Member Info for wasarunner

I suppose the point I am making was this - KB exited when the resource was fully proven but the mine had not yet been financed or developed. Relatively low on the Lassonde curve. The real jam for seed investors is at production. He didn't wait because he needed the money elsewhere or they fell out or whatever who knows. But 'maximising' returns would be done by either delivering sufficient news to get the SP to spike pre finance (which hasn't happened here, at the perfect points when the shareprice could have jumped KB sold heavily into it so it never really got anywhere like the valuations of BKT) and he got a couple of multiples return instead of 10 bags. Hell I can get a couple of multiples returns open market if you join the party early enough so that's no big beer really for the kind of risk you take early on when the resource isn't proven, Magafuli is still in charge and Tanzania wasn't considered great place to do business.

I welcome all constructive opinions to be fair and the point on KB is a fair one but it has provided opportunity. It is always stressful for PIs who ride the coat tails of IIs when the II exits and they see the shareprice hammered repeatedly. Happened on Horizonte too. Just have to try and be patient, wait till they're gone, you need the shares in sticky hands. I plan to hold to production anyway - no other option because I'm not sure we'll get any big re-rate on finance, hasn't happened elsewhere with other companies. GLA

A very modest one if he converts a 2.2p warrant into a share at sells at 3p - almost certainly not the return he looked for for the risk he took and the time he held the option. But yes he made money on the original share he subscribed for which he got cheaper.

It's a good thing if seed investors cycle out for the build phase anyway as we should attract invedtors who will hold to production. Just need that news to kickstart the process....

*producing more of it

Afraid of what? Watch the gold price, hopefully it turns as Goldstone starts producing it. That and the announcement on the debt - how much is left after September. The chairman thought equity at 6.5p was better than debt so I wouldn't be too afraid at 6p you are getting in cheaper than he did and he has a better idea where this is going than any of us.

They won't raise rates to anything like the level needed to tame inflation because, whether you believe it or not, they aren't really independent of govt and govt answers to the people and the people don't want to be bankrupted. If they were going to raise rates to bring inflation down they would have done so as soon as we were materially above 2% in the uk, and they didn't. They have no weapons left so inflation is here to stay I am afraid. Best get printing instead. As for investors, better buy something that kerps up with, or outpaces inflation. Commodities are one, for when the recession is over in any case.

with the tenure of the debt being 10 years plenty of bandwidth for divi....but that won't happen.

Again, very simple high level maths: 29k nickel production (A1+A2) for which we have raised finance already (as A2 is from FCF) producing $10k/t profit before tax. That gross profit (which is before tax and debt payback) per annum, is nearly equal to the entire debt to build the mine which from memory is circa $350m. So the scenarios this fails are - nickel goes so low that we can't build from FCF (which again to re-emphasise I am reliably told is $14k/t), or we don't build the mine successfully. In all other scenarios paying back the original debt used to finance A1+A2 is a walk in the park, except for the fact that long before we build A2 the bids will come.....

I did calculations back in the day on divis but it's moot because we will be sold long before we get there. In the first instance in any case they will most likely use FCF to complete A2 if we aren't taken out before A2 completes (which I think it won't - i.e. we will be bought before). Really you should only be considering divi after A2 is complete and producing and /unless you get a special div from Vermelho sale. I just think the whole company gets sold, lets keep this simple, so the question becomes when and how much. I am still thinking 24/25 for £1-1.5bn mcap so divide by number of shares (5bn?) 20-30p in old money, £4-6 in new. GLA

how has he maximised his profit when the shareprice has been barely above the option price? I would say the opposite - if anything it has been done to minimise his profit knowing he was selling up. Maximising profit would have see us 10p+ before now.

It's actually really simple - the market is pants and may go lower, possibly a lot lower. Nothing about the shareprice of Horizonte today has anything to do with how the company is operating at all. As far as we know build is on track, will be completed within budget, and nameplate production can be achieved, plus, we have further news to come on Vermelho DFS.

So it's a screaming buy at 5p UNLESS:
- you believe the world is going to end, nickel is going to $5k/t in the next 2 years or
- Horizonte can't compete the build within budget or within whatever time constraints Orion/La Mancha/banks have imposed. That's a very bad scenario for us indeed
- you need your money out sooner than the inevitable recession which MAY depress nickel prices in the next couple of years a bit may keep Horizonte's SP from achieving what it would in a 'normal' market

I'm of the opinion that - the world won't end, Horizonte will deliver the mine, and I can hold 3+ years if necessary so for me, it is a hold and add if/as funds become available. Precise price you add is a personal choice but at market cap sub £200m, with NPVs measured in the $bns when we go into production, it's cheap, no question. GLA

Hopefully in any case they can make some repayment so reducing the capital on which 17% is payable if it does get extended. Lets see. At least we are producing gold that's worth stealing.....

There are people who understand the dependencies much better than me, but to accurately finance a mine we need:
- updated DFS
- govt stake agreed#
- agreed offtakes (which may need more engineering to determine quality I'm not sure, that may be ongoing)
So I am sure he could have raised 'some' money towards eventual finance, a bit like BKT did, but he can't accurately finance it until there is a detailed plan in place. Of course we all already wanted that but it isn't there yet.

He raised c. £550k to progress the above, at 4.5p in May 21. I know, I bought a million of these warrant shares. So he did capture some cash which now of course looks at a premium.

I don't think parties will have walked away from the table rather I assume final numbers aren't in yet to finalise finance. We should hear on the other aspects (govt %, dfs, offtakes) before full finance package I expect. I am still hoping he brings a partner for the equity. Those talks could be well advanced. GLA

Agreed, as non-executive chairman, if he doesn't know what is going on with the company, we have a big problem. I see the conversion as positive too. I make the outstanding loan to AIMS (which is meant to be paid down by around September) around £3m GBP as converted from the gold loan schedule Jan-Aug 22 (63.4kg) so I guess we should get an update at some point as to how/when that will be repaid. I make it around 2200koz of gold.

The closed period for directos dealing was long I am reliably told because they were talking to financing parties over a very long period through covid. Therefore they couldn't buy at the real low points like 1.7p in apr 20 like I did. Their reward now comes at production with essentially being for both financing and building the mine.

Subtracting options granted in latest RNS from total options outstanding gives 5715000 options. Pre consolidation that equates to 114m shares.

Back in the day when I did the options calcs to work out potential dilution with the raise I seem to recall I used around 140m options (which back at that time was close to the 10% limit that companies are allowed to issue) as most of the options had been allocated within that constraint. Now that we have had the 'dilution' effect of the raise, clearly there was bandwidth up to 10% again to issue more options, and they have done this to just under 8%.

This all seems reasonable to me. The main dilution came with the cash raise to build the mine. That the team are now incentivised to deliver it is fine - all the options are moot if they don't deliver a working mine because the SP will be 0 and the creditors will take all. GLA

The offer is to "flog" 25% of the options after 12 months at £1.68, another 25% of the options after 18 months at £1.72, and the final 50% of the options after 28 months at £1.76

Just on timeframes - 18 months corresponds to commissioning (from award) and 28 months should be production. Dunno what 12 months is but we should be finishing off a lot of the build milestones by then. Whether or not the shareprice reaches the option price by those milestones will depend on the delivery of the milestones and/of course, wider macro.

It doesn't mean they have to cash and sell the shares then. Hopefully all the options get wound into the eventual company sale anyway. Options last for 10 years from award.

by the way no way I think Orion La Mancha etc. would have signed off an option price lower than they paid I think. They're here to make money right.... so think the options always had to be >7p. I also think Orion/La Mancha would be disappointed by 8.5p return so obviously the gig is to get this well into double figures (in old money). At some point I will have to convert my thinking to £s instead of pence SP but unfortunately no spring chicken any more these things take me time....

Reasonable I think - 20% above the financing price (of 7p) an an average around 8.5p in old money. Hopefully the remainder of the options are with key people building the mine - they should be incentivised to bring it in on time and on budget and options can really help focus the build as the rewards are when it is built. If we hit my eventual goal (20p in old money) or £4 in new, JM will have around £20m in value less the option price he has to pay to convert.

Yes esg angle for V but the other aspect is the price of coal has increased dramatically and may continue to do so! Whereas our hydro shouldn't so every $ rise in cost of coal which is a big input cost if you are burning it to power your plant ( I understand rkef is pretty energy intensive and this is one of the big costs) we become more and more attractive on cost vs Indo where coal is the primary power for plant.

So as coal price rises Araguaia becomes more attractive on cost against competitors e en without the esg angle.

I think esg is important for V to help facilitate the sale but I don't think Horizonte will ever mine V themselves but making it marketable to majods with an interest in the same will be important. If you want a non Chinese buyer.

There is no financing plan/timescale for V because as JM has stated on many occasions, and especially if it goes HPAL they can't/won't develop it alone. So then expect a major to JV and finance OR (and imo more likely) buy the while co at that point. With or without the existing ii's financing support ie no reason Orion or La Mancha wouldn't put money on the table to help finance Vermelho for the right eventual return but more likely Glencore finances it IMO.

wrt global recession post - agreed looks likely/inevitable, how bad we will see and what can be done about it also, I have been banging on about the overprinting for 10 years now and it's why I don't want to hold currency so you have to park your cash somewhere right? If we get the worst case scenario civil unrest due to hyperinflation or a depression type thing the fact Horizonte only make enough money to repay debt and all nickel miners with higher cost of production go to the wall is least of our worries. At least we are viable probably down to about $10k/t depending on cost inflation. Even in the sh-itest market horizonte still would be safest in my particular portfolio although I would expect gold also to rally if currencies collapse more.

I don't think it will last forever the west despite stagnant growth for ages will get back to QE and pretending we are all wealthier than we really are at some point....