Member Info for wasarunner

The other reason for not taking it private (if you are one of these holders in their network) is you want the liquidity of being able to choose exit for your position at various points in time which is the whole point of being invested in a listed stock. If it is a private company you have to find private buyers for your shares and they may not value the company as you do. By being listed you have the potential to sell to literally everyone in the world and the market will find a price for you. Pros and cons of taking it private....

OMJ if the BOD want to take the company private it goes to a vote so shareholders have to approve. They also need the funds to buy out the remaining holders. Then it really comes down to how much holders want for it. I would want a decent amount so they wouldn't get my 4.5% cheap. I don't think it is that easy - they would have to bid above the price. Obviously at the moment there is some risk that disgruntled holders would take, say, 4p or 5p if it were offered to them. Would 50% of holders take it? But the BOD would still have to find then £15m+ to pay for it. I suspect in a rising graphite market it is not beyond the realm of possibility they can find an investor with that kind of cash to pay.

My understanding of the AIM rules etc that if you get to 30% holding you have to make an offer - but this is an individual entity threshold. So say MB plus distributed network could hold 30% between them they wouldn't be obliged to make an offer. In fact given that many were probably warrant holders in the spring conversions there is a chance they already own 30% between them. Obviously assuming they all agreed to take it private they would still need the backing of an additional 20% of existing shareholders to do so.

But this is more of a risk the lower the shareprice is, and so I guess because the shareprice is low, there is some risk of this agreed. sub £10m mcap now for $500m resource.

Haffy, I share the frustration of people on the board. I have had to rejig life plans because _none_ of my shares have worked out over timescales I wanted them to. The learning experience for me has been if you invest in these kinds of companies you need to be in for the long haul and you have to have external means in the meantime. It's not an easy learning curve but you have to learn it quickly or you're doomed in this game. We've had two really bad events which I do believe have fundamentally changed the nature of things I was invested in (for the worse outcome) - Covid and now the war/inflation trigger. But blaming one company or one set of BOD when the majority of junior miners are broadly in the same camp is harsh. As ATD commented the other day with concrete examples most juniors are well down. Of course that doesn't guarantee ACP delivers but we all have to take our own decisions on that and put our money into companies that we think WILL deliver. If you don't trust the management here I would be selling, not holding. I sold (at a loss) on Pembridge and it was the right thing to do. I sold (at a loss) on BKY and it was the right thing to do. Personally, and this again is just my opinion, I don't see a reason to sell here.

I should have added ongoing funding requirement to the list below. Of course, we are more or less funded to 'mine finance' point at least, that's what I've been told. We have the runway to complete financing with no significant costs to clear before then. Some companies are further away or have insufficient resources so have to constantly fund and that's very expensive in the current market.

...Not many companies tick all the boxes. GLA

These are my thoughts. Opinion only, I may be 100% wrong, DYOR and all that.

Latterly I take a risk based view on investing (rather than a return based one). Because I stake, for me, a lot, I don't try to guess the return or the absolute significance of the return is less important than the risk of not getting a return. This is different for people who 'need' 10x, 20x etc. to make their targets. That's very hard work and needs a lot of luck.

The main risks being constantly mentioned on this board relate to the BOD. I don't see graphite demand being mentioned as risk, jurisdictional risk being mentioned, inflation capex risk etc. So dealing with the BOD risk this broadly falls into 3 possible camps:

1. the BOD are not motivated to deliver this mine
2. the BOD are not capable of delivering this mine
3. the BOD are lifestyle or downright shady characters lining their own pockets at our expense (and as a result a bit of 1. above)

Dealing with each of these in turn:

1. MB owns 10% of a $500NPV asset and recently put £170k of own money in. I believe he is motivated by outcome here. $50m is a lot of wonga to not extract value from.
2. Perhaps, I don't know. But doing OK over at Patterson.
3. Don't believe this to be the case. Nothing about the finances of the company to me suggests this.

So what risks am I actively trying to avoid investing in ACP and which companies in my (limited) time investing in mining have I seen problems (and sometimes taken a loss on sometimes avoided investing in):

a. No licence. BKY
b. Volatile commodity or marginal (non lowest quartile) miner. RMM, ARB
c. Jurisdiction. Russia, ZAIM
d. LIfestyle CEO lining own pocket PERE
e. Massive capex - HZM (big dilution), Sirius (couldn't finance)
f. Not proven demand for product (Sirius)
g. Substitution of product (none yet in my experience)
h. The mine is difficult (technically) to build (none yet in my experience)

Do I see any risks above for ACP? Answer is not really. Signs are encouraging that Tanzania wants BKT to proceed, that will be a key de-risk step for ACP. Graphite IMO is going one way and the flake stuff is better than the spherical for some applications. We are lowest quartile and crucially high purity. The mine is low capex and relatively easy build.

The risk for me at the moment is that we have to finance from a low SP a % of equity. The mitigation is MB doesn't want to do this, and I do believe that the SP will be higher when other companies around us get their finance in place and start building. We have yet to see what the BKT finance final package looks like it may give us clues as to what is possible. But at the moment I have no significant concerns other than how do we raise equity at an acceptable price - and if the answer is, wait for the environment to be right for the SP to be higher, then I'm happy to wait.

One reason I don't throw my money all around AIM is you really have to be confident on each of the points above. No

Yes I thought £20m gbp was cheap for a $500m+ usd asset at 80%+ IRR. That makes it cheaper at £10m gbp.

Very (in fact increasingly so). Graphite prices rising and the repercussions of strong dollar starting to break things (which eventually means fed pivots). All a question of time, longer than I wanted but positive nonetheless. I will add in q1 next year all things being equal, and quietly hope we are still low for april 6th isa allowances. These times are when the money is made, is what I believe.

Agreed TDT. I give them benefit of the doubt that it was the only way (covid problems, now war and inflation) but it still hurts.... even Craig no longer owns 1% and he was up around 2% at one point!

Or 'optionality' as JM used to refer to it in the early interviews I followed in 2018-2019. The buyer can choose HPAL or RKEF if you have both opportunities.

I think building RKEF at Vermelho or Araguaia North (which is close to Vermelho) both options as is trucking to the main Araguaia site (but that's more expensive as it's further).

Snowden included this in the PFS for Vermelho:
https://horizonteminerals.com/news/en_20200618-vermelho-pfs-ni-43-101-october-2019.pdf

(Section 1.18.2 then another section a bit later on):

"1.18.2 Opportunity to develop the Project as a ferronickel project
Early studies of Vermelho by Vale focused on smelting the saprolitic portion of Vermelho ore to ferronickel;
however, this was later switched to a study of hydrometallurgical processing of the more limonitic ores (this
forms the Base Case of this PFS). Based on laboratory testwork HZM carried out during the last quarter of
2018 and earlier work on HZM’s nearby Serra do Tapa deposit by the former project owners, as well as the
close similarity of the chemistry of the blended feed over the first 10 and subsequent years to existing
rotary kiln electric furnace (RKEF) operations, the RKEF process is also considered appropriate for the
treatment of the Vermelho and Serra do Tapa saprolitic material; the ferronickel product would have a
nickel content of 30% Ni.
Consequently, Snowden has developed a PFS case that explores the opportunity that utilises the Mineral
Resources of the Project, in addition to HZM’s Mineral Resources at the nearby Serra do Tapa deposit,
about 120 km by road from Vermelho (Figure 4-1), to feed a 1.8 Mt/a ferronickel plant using the RKEF
process route to produce ferronickel.
This opportunity is discussed in more detail in Section 25.8.2. The post-tax economic key performance
indicators (KPIs) are presented in Table 1-7 below."

The NPV8 was $1.37bn at $16.4k/t and $2.07bn at $19.8k/t for the RKEF route (after tax)
The NPV8 was $1.72bn at $16.4k/t and $2.37bn at $19.8k/t for the HPAL route (after tax)

So better economics but far greater risk but I maintain if you want to sell your company (at premium) you probably want to demonstrate the 'in demand' thing so they know what they are doing making the study a HPAL study, from the 'inbound conversations' they probably know this is what people want to see and what will be bid for.

My point really is that if Horizonte was staying independent we should be building RKEF. There is another investor I speak to who has deep reservations about HPAL and is also of this persuasion. I'm fairly convinced we are up for sale eventually so bring it on max bang for buck if we aren't going to build it anyway.

BRES don't have a mine. Neither do BKT.

If you only invested in companies which are already producing the goods you need to invest in FTSE100 FTSE250 Nasdaq. The reason we are investing in AIM is we are looking for the next Apple the next Google the next Tesla (in the mining space in this case). The returns are greater. As are the risks. If you invest in companies with steady state returns they are typically already at fair valuations.

Ok so here's the rub. If Horizonte wanted to stay independent, but don't have hpal capability they should concentrate on another rkef mine (or rkef+matte). They could do it at vermelho I think and it would be lucrative probably/certainly better economics than araguaia. I think they won't do that route because they want to get the for sale sign out there (that's my thinking anyway) and obviously if you want to sell your company/asset you want to be selling the in demand thing which will be battery nickel. So at least on Vermelho I think it is primed for sale. Like others I thought we might get a sweeter financing deal on araguaia by fiving away some of vermelho it didn't play that way. Now I would like some value from vermelho without further dilution please.

Unless they have to pretend they could build it themselves. But I'm pretty sure JM has been adamant throughout they wouldn't be building a HPAL plant themselves, in the interviews. I'm sure now when the FS is done even at 25ktpa we'll be looking at not much change from $1bn (and the rest) given how Araguaia has worked out.

Must admit I could never get my head around that one. Company says 'this is too big for us to build' then surely you do an FS (unless prohibitively expensive to do so) for a big mine that a major would build, along the lines of what Vale were planning, if you are going to hand it over to them anyway.

Perhaps the reason for doing a 25ktpa study is you can make the IRR really sweet (concentrating on the best material) to tempt a better sale price? Otherwise you should get a better sale price for the bigger mine surely.

Best would be a modular approach with say 4 modules instead of the 2 planned for the 25ktpa study. I guess the more FS though the more it costs to do...

Only thing missing in the RNS for me is a timeline. So if we assume the contract is awarded now, with further contracts to award on pilot plant etc and working on an (12-?) 18 month timescale to completion I guess the DFS is published at around Araguaia commissioning or beginning of ramp up. Q4 2023 or Q1 2024. Be good to have that confirmed at some point. I just really hope we stay independent till then (I think we will in the current climate) as it should be a serious value add at the level they are going to publish it (shovel ready in effect). Nice to see the licencing progressing also.

Dee indeed, I am away at the moment so no time to go through DFS but will be really interesting (key really) to see bkt get financed. If they can finance their bigger build we should have no problem financing ours. I guess we find put in the next few months. The graphite narrative is strong but financial/capital markets are still in risk off mode so could be a tricky period. I'm hoping fed peaks soonish and things ease somewhat on that front. Lot of stuff going to go to the wall if they tighten indefinitely. Gla

Looking forward to reviewing our 115 page dfs when it lands. I might have finished reading Blackrock's by then!

https://blackrockmining.com.au/black-rock-completes-feed-and-edfs-update/

From the updated dfs this morning.

£2 would do
£4 I would be really happy with so
£3 it will be
My first instinct was this dilution made us move from £3-4 T/O to a £2-3 T/O. I still think 100% we are on for T/O. Hopefully being a relative pessimist my estimates are overly pessimistic. GLA

haha good stuff, I actually misread your post I read 'in recent years' whereas you wrote 'over the years'. I've never invested in an explorer that early in the lifecycle I guess that is where the maximum risk is as they have to keep funding to get further and further into the 10yr+ journey. Here's to 500p, a worthy target and I'm sure one most on here would be more than happy with. GLA