Member Info for wasarunner

Leathal I forget to caveat - all just opinion please DYOR and all that! I've got it right before, and wrong before, I'm no better than the next punter really. I hold large positions because I trust my own judgement but nobody else should trust my judgment etc.! Cos I can only blame myself if it goes wrong!

Anyone see a problem with my figures?
I assume first two payments are made. Looking at the rescheduling RNS that leaves 71.4kg of gold left to pay ~$57k/kg current price would be around $4m left on the loan. I think it's a $3m loan but interest has been accruing.

If so $4m debt which is peanuts next to any significant production. Just need to see the significant production!

And lastly and this is relevant to GRL there's a lot of analysis of crypto v gold this is just my view. I'm by no means an expert and I do have a lot of time for bitcoin, I don't know that much about other crypto. My feeling is crypto/btc is unproven as a hedge against a stock market crash/correction 'flight to safety' scenario whereas gold is proven. Secondly crypto is by it's very nature probably cyclic with tech. It is tech. So apple/tesla go south, I think crypto goes south. I happen to think that sector is ripe for a correction whereas gold is still relatively cheap by historical standards particularly with the clouds I see over the global economy. It's why for the next few years I am bullish on gold. Probably no harm holding both gold and crypto but for now I only hold gold. GLA

...volatile and perhaps nickel more so.

I actually think of my main three holds (GRL, ACP, HZM) GRL should be first to pop and the only thing holding us back at the moment (existing holders will rightly argue with some justification) is we don't have enough data or comms on what the company are doing or how close we are from 'real' production. Building the gold room in quick time was a big achievement but now we need to see numbers coming through that the company promised us. I expect a rerate at least next year into the 20-30p range when we do, a year or so later I am hoping we are trading closer to 40p or higher.

Again, I'm bullish on gold, any one event can move it up:
- crypto bull pops
- nasdaq /tech market correction
- wider economic woes of Covid start unwinding
- a war. Plenty of potential flashpoints there Ukraine etc. Never bet against a war happening.
GLA

A poster on another board asked me about GRL (and HZM) and I thought more etiquette to answer here. I will try to make it GRL oriented but will highlight the relative risks as I see them. I have a very big position (for me) in both stocks with a weighting around 2.5 HZM:1 GRL.

GRL:
- yes it has risen a lot over a year but the company has roughly trebled its annual production estimate early in 2021. Therefore simply on that basis, the shareprice should be 3x on what it would have been if the guidance hadn't been updated. Against that backdrop of course company has under delivered in 2021 in terms of production targets so the shareprice languishes somewhat until the company can achieve what they state.
- my estimate is that at steady state 50koz/yr production (which the broker thinks can be exceeded to 73koz) we are looking at something like £35m GBP after tax, perhaps a bit less with gold >$2000/oz with the low opex. On P/E of 6x which is conservative that's around £200m GBP mcap which is around 4x on todays price. This is my eventual goal for Homase only which puts us around 30-40p one day, happy to wait 1+ years to get there.
- GRL have another mine which they will drill, underground mine, no doubt more complex, but also high yield. Upside from that not factored in.
- GRL can extend mine life at Homase, lots of exploration targets the above numbers are for the first (1 or 2? pits only). Realistically they need to extend mine life as they could mine out the established resource.

So 3-4x is a minimum target in 1+ years, but a lot more is possilbe, particularly if gold does well, I happen to be very bullish on gold, I think generally markets are pumped and ready for a correction and the true economic impact of Covid hasn't been factored in and when it does gold will rise. For now, cheap debt rules, until it starts unwinding like it did in 2008.

Particularly attractive about GRL is something like $3m debt which is peanuts. GRL becomes a cash machine as soon as it is a producer. It is virtually a producer now. But still valued like an explorer.

Just to contrast against Horizonte - yes, they will soon have $633m in the bank (less $8m that PI's won't cough up) but:
- financiers have them over the proverbial barrel. Plenty of contingency, but if you don't deliver a working mine with the money raised (and things can and do go wrong), they will happily take your company from you and equity holders get zilch, nada, nothing.
- even when they have built the mine and they start producing, the debt is $400m including the CLN. GRL's debt is $3m. Horizonte will have a higher output and gross profit, it's true, but the debt is 100x+ the debt here.
- Horizonte won't be producing for 2.5 years. GRL should be producing right now.

So different risk/reward. I feel GRL is still lower risk. I prefer Brazil (just about) to Africa on jurisdiction. For a long term hold I prefer nickel to gold because I see the utility, I accept both are volati

Leathal, I will answer on grl board and maybe what I see as the pros and cons of hzm and grl. Sorry cant comment on ggp as dont follow it! Historic shareprice can be a barrier to investment ie 'but it has risen a lot' whereas stage of development is more crucial and I will put why in my post.

You can do a lot worse than 50/50 hzm and grl. My target is 4x on both from cur price and I think grl will/could get there earlier. Sorry o/t.

Hi leathal, I am equal weight acp and grl (near term gold producer) and double weight hzm. I see grl as a 2022-2023+ play, acp as a 2023+ play and hzm as a 2024+ play. So depends on your timescales. You can pan back on posting history on those boards whats what. Sorry about the o/t here.

Don't know because I don't know him well but what we have is high purity graphite which they want so that's a good starting position to negotiate from particularly as price is creeping up! Negotiation is an art it is true but it is best to be selling something the buyer wants/needs badly.

Yes sorry for the O/T but I do also see GRL as a no brainer as a hedge when it all goes south, as Evergrande may yet push, on wider markets. Got to hold some gold. I think it is important these miners close their finance deals before global markets head south so I'm hoping Matt is well advanced here. Once finance is secured you only care about commodity pricing which generally should be OK in recession. So we need finance done. On the other company I won't mention I'm just pleased it's done you don't want to be doing deals that big in choppy capital markets. On GRL I'm now nearly equal weight GRL/ACP. I see GRL as my 2022 will deliver results investment, ACP as my 2023 will deliver results investment.

Come on Matt, some news in next 2 weeks please :)
Sorry for the O/T guys.

SJ only thing to be aware of here I think in terms of risk profile of the investment is - maybe don't expect the post finance valuation and build time to fully reflect the economics of the mine. So I'm thinking very much along the lines of 'sell no shares till 2023 earliest' because AIM is a bit of a s***show at the moment and we may not be valued correctly on NPV. All that changes at production I reckon when the cash starts rolling.

There is clearly a lot of upside from 4.5-5p even post finance but the full value will be at production. Thankfully production will be a lot sooner than certain other stocks I'm invested in!

leathal - just on demand side, we won't need to worry on the timescales most PIs here care about - because the offtake will secure it. If your investment horizon is 2023 (which is fine nothing wrong with it - I may and probably will de-risk some at first production too) we will have a buyer for our product well before that with published terms in the offtake - i.e. you will know this information in the next 6 months no more.

Demand side doesn't bother me here at all - it's different if you see this as a 20 year investment. I am quietly hoping we can actually up 'early' production to hit the sweet spot in the demand cycle then you can throw the current estimates on NPV out the window and pencil some better ones. The original DFS is designed to only utilise less of the mine to keep capex low but if there is a buyer for the product and it can be squeezed into the capex producing more earlier is a no brainer, if graphite prices are rising. GLA

Lets not also forget for cashflow - Araguaia was always designed to mine the best ore first. Having two working RKEFs means you can mine your best material in 5 years (as opposed to 10 years with a single plant). You also want to be mining that best material at a point where nickel price is high. We don't know the nickel price in 2030 (we hope it is high) but we have a guesstimate for 2025. So two working RKEF, mining the best Araguaia ore, at a known deficit point in the nickel cycle is not a bad place to be. All IMHO

I agree this is really good news this morning. I was a bit jaded by the level of dilution for A1 but realised pretty quickly that if A2 can deliver on roughly the same equity (i.e. no more dilution, or if anything very minimal and at much higher prices, perhaps to bring Orion to 30% holding) then A1+A2 is still worth an awful lot in a future nickel market even with the enlarged share capital. It seems Horizonte are keen to deliver A2 as a working operation sooner than the 'worst case' estimates much later into the decade which can only help to build value.

If we can get A1+A2 producing by around 2025 latest I think there is a lot of good value here, so an up to 4 year wait but for multiples returns. With a very possible de-risk point 2-3 years down the line A1 built and starting to produce.

I essentially see the current investment as A1+A2, with Vermelho the wildcard, what we get for that we find out in around 2 years time I reckon.

Yes echo what AIM has said, I think low risk to financing (there is never no risk of course). It's the high IRR, low capex which makes this a particularly attractive investment in that regard. For e.g. if you can payback a loan in 1 year on production, you don't care if that loan is 10% or 15% interest, whereas 15% interest kills you if you pay your loan down on 10 years. So high IRR means they can service the debt element quickly and also lenders see less risk (on the lower capital).

In terms of equity - there will be between 'none' (that's a holy grail, maybe impossible) and 'some' but that some will be well within a range that will still get a financed, then producing mine worth some x of what what we're worth today.

I don't see anything like the risk we had on Horizonte where company raised >mcap in equity therefore dilution was >100% to get finance done, here. I'm hoping more 20% (at most) and I can easily work with 600-700m shares here post finance complete which is the range I'm hoping for. All prepay offtake + equipment finance + debt with no equity = even better. GLA

BTW not suggesting it's a sale but even offtakes etc - you really do want best terms and you want to hit the sweet spot on graphite pricing.

Or negotiating? Good deals take time. (Sometimes bad deals do too but that's a different story!) I'm hoping very much for the former. You want several parties to discussions for competitive tension etc. then you want to extract best terms. Having been involved in a transaction directly myself I can definitely say it takes time to get a good one....

https://www.goldstoneresources.com/documents/media/SPAngel-Goldstone-Note.pdf

I found the resource with the figures it's the broker note from May - third paragraph bullet
"• Throughput rates are expected to increase to 745kt and 2.0mt in 2021 and
2022 producing 26.9koz and 73.8koz at c.$613/oz TCC and C.$651/oz AISC,
with sales expected to cover development/exploration capex, interest, and
debt repayments."

Obviously 2021 didn't quite go to plan but the broker believes 73koz eventually is possible which is quite a bit more than the 2koz/mth. So that's the potential upside, of course, it isn't easy to ramp up production, co has to deliver. But that's what we're here for and on those numbers of course EBITDA goes much higher so should valuation. GLA

We have 50koz planned production ramp up figure and I have seen 73koz mentioned (not sure whether that is in a presentqtion or broker note) so there is upside from increased production, the 25koz was meant to be first 8 months only so I am hoping for more production eventually, perhaps a more modest p/e but crucially higher gold prices and the leverage to gold price is of course huge at low production cost.

I am not sure what happens if they reinvest a lot of profit into expansion early CT is less significant until they declare profit. It becomes signoficant when they go into divi paying mode which I hope will come one day.

Less. Because he know they won't build it themselves they only have to do the (right) dfs. Whole company sold 2-3yrs max I am strongly with pickedpeck on this one. Hopefully not hpal, hopefully nickel matte.