fulmar, agree with the sentiment, of course it is important to distinguish the Chinese people themselves who are blameless and the govt who bungled the coverup (whether it originated in a lab or on a market). Ironically I think any economic fallout ramifications of trade with China and the west could lead countries to scramble to secure supply - both stainless steel and batteries for which China is such a globally dominant producer. Geo diversification will play well for Horizonte in both markets. GLA. (Personally on the China question I'd like to see a deep investigation into the root cause but is that ever likely to happen?!)
Anybody think we might get an offer pre financing? The reason I say that is this - once financing is agreed and big IIs are locked in with their big holdings purchased at a higher price - they just aren't going to give that away cheap in the future, vs their share of the production. Once Orion have a 'wedge' of this in whatever shape they are coming into it, it will be more expensive for Teck or Glencore to buy it. At the moment, Teck or Glencore don't have to buy Orion out, they have to do a deal that is mutually agreeable and agreeable to the wider shareholder base which now consist more of PIs (Griffiths/City Financial/JPM gone) and PIs will take less jam now than more jam tomorrow, tends to be the way.
I don't know if majors like buying at this stage but they are guaranteed it cheaper right now, and possibly in light of the current macro problems even more so, than ever again. Post financing Horizonte's sale prices increases dramatically I would think.
pickedpeck - agree, when I've done the sums it looks doable in the 7-10p range and that fits your analysis nicely - JM wanted the mcap to be £100m which is conveniently close to 7p and is probably and hopefully the starting point for negotiation, then the existing IIs who have paid more throw their hats in the ring and state their numbers. It must be a delicate negotiation but for my money still 7-10p range looks most likely I would be surprised if we get more.
It must be a very odd situation - Orion wanting an entry and would probably take a good chunk of equity perhaps at premium above the existing holdings - if they paid equivalent of 10p or similar for a seat at the table, they would perhaps be willing to part with a bigger number per share for a much bigger slice. But on the other hand, Teck and Glencore if they want to maintain their position not only as % holders, but with an eye on the 'long' game, don't want Orion to take more than they could potentially buy out down the line. A very interesting situation.
There's an outside chance this is a sellers market (obviously macro isn't supportive but the initial Orion deal bodes well). If so it could be that the board are holding for best price rather than just agreeing the first thing that everyone can agree on. At the end of the day their job is to protect and reward shareholders (of which we are some, obviously the IIs also) by not financing it on the cheap.
I take comfort from the fact that 7-10p would get the job done without massive dilution if all the other parts (debt and offtake) can play their part. We would be in a much worse situation if say we needed 15-20p to get it done.
Also would love to know what % of JPM shares went to institutions and how much was mopped up by PIs. There is definitely a lot of PIs in this stock on an accumulate strategy (me included), we've seen City Financial shares all find a home, now JPM, and the only Cannacord have added as far as I know on the II side. I know some PIs will trade the swings but I think the majority are here for the financing (at least) and the closer we get to financing the less likely they are to sell and take profit -> all points to shareprice rising.
I think Horizonte's 'FOMO' moment will come - what we know is JM would like the shareprice at 7p for financing in 3-4 months and we are at 3.5p now. To earn his bread he has to make that happen so we can expect newsflow to start anytime soon IMO.
Interesting share HZM on the trading volumes side - today we are up on relatively light volume (I have sometimes bought more than the combined volume so far today myself on a morning). Once there is no background seller - and lets face it it looks like we've pretty much had 1 maybe 2 IIs selling since the Orion news, and once the profit takers are out this really is very illiquid for a £50m mcap co so once we see interest it moves up fast.
Just a preview of what will happen on news I think. The shares are pretty tightly held I think it will be hard to buy when news lands and the rises will be rapid as MMs won't be able to fill orders.
I expected weakness tbh following the update but it appears pretty well supported by buying and I think JPM being out (if indeed they are completely) will take pressure off with less selling than in the previous months. Maybe this has been a false drop (I don't mind I bought a small tranche yesterday) and we resume where we left off pre-Thursday call -> which was upwards trajectory.
Nice to see Nickel approaching $13k/t again. If we can get past that level things might start to get more interesting. I know it shouldn't matter but sentiment is sentiment and if it is all pointing the right way people will add here.
FWIW I saw 3p area as support for a number of factors:
- macro will only improve with China getting going and hopefully nickel to follow (but headwinds for nickel noted somebody posted interesting article on the other board)
- whether it's Q3 or Q4 financing gets closer with every day and we expect drops of news along the way if it is the way it gets to 7p. People won't want to be out when it lands and
- hopefully no bloody II selling for once. Well done to those who pointed out JPM were selling down, it was clearly the case. Hopefully out now and we don't have large numbers dumped.
If so and 3p adds support so be it, I will add top ups in months ahead to financing.
Yes Glencore are a natural intermediary for the ferronickel product but given that vermelho could also go down the ferronickel route you wouldnt rule out Glencore swooping for the lot. It is a really nice setup - Teck with no nickel operation possibly looking to enter the space and Glencore already big in Nickel one of the top producers and both shareholders. Many (good) ways it could play out.
Stay positive all. I bought a small amount this morning ahead of my 9am meeting and will try to add as and when in the next few months befire finance complete. Price holding pretty steady for time being and nickel should improve from here.
Yes the only flipside is if you part sell Vermelho now you won't get as good a deal as you would in a couple of years time. But it's not all about total return, there is a timeline - everyone has one - so it is a balancing act.
There is also the slight complication that if the endgame is sale, bringing on a partner for Vermelho might limit the options unless the senior partner is where you want to sell to. But I'm sure deals can be done and maybe that's what the board are figuring out - half an eye on the long game, as it were :)
Nthoftheriver there is also benefit of a partner for Vermelho now than later. If partner now, gets on with all the permitting and building out a DFS we see an income stream earlier years than we would if we sit on Vermelho and take a couple of years to find a partner. As ever it is juggling between best total returns but also being mindful of timelines and macro situation. No point getting a duff deal done on Araguaia now and waiting for years to monetise Vermelho. If the two can be combined.
Vermelho will of course come into its own once the real nickel shortage looms - 2025+, esp in the battery space. But I have absolutely no problem with Vermelho generating income to us (existing shareholders) well before then if they can find a partner who can run fast with it right now off the bat.
Could well be that the goal was to try and finance Araguaia _without_ touching Vermelho for time being even up to Feb. The present situation may have hit that plan and there is a chance the company have had to change tack and perhaps 'accelerate' some Vermelho discussions - perhaps even actively pursuing inbound enquiries instead of batting them back.
I think yesterdays conf gives me a slightly higher % that Vermelho will be in the mix. I don't really mind that at all as I still think for releasing shareholder value reasonably swiftly, especially in a poor macro environment, they have to use all levers they can and Vermelho is a mighty big lever if there is interest. Would I rather we parted with some of Vermelho or stalled for 5 years? No brainer. If Vermelho is what it takes, get a deal on it that makes Araguaia happen to get us from explorer to producer. Not saying it is a given, but more likely I would say after last night and certainly there is now a bit of time to negotiate with parties if that is what the board are thinking, to end of Q3.
Luke yes I just made that point on twitter. You have to respect the BOD for not selling PIs down the river (as they probably could have done several times even in the years up to now) and holding for the deal. Timing the deal is difficult of course in current conditions but respect that they are holding nerve and setting own terms on it. Rather a late deal than a duff deal personally.
PopUrbanII - the target I believe was always end of H1 but there was always a caveat (even pre Covid) that it would be subject to market conditions at the time. I always took market conditions to be - equity markets general risk appetite etc (which both JM and Simon Retter had previously said were generally pretty weak at the moment) and Nickel price. Well nickel price ain't really flying presently and I guess CV hasn't improved the equity markets appetite but there we have it.
I can't find a timeline in any of the presentations but there was definitely a timeline for Araguaia in something I saw back last year.
Everybody knows this isn't a precise science there are an awful lot of variables. I believe in the board and the assets but the timing (of the pandemic) is pretty bad really. I think the positives to draw are there is clearly lots of interest (Orion are a given on equity I think) from major players so they will get the deal done, and not just doing it at any price is a good thing IMO.
>>I am not sure why this has any relevant whatsoever to JM and this project
Yes that would be my comment.
I think (sadly) UK plc is going to dark places in times ahead. But this is very different from the global situation and Aragauaia/Vermelho are going to be much more tied to the global picture, with the commodity priced in $. I am generally pretty pessimistic about UK (even before Covid) and is one of the reasons I wanted most of my cash invested externally (probably started thinking long and hard about this around time of the Brexit vote). Horizonte is just one such opportunity.
The world will recover. I think they have to wait till macro improves to complete the deal. Maybe as you say buying time to get something done on Vermelho, perhaps talks already ongoing. The only bit that is a tad annoying is the slight false hope the latest update gave us that things were on track. We knew things weren't on track because we didn't have the list of banks in Q1 as originally promised.
I think a lot of the deal is done they need the right conditions to trigger it that's all. I would be amazed if they didn't have the equity partners lined up, and didn't already know the equity price they want. Maybe they just can't get what they want right at this minute.
Also again just opinion but a buyout price only rises from now as Nickel improves with or without development. Even if we are stalled and nothing happening car manufacturers are still making plans to move to ev and new nickel supply is still not being developed to fill steel demands in years ahead.
Ultimately the value of this company (whether t/o value or value in production) is dependent on nickel price and tbat will only improve with time. We are a T/O target whether producing or not at right nickel price so just patience needed here for the long game...