Member Info for wasarunner

Well, they issued/declared ~$5bn USD in dividends in 2022 so I reckon Glencore can probably afford Horizonte and barely break sweat. They have to keep developing new assets to keep that kind of dividend going and what better way to do it than to acquire a couple of mines with ~30-40 years mine life between them. I'm pretty sure that's their plan or why buy Teck's shares off them.

As for ROCE not for a while as it requires earnings, which requires a working mine, of which we have none at the moment. I'm sure KRSS is a robot. Its relatively easy to combine financial terms into a sentence but it's harder for them to actually make sense in the context of a given company. Glencore were on board since 2012 (at a minimum) when Horizonte bought half of Araguaia off them. GLA

TDT - I didn't say it would go cheap! :) But if Glencore want it, they'll take it, mark my words and they may need to pay $$$....and hopefully there will be a good bidding war with other majors involved. Now all we need is some news that the Vermelho DFS is being accelerated along to get us a sale value we are all happy with.

La Mancha aren't going to build Vermelho. The miner that will build Vermelho will buy Horizonte and the price will obviously need to be agreed by La Mancha and Orion. They almost certainly had a price in mind when they financed Araguaia. We will see. My best guess remains 2024-25 we get sold and we won't see a dividend here.

Yeah they will convert them well before and the company will be sold well before. All imho.

Also La Mancha won't convert the bond while there is risk - why would they? They will convert the bond at the point where:
A. The project is most de-risked
B. The conversion is still exerciseable
C. Horizonte can't buy it back off them
I haven't read up on the T&C but suggedt the window for most likely exercising the option will be much closer to production than now. But crucially, do expect them to convert so any mcap/sale value people are mulling should incorporate the enlarged shares in issue.

Politely, but I disagree. Horizonte have $633m now, and the only thing that matters is building a mine for that sum or less. Whether La Mancha hold debt or equity is irrelevant to shareholders risk (it may be relevant to La Mancha). If Horizonte don't build the mine for $633m shareholders get wiped out.

Lest there is any doubt I think they will build the mine in budget. La Mancha will convert the bond. Glencore will buy the company. For anybody buying at £1 area that means literally upside on 2-3 year view. Anything from £3-6 is realistic endpoint and I am hoping the top end obviously. Gla

No, because it's probably nonsense. The convertible bond is priced in. Whether we like it or not, it will most likely be converted. It is in the shareprice it can't weigh on the shareprice and converting it won't really alter the shareprice. Yes it's an option but literally unless the world ends La Mancha will be converting it (well before Horizonte have a chance of buying it off them if they have that option). It is probably immediately convertable when a T/O lands.

What's weighing on the shareprice is:
- The global markets / macro / meltdown situation. War with China would just about seal it I reckon so the Taiwan fiasco recently isn't helping
- near certain global recession
- Horizonte still 1.5-2 years from production

Of course we all expect that to correct to fair value, what's fair value, well more than around 15-20% of NPV for starters particularly as we are, effectively, funded for A2.

At some point (perhaps a year before production, perhaps at some other point) expect institutions to start accumulating. Perhaps as early as debt drawdown (which we haven't had yet). At some point I would also expect Glencore to perhaps start buying open market and if that happens, expect a lot of institutional interest also.

There will be no more equity funding here, the JV partner will bring the funding for Vermelho, or, the whole company will get sold. We are, for all intents and purposes, fully funded. People will be paying us/the company cash for the assets, we won't be borrowing cash to develop the assets further of that I'm pretty certain.

Pros and cons of China:
- market is here and now you can secure an offtake not wait for some govt agency to set up some framework agreement with end users for product. China accounts for vast majority of demand for graphite at the moment.
- lower ESG so you probably spend less money building the mine
but yes longer term would be better not to go down that route especially if eventually there are geopolitical issues east/west.

In a perfect world I think you secure your offtake now to get funding by a Chinese company then negotiate the rest of your product /expansion elsewhere (apart from anything else to hedge your risk of selling to a single buyer) - which I guess is what BKT might be doing. There is a chance west will pay more for your product (they should, for ESG anyway).

Craig Vale have a (small) royalty still on Vermelho IIRC?

How did Glencore overlook funding? They guaranteed 10 years offtake, lets say conservative $20k/t = $2.9bn (around 10x what orion+la mancha agreed to) which thr banks needed to fund the remainder of the debt. You can say Glencore made the deal and probably the banks wanted different equity counterparties to keep things honest. Still expect Glencore to take the lot at a point of their choosing but trust me, they didn't just miss the fact they could have participated in equity earlier....

Sorry 50% off high here...

O/t I scanned around aim yesterday at some previous performers. Ggp is around 75% off high dont follow it no idea why. Eua is 85% off high russia obviously. Covid stocks are foobarred. Crypto stocks are at what 15% of high valuations. So I maintain 15% off high here is not outrageous given also that at the high we speculated a better finance package. We are down around 30% on the financing price that orion and la mancha thought was reasonable. It will recover. I am hoping for vermelho news in q3/q4. Gla

I got quoted £49999 to sell 500k shares at one point. That was my virtual high on hzm. I didnt sell any then at 10p. My pf is hovering a shade above 50% of the value of its high point but here's the rub - since the high I have added something like £400k new cash. So in real terms I am lower, something like 40% maybe. That's ****e markets for you but it will turn if you invested in companies with sound fundamentals and mgt who can deliver their roadmap. But is it an easy ride? No or we'd all be doing it. Oh we are :-)

Hopefully less than a year behind. Bkt are building a much bigger initial mine (1mt vs 400kt?) Which on paper taked them 6 months longer. We should also benefit from infradtructure they put in. The thing to watch is how soon we get funding after threy get funding. If they have funding in place q4 this year and say we have funding in place q3 next year with a shorter mine build we finidh building a few months after they do. I don't know where we are with proving the product ie what is left to do. But my view is first production 2024 is likely for us which is a year later than I hoped and also coincides with first production in another share I hold where I hoped acp would be earlier. But 2024-2025 should be great years for graphite and that is probably the timescale to plan to hold here, at least, for full value. That's my plan anyway then run some to expansion or company sale.

Which costs? Because in the RNS on July 13th they state they now have more material certainty on costs on capex. So is it capex or opex you refer to? On capex there is whopping contingency in the financing raise, however, we may see that get eaten up now we have double digit inflation. It only matters if they don't have enough money for the build but they are pretty shrewd and raised a lot more than absolutely needed - probably at the insistence of the banks.

As somebody else pointed out next question is where is the money. They raise in £ (at least equity, debt may be $ denominated) convert to $ and hopefully hedge some in Real. What prices/rates they did that means they are hopefully insulated from ongoing FX changes.

"The successful completion of these contract awards is a significant de-risking event for the Project. Importantly it provides more certainty on costs for a material portion of the overall capital expenditure and builds confidence in the Project schedule by gaining commitments for the delivery of key equipment on site in the timeframe required."

My target here if we can get to around production on A1 a DFS ready (possibly financed) A2 and a DFS Vermelho is £4-6 in new money or 20p-30p in old money which would represent ~£1bn GBP mcap+. That's quite a lot to pay but they are buying multi billion $NPV and the market for nickel should be all there by then. When? I think the earliest will be 2024 as we run in the mine. Waiting for '5 bags' for 2 years doesn't seem too bad a deal for me obviously some of us have been waiting longer than that but for new investors this should be a pretty good buy point I would have thought...

divide by 20!

Agreed and to state yet further obvious - I'd rather 20p+ with a working mine in 2024/25 than 10p next year. I hope we can hold out till at least we get value in the sale price for a. a working mine b. a (financed?) and DFS ready expansion of A2 and c. a proper solid DFS for Vemelho. If we can get to that point I don't think any of us will be disappointed with the sale price....

Watch/re-watch the BKT interview:
https://www.youtube.com/watch?v=LP82SHZeckc

The reason it is relevant is it was done in May this year. 'Multiple inbound enquiries' into their Phase 2+ production with Phase 1 already sold to Posco from companies they would only have dreamed of 12 months ago.

Yes they are further ahead but anyone talking to them will also be aware of near neighbours. Apparently some may be govt agencies - looks like the penny is dropping that Chinese dominance in resources is going to come back and bite west in the a**. I still expect us to go Chinese route but nonetheless some competitive tension doesn't hurt.

I have no concerns here except I have to accept timescales will be what they will be, slower than I anticipated and wanted but the macro is almost all good. In the meantime watch where BKT are going because we will be going there next. GLA

Lowball T/O won't succeed because Glen+Orion+La Mancha own 45% and to state the obvious paid 7p+. So any offer will need to be materially above this and if it doesn't come from Glen they are likely to counterbid anyway I would have thought. I have no worries now that this will be bought cheap cheap, perhaps 15p in old money might be absolute lowest but again most of us investing here are hoping for higher obviously.

On cost - some will be variable (both in capex and opex, like diesel) but some are relatively fixed - like hydro, I believe they have done a deal to fix electricity cost which is a really big input cost. Furthermore being lowest quartile on price (and in relative terms your position with respect to other producers improves if you can fix your input costs - indonesian producers will be paying more for coal as coal price rises for electricity) protects us from not being able to pay bills like interest payments.

Finally with respect to financing A2 I can't see how that interferes too much with cost because to state the obvious - if you can't afford it you don't build it. It is fully optional at the moment whether we build A2 and at what point though we do have the option on the plant they purchased for the job. If economic circumstances aren't right in 2024/25 to finance/progress it you simply don't and proceed with A1 standalone.

Main risk here is the build of A1 going wrong that I can see. After that it all becomes moot because we get bought anyway. I added £50k here in the last 2 weeks with new money, surprised in a way we are down here at 5p in old money but I don't think we will be in a year+ time. GLA