Member Info for wasarunner

Morning. As a large investor in both (ACP now a bigger holding for me than Horizonte) I think the deal over there yesterday shows the pros and cons of investing in different styles of AIM company. As ATD points out, one has a CEO on a huge salary with less skin in the game, big capex project, big institutional investors and crucially banks who now run the show. Armadale, modest capex, probably B or C tier financiers in terms of banks et al it won't be BNP Paribas doing the financing here. The lenders will want a higher interest rate but the IRR takes care of that. Simple mine build, hopefully we can quantify and not overrun on build costs.

Every conversation I have had with MB has been underlined by the need to preserve capital and unnecessary dilution. I haven't figured out the shares in issue on HZM yet but it has gone from 1.5bn in old money to 4-5bn on finance and now an extra dilution. The expected return that PIs can make has dropped substantially on each occasion. Justified or not, that is the nature of the beast of investing in a large capex (relative to mcap) company. My lesson is learned. I still expect to make money on Horizonte, and continue to hold, but am counting my blessings I diversified away when I did.

For people critiquing MBs approach, consider the HZM, RMM, EUA and all the other scenarios AIM juniors run through. Yes it could take longer with this approach but having an aligned board/board members is crucial. That and the modest capex. When I last spoke to MB he told me he put his own money into this project because of the low capex. That means he believes he can get it financed on terms he believes will protect his investment. Which is the point DanInvestor was making.

It's hard to make money on AIM, that is clear. Horizonte was the last one to kick us in the collective nuts. GLA

A 10:1 or 5:1 share consolidation post dilution will maintain a rising shareprice and an illusion that all is well! On a serious note though wasn't thd 20:1 designed to get the price into major digits so the yanks would buy mord shares? Now we are back solidly into minor digits...

I'm not defending this raise but war broke out after the deal was signed and triggered the massive international inflation. That wasn't known at the time of the finance deal. I sold some in the aftermath of the deal I got like 8p and 7p for my shares but sadly the companies I put it in also halved since then so if we drop to 4p here its equivalent.

Hard to make money on aim, it is, naive and green, we are. (yoda voice)

Sucks right, I am still absorbing it. Luckily (or unpuckily) still a third of my pf in Horizonte and I added £35k yesterday before this news - ouch.

Just wondering has anyone worked out roughly with the extra dilution of the loan notes (which will convert) how many shares will be in issue? I know we can't do the calc precisely because we dont know the accrued interest but an approximate would do.

My original target at around production was £3-4 now wondering if £2-3. Orion and la mancha will want to see profit on their 140p shares so I am sure we shpuld get higher. But the heady days of 30p-50p in old money we all hoped for may well and truly be behind us.

I am not sellimg come what may and the sp may drop to a level where if anyone has cash they can pick up a 200-300% return in due course. Proviso always being no further raise but the BOD lose credibility in situations like this. Essentially thry got the main raise wrong (I understand why, war broke out etc. but they still got it wrong).

(forgot to say obviously we have a lot more shares in issue than we did in 2018 but that should be more than offset by the progress and the finance raised...)

Hi Coldjoe, the vagaries of the markets! I looked back at my spreadsheet I paid 4.59p (old money) on 21/5/2018. Nickel was $14k/t (v $21.5k/t presently), Horizonte didn't have a DFS for Araguaia, let alone a DFS for Vermelho, let alone finance for Araguaia and we were a lot further than 12-18 months from first production. Today we have ~4.8p in old money with all that finance in place and all the progress we have made and nickel demand is going up. Madness but that's why there is so much money to be made in markets they both undershoot and overshoot, badly, at times. I don't know about the Brazilian elections I don't have a feel for what risk this poses (or none) but I attribute the remainder of the weak shareprice to generally weak markets and not anything specific to Horizonte per se. In August when I managed to buy £50k at just above £1 in new money I was pretty happy with the purchase now there is even more value to be had for those with cash. I think a lot of institutional money must be sitting on the sidelines at the moment probably not taking new positions until it is clear which way the world economy is going, and with our mcap now we are more driven by institutional buying (and selling) I think than what PIs think. GLA

>>Homase is not up and running yet
By which I mean, very profitably. To the point where it can repay debt and finance expansion (as clearly the gold loan being rolled was because cashflow is being spent on opex and drilling).

My take FWIW:
- setbacks yes but Homase now at breakeven and should become profitable
- Akrokeri is exciting and we already knew from the call with Emma that it will need separate funding
- The terms of finance for expanding Homase production are a question mark for me, we need the SP much higher (i.e. Homase profitable before being expanded) before we raise any equity. It is different if it can be done with debt.
- Personally expecting gold price to rise when (not if, IMO) the Fed pivots. We are already seeing QT falling apart and not just in the UK. At some point those big interest rate hikes will hit yanks in the pocket and they will have to reverse, then we will see gold rise.

All IMHO. It's a marathon and not a sprint and all the other cliches, We hoped 2022 would be the breakthrough year, it isn't (yet), so roll on 2023. I still expect Akrokeri to be transformational longer term, but share others frustration that Homase is not up and running yet. GLA

The Company has received an encouraging level of interest in funding the Mahenge Liandu Graphite project and has advanced its discussions with a number of potential finance partners with respect to securing project development funding for the project.

So not doing nothing then...

I meant MB. Yes I believe it is open pit and it is an easy mine build. Hence capex is low. Probably more risk in the financing process than the build out process (though being Africa getting stuff in, who knows if that part is more difficult than normal). I think BKT are using Chinese parts for the plant and I guess that's what we'll be doing too.

Yes he wants it built. A lot of the warrants and early round funding were through his network too - so think of the people who put in at 3p, 3.5p etc. in the spring this year almost all the warrants got converted - there will be plenty of pressure on him to get this done from people closer to him than you or I. It's a waiting game that's all, timing is everything in financial markets etc, you sometimes need the market to come to you and not force it. We're licenced, have a scalable resource with not vast capex, low cash burn rate, decent balance sheet, experienced mine director, and we await the machinations of the Tanz gov and our larger neighbour to limber up and get moving then I'm pretty sure things will start happening....

Sure - if he's lazy and not motivated by money then £30k/yr is easy money. It's £90k +/- over the next 3 years. If, on the other hand, he fancies 10% of $200m mcap (which is £20m GBP) by 2025, he needs to do some work. I don't know him well but if it was me, £90k v £20m well it wouldn't be a difficult equation really....200x.

Warrant expire around now. Expect the blocklisting RNS first thing next week? GLA

That doesn't make sense. You sell things cheap when what you have isn't in demand. Graphite is in demand (price is rising right now, with or without deficit). I won't sell my shares cheap so not sure how Armadale will be sold cheap if there are enough like me. Lets get it producing then sell for $$$.

What you're saying is we can't get it financed, or, we can't get it built. We got a very successful mine director who has built many mines, and Blackrock's recent deals with Posco and Urbix Inc show there is plenty of demand both east and west to finance graphite projects.

I don't see a problem at all here. Capex is low, finance should be easy, patience is all that's needed and in short supply it seems...

Bottom draw for me now and I'll consider adding next year. I expect mine built/producing around 2025 (could be late 25). I expect a rerate well before then as the pieces start to be assembled. I also expect read across from BKT when they move their project forward and start building. My hope is BKT are looking to go into production H2 2024 and we follow max +6-12 months later. Good value at 2p? Depends on your time horizon of course, but I very much think so on a 3 year view. GLA

Sometimes you can get £10k at the same price as £3k. Especially if there has been a lot of background selling. The other thing is you don't know how much more your second £5k buy will cost when you buy your first. So like Rover if I can get a reasonable quote I tend to buy in biggish chunks until no quote. Sadly no funds till new year now. Everything at the moment for me is as it was except equity becomes more e pensive to raise with weak pound and construction in usd. But we will look back on 2p and go why didn't I buy more, I am sure of that. Gla

£4-6 with Vermelho news thrown in. At production.

to be fair that one was quite good! We did hire a guy who can build mines though...

DanInvestor thanks for the feedback - the gov% talks are ongoing I know that (ie not on hold). I don't see that as particularly risky because even though it is with the government the template is now set. Why it takes 6 months to agree the same % who knows but I am treating it as a kind of given now we have our mining licence. But as AIM points out a necessary precondition to finance because financiers have to see a clear ownership/stakeholder/legal structure before they will commit (equity or debt).

Thr seat on board was tongue in cheek but maybe if I did get 10% its not unrealistic to request it - don't think I would add much value as I haven't a clue about building mines but I could at least say come on guys lets get this built etc....

average up isn't a bad strategy (on news) a lot of savvy investors prefer certainty at higher price and that's what institutions do also. Average down if you (like me) like a punt that can also work too. I can't tell you the right or wrong it's an individual risk appetite/weighting. What worked for me on Horizonte was steady buying over 3 years I got some 4.5p some 1.7p it all averaged out.

Famous last words but I can't see Armadale going down to 1p (or even near). That would be mcap £5-6m, with £2m cash in the bank and a $500m asset (in a rising graphite price/demand market). You hit that kind of valuation if you have immediate cash needs and it looks like you can't meet them. Or, if for whatever reason it looks like you can't build a mine because people aren't willing to finance it. We're a long way from that scenario here. If it got anywhere near 1p I'd be tempted to 'double down' and get my holdings up closer to Matt's, then I'd ask for a seat on the board and see why we can't build this mine. As I said couple of months ago, if this needs capex £10m equity to build a mine, I know people who can fund that kind of money. At 1p I could get my 5% do that for £250k and I think that would be worth doing (I have that in other stocks).

Also guys this is obviously really obvious but DYOR. I say it how I see it but these are my opinions only! I am slightly fortunate as I get to talk to Matt but that doesn't mean I, or he gets this right. With all investments there's also risk this is pre finance Africa etc.etc. if it always worked going from 2p -> 33p and all you had to do was wait 3 years, well, that'd be too easy right :) all this goes without saying of course... my mitigation as I've put on another post somewhere is I hold 3 stocks in size, broadly speaking I need 1 to work out real good and it would cover the other two if they went south. I prefer 2/3 or 3/3 ideally though. GLA