate capacity if everything goes to plan - having been invested 4.5 years already that really isn't a long time. Gla and really 2023 should finally bring the rerate we have all been waiting for.

It's just a different way that I arrive at my target of £3+. I think ultimately we won't get line 2 built ourselves. Line 1 operating is worth £3/sh, kind of a level I would have been happy with when I first invested, but A2 part financed/dfs/equipment in place + Vermelho dfs 'shovel ready' should really land us a price between £3-£6 (at mcap (£1bn-2bn). I am pretty happy with that range, hoping 2025 latest. Gla

Surely it could be from the fund raise?

Total new shares c. 78m
La Mancha new shares c. 24m

54m shares went somewhere. Helikon have something over 10m shares (the others are financial instruments/options?) So they could have taken a decent chunk of the placing?

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). GLA

- Tanzania has 6th largest known reserves of graphite in the world (source Credit Suisse)
- Armadale has some of the highest purity graphite in Tanzania (source Armadale Capital Plc)
- President Xi Jinping Holds Talks with Tanzanian President Samia Suluhu Hassan on 3rd Nov 2022. "China will further increase import of specialty products from Tanzania, and support Chinese companies in investing and operating in Tanzania" (source Ministry of Foreign Affairs of the People's Republic of China)
- LI-ion batteries are around 30% graphite by weight (source a random website I googled)
- There are going to be an awful lot of electric vehicles later this decade (source, it's pretty obvious really)
- Blackrock Mining secured final finance package in Q4 2022 to develop their graphite mine in Tanzania. (source, hopefully soon....)

Ok the last item is a wishlist item for now but if you watch the macro, the macro is very good indeed for graphite right now. Join the dots, sit back, relax, we were early to the party, there will be plenty joining later. Wish I had some cash to take advantage of current prices etc....

Xeiger agree 100%. For me, this bit in the Interim Results is important:

"With the revenue now being generated from our gold production together with the further funds from the exercise of warrants in June 2022, we can continue with the current level of operations. However, further funding may be required to accelerate the ramp-up of production at Homase and the exploration programme at Akrokeri. "

So depending on how 'further funding' may be sourced, I think they should 100% make sure it is clear that we have an operationally functioning mine, profitably delivering gold before they do it. Especially if:
a. It is debt funding, we need to make sure we can cover debt interest from opex and
b. If it is equity, I really, really, really don't want them to raise it at 5p having invested mostly at 10p (and the last institutional investor I think bought at 10 or 11p)

So we need that positive progress update on Homase before they come with a funding plan for expansion, is my position.

£1bn (£3/sh) has a ring to it because:
- Orion and La Mancha double their early money, and make correspondingly more on the 90p shares.
- As you say lots of upside for Glencore because it is c. 50% of Araguaia NAV and they get Vermelho for free
- PI satisfaction levels - depends if you're Craig and bought a s***ton at 1.5-2p (which is 30p-40p in new money) you 10 bagged, if you got in at the 6-10p old money range, well you've ~1 bagged was it worth the stress and uncertainty of dilutions and risk, probably not but if you wanted to play it safe you put your money in the bank. If you were relying on this being your palace and didn't put enough in, you're probably disappointed.

My hope is:
- nothing happens (other than successful build & commissioning) till 2024 by which time
- Horizonte have a full feaso for Line 2 (so we will get some price for that in a sale), probably part funded from left over contingency and the plant they already have bought for this purpose
- We have a full feaso for Vermelho showing NPVs of gargantuan proportions.

Fingers crossed, this makes the opening bid ~£1bn in 2024 and we go a lot higher in due course. Personally favour a sale in 2024/25 as I'd really like to get on with my life and some of my money will have been in since 2018, I know others like Craig a lot longer.
GLA

Ok sorry I misunderstood - yes I hope that doesn't happen. Agreed Orion/La Mancha/Glen could do a deal (mathematically speaking) but when I asked this question a while ago (is such a thing likely) consensus seemed to be that Glen being a top listed mining company can't behave this way? Reputational risk is worse for them potentially than coughing up the £1bn. But I could be wrong fingers crossed Orion and La Mancha hold out for good terms. I too think Glen will take it but hopefully there is a bidding war with other majors first!

>> at the end of 2020
Sorry end of 2021 was the finance package. Losing track of years (has it been that long! :)

Of course, if I was Glen.
You are already a significant stake holder (10% equity) plus you have all the agreed offtake.
Bored PIs and others are selling today at 85p (no idea why, but they are).
I'd be buying every share they sold me at 85p:
- Horizonte runs into trouble with the build - you buy it cheap
- Horizonte gets the build done - less shares to buy at £3 for every one you bought at 85p.
Are Glen buying? Would we know if they were?
GLA

>>Glencore....can swipe it for £400-500m. ...I know others disagree.
In this context it isn't generic 'others' that matter but specifically, Orion and La Mancha. At £400-£500m and concerning the recent additional dilution. The return on their equity which they put up at the end of 2020 - £1.40 - at the £500m mcap figure is ~11p (they receive £1.51p back) fully diluted. I would politely disagree that for the R/R they would take a c. 8% return on capital and will hold out for a multiple and will invite others to bid. I don't think Glen will get this for anything like that kind of money, I make NAV on Araguaia alone c. £1.9bn in around 3 years time.

£1bn+ I'll put it out there (15p in old money fully diluted) might start to get some interest. Then hopefully we sell for much more than that once the bidding war starts.

Every month that passes towards production increases the price and de-risks the project (and makes the bid more likely of course). £1bn is chump change for Glen for these projects. All IMHO

It happens. I have invested in companies run by incompetent people, I have invested in companies where the jurisdiction/political risk didn't work out and I have invested in companies where the management were crooks. These are the risks we take. Bars of gold or stacks of cash under the mattress are safer, but yield lower returns. Hopefully this company is not one of the above. Gla

>> in the meantime all you need is enough cash in the bank to get to the oasis. GLA
This applies both to the investor, and Armadale. If you have to sell before it gets developed and you have to sell at lost. You weren't prepared for long enough. If Armadale runs out of cash. Management got it wrong. If there's one single thing I've learned investing in stocks/AIM over the last 6 years it is - if you put money in, get ready to keep it there. This is the one advice I would give my (slightly) younger self. But this is akin to Warren Buffet who says be prepared to be down 50% and be prepared to invest for a decade. He's so right. If you need to make money this weekend the bookies is probably a better bet....

Not sure if it is etiquette to merge threads but here goes.

>>who bought at 5p and have no funds to buy more are pretty much ****ed
Not really. It is unpleasant for you, is is also unpleasant for me, my average is probably above 3p and I'm in for £700k so days like today where I'm £350k down aren't pleasant. But the reason you aren't ****ed are:
- You aren't ARB. Selling your hardware to keep the lights on, having put out an RNS saying you don't know if your saviour is going to invest or if you get wound up.
- You aren't ODX or Mode down some 95%+ off highs and in a market where you might not make any money
- You aren't RMM where the creditor has called in your debt
If you were in the above at a high, then you are probably ****ed. At Armadale you still have £1.5m in the bank, your neighbour is signing deals, and you still have bottom quartile production cost on a commodity everyone wants a s***load off next year and the year after.

Management:
Absolutely agree LockerRoom. I'm in a semi similar position myself - have cash coming Feb and April next year. Will I put it in Armadale. Right now, my feeling is if we saw life I would rather pay higher and buy then, than buy right now. And normally I'm a pretty big risk taker - so if I'm looking for sign of life then so will many others. We all know this is dirt cheap here if/when it gets developed. What we don't know is when that happens. It could move pretty hard and fast when it does because 'fair value' is certainly well above here.

I'm sure I've said before and so I apologise if this is tedious for people here while we pass the time but this is what happened to me. I invested going north £1m in Horizonte. My first buys were 4p and 4.4p. Eventually it was 1.7p and I was some £200-300k down. I kept buying. Covid happened, would it ever get developed etc.etc. Sold some around finance at 8p 7p took £650k profit.

This situation is analogous. The market is really really **** right now. We have a war. The war will end. Graphite will be needed. I see 1.4p here as analogous to the Horizonte situation. Yes there is a big risk to take, there always is. But that's what we are here for - big reward. I was naive (and a bit lucky) with Horizonte. I'm a bit more seasoned now but the current situation doesn't phase me at all. It will get developed when the time is right and in the meantime all you need is enough cash in the bank to get to the oasis. GLA

It's cheap today if it gets developed (or sold). Whether you believe that happens you places your bets. I'm not buying because I have a lot already - enough that if it gets developed or sold even the 5p shares will be in the money (I have one or two buys above 5p). I'm disappointed with the shareprice and the lack of speedy progress but not enough to capitulate - far from it.

Hi SJ re: unfinanced or in development miners I think in a risk off markets obviously their valuations reflect risk that they can't advance or fail, with Horizonte no doubt there is an element of the SP at the moment reflecting recent extra cash raise but I think the wider markets are what's driving the weakness more - fear of recession, the war, ongoing inflation, strong dollar. I don't think the company has done much wrong obviously we want progress update on the mine build. I'm pretty shocked we are at such a ratio to the raise price at which Orion and La Mancha put in for their main tranche of equity (85p today v 140p they paid) as they invest for a multiple. If we are following the Lassonde curve we must be pretty low on it. I think people buying Horizonte today are going to do very well and I wish I had cash to do so, but there are still risks in the market (I am reasonably comfortable now with political risk as I think Lula doesn't have control of the congress so may be limited what they can do on taxing miners etc.)

The other cos are the other cos each with their different problems. I am pretty confident on Horizonte but in a soft market we may not see the kind of valuation it deserves until much closer to production, potentially, when maybe nearly fully de-risked. Good luck with your investments I'm not unaware of pain going around on AIM at the moment on certain stocks!

I don't know when I crossed it because it is lost in the mists of time but I'm down overall on paper what I invested in the stock market which is amazing considering some of the big wins I've had over the years. That either means I'm carp at this or we are hopefully near a bottom. I am hoping an end to the war early next year might fix 'everything' everything that is that can be fixed by such a result....

Must admit I always hoped we would get to 40p one day. But that was before the share consolidation!.... :)

The 30% threshold I think is for a mandatory offer - i.e. at that level they have to make an offer. You can make an offer from any level I guess. I could write to the BOD and suggest I buy the remaining 95.5% of the company tomorrow. They would only have to put it to shareholders probably if they saw some colour of my money and could recommend it to shareholders though that would depend on the price being offered. The point is we all (existing shareholders) get the option to vote for a T/O not to go ahead. Twitter shareholders accepted Musk's offer (though you can argue he manipulated the price a bit).

WRT to supporting the price I guess that comes down to timing. Once things like the gov% is agreed, financing talks progressed they can start to release news which should support the price. That's my hope anyway that we get say a 6 month window run up to financing where the shareprice will be supported to a higher equity level for financing. My guess is that's not yet because we aren't seeing it and to me that makes sense in the context that our larger neighbour is currently dotting i's and crossing t's on their deal.