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9.7m yesterday (yahoo data) and 14.8m on 27th Dec. So around 0.3% and 0.5% of issued equity respectively - not vast but when you consider the float being, say, 30% outside the top 6 institutions then it becomes 1% and 1.5% of the float.
Still think for the time being that looks like PI buying and selling, still too risky for most institutions I expect and we will get proper rerates when the company releases more information about the proposed funding. Up until then it'll be a traders playground to some extent and 'the market' will settle in the price range/trading zone many are comfortable with ahead of financing.
£25m mcap was priced to fail as is £45m mcap, for a company which has spent the money it has spent getting this far. The assumption is like equity wipeout or a 1000% (10:1) dilution. So what's it worth - nobody really knows at this stage because we don't know the funding terms but you have to see the current share prices as arbitrary: 8p is no less or more valid than 16p is no less or more valid than 50p because we don't really know the terms. If, as we speculate, there will be lots of debt and some equity 16p is very cheap. If it's all equity 16p is still cheap just not as cheap. I know debt isn't the nirvana because it still reduces ROI and NPV but at the current SP certainly it is better than equity.
I guess 'the market' will agree eventually on a sp (I would say that should be north of here) which prices 'company not going into administration but we don't know the deal). But there's not really a correct number everyone will have their own views on what that is, I think 20p is 'safe' someone else might think 40p is 'safe' and continue buying to that price thinking only upside from there.
There has to be a (smaller now) existential risk to equity but I do think it is receding. What's the right price now? It's what the market will make it in the next 1-3 months. Then we'll have the deal and the new price will be different again, higher, I'll wager. GLA
>>He sold out on the last fund raise at about 80-90p because of fear of another one coming, he was right to be! 80-90p better than the 15-17p right now and I don’t see it getting to that level for a long time to come if ever.
Yes and put it into RMM. Which went to 0. Prefer Horizonte pre finance deal at 17p to RMM at 0p. Yes I know he sold that one too but he's not the guy calling it right - most AIM shares fail so the correct scattergun strategy is to short them all and eventually that pays out. All IMHO
"I thought this should have gone higher when the interim funding was announced. Seems the MMs are marking up today, makes sense"
The interim funding landed at an odd time probably earlier than any were anticipating and in the 'holiday' season. Guess 'the market' is digesting it today. It will be interesting to see if there are any big after hours buys printed or perhaps printed today as the general sizes of the trades when I've been looking haven't been huge.
Either which way I still thought 20p was a reasonable level pre finance once it was clear finance is likely forthcoming.
Now imagine a scenario where they can announce some debt funding ahead of equity because Mr BNP Paribas has been very generous and restructured the loan. What price then for the equity? Got to be higher surely. I'm fairly sure if Orion and La Mancha want further investment to come in alongside their own equity they just don't want it happening at the current levels. I do also believe time is of the essence and this will get done sooner than the worst case timetable they have published. All IMHO
>>they will have misunderstood the other forces at play here - namely the big banks, and the other big cornerstones.
The other force at play here was the closeness to build of the mine. This isn't Glencore buying an explorer, or a patch of land off some PIs who are ready to cash in. This is a 70% complete mine with $400m already spent on it. They're unlikely to be able to pick it up out of admin for the cost of a pint in DJ's pub I would wager. GLA
Hi Barno and CaptainSwag - agreed Glencore seemed the most likely candidate AND they are in a different position than other third parties because they already have a holding and Orion and La Mancha can't entirely block them (don't hold 50%). The thing I don't get about Glencore buying it though are threefold:
1. If they wanted to, would they have done it already or:
2. Is part of the point of them doing the DD right now to ascertain 'cost to complete' with half an eye on what it would be worth to buy it or
3. Actually do Glencore want to buy a fully de-risked mine - fully built up and running as right now they share the risk with La Mancha (who lose more than Glencore if it doesn't) and Orion (who also lose more than Glencore if it doesn't).
It could actually be a combination of 2. and 3. at play and it might be that Glen eventually do want to buy it. Do Glencore care if they spend $400m now, or $1bn for a fully de-risked mine? I don't know because I'm not really sure how their gear levels work. I do think however that that 'they want it in admin then buy it for $1' brigade will be proven wrong and they will have misunderstood the other forces at play here - namely the big banks, and the other big cornerstones. GLA
For my money fair value for us to sit now pending a finance deal, which is likely to happen, would be 20p. It's reasonable as it's (probably) the lowest price any equity will be done at. So pre finance deal that's the gap that I think *might* close but I don't like to guess price movements because I always get them wrong!
Barno - a takeover could happen but you'd have to look at who gets what out of the deal. The reason I don't mind a takeover is Orion and La Mancha will want £1+ for their shares even just to breakeven and because they didn't buy to breakeven, they'll want more. And because Orion/La Mancha/Glen own 51%+ nobody is taking over until all three are happy - unless it is one of them taking over.
So a takeover - maybe - £1+ in that scenario - definitely. GLA
Happy new year Dambaba and all invested here!
Could be worse, we could be BRES:
https://www.youtube.com/watch?v=0sDWqy0b8do&t=2s
ouch......lets hope Tanzania is a bit more forward looking.
Rover think we'll need more but I have no solid basis for that because the info is sketchy at best. Delay is $$$ and all the while Mr Nasr et al need paying and don't come cheap.
For my own wishful thinking how about this one: currently hzm have a $65m bond, accruing interest. It can be converted to equity at sthg like 110p I believe (made up that number but the original rate was 160p before the dilution). So as a nice goodwill gesture (I know, but bear with me) Orion and La Mancha convert as part of the package. That's no new $ but equity is at a high strike price, gearing goes down, now suddenly it's possible to: a. Add more debt b. Invite other participants to commit to equity at a 'decent' price. So suddenly $100m more debt and $100m new equity is not so scary esp if the equity can be done with new players partly at 50p+.
As I said probably dreaming but I do wonder if the convertables will be a makeweight in the deal and also somehow facilitate the raise at higher prices - counterintuitive I know......but if it gets Orion and La Mancha a better retur in the pong run thru less dilution????
Crypto correct, my bad. Must read these things properly....
By which I mean - it may require Araguaia2 to be producing to see a shareprice well north of £1, which may take a long time and may require additional debt/equity. Araguaia1 producing may be worth 50p-£1 unless we get a very favourable deal, in which case maybe we get over £1 at production. I can't see £1+ till (nameplate) production now on Araguaia hope I'm wrong though!
BuddhaBob the numbers you are talking are probably only realisable in a medium timeframe 2yrs+ if the deal is mostly debt. When I did the calculations pre ****up here you could get to £4.50-£5/sh with Araguaia 2 producing around 2026 but since then we've had a pretty big problem to resolve here. Even debt will hammer NPV on Araguaia 1 making those former targets very difficult.
Nevertheless I think the current SP is nonsense and I am looking for a range of 50p-200p at some point post finance/production (because I don't know the finance package terms I don't know when we will be in that range and at what point in it). I really hope they can build Araguaia 2 - it will unlock a lot of further value adding the SP and I'm happy to wait till then - my concern now remains that may be difficult if Araguaia1 can't finance the Araguaia2 build because then you need further debt, further equity, etc.etc. all diminishin eventual returns.
50p-200p range in a reasonable timeframe (3yrs) will do me and I walk away with my shirt on, perhaps a modicum of profit. Which of course makes it a stonking buy to new entrants now...and your 12p average, if I'm even in the right ballpark.
So re-reading that, really $25m was released. Sure, $5m was previously committed but why would Orion throw in another $5m if the company was going to go under? A funding package will be forthcoming, the only variable (albeit a big one), will be the terms.....
Mv01 Horizonte is say 35-40% of my invested portfolio. I bought that for something like £750k to keep the maths simple. I believe La Mancha bought Horizonte for $100-$125m total consideration to date and Orion similar, for La Mancha it represents 6-7% of their portfolio lets assume Orion is similar. In $ they risked more, in % holdings I risked more. I actually risked a shedload more _because I bought pre finance_. I risked finance as well as mine build they only risked mine build.
Generally PE I am lead to believe looks for a multiple of 3-5x. The uber greedy PI looks for more, but in my humble experience of investing more is hard anyway so I'd be super happy (as a blended return, over all stocks) with PE returns over a reasonable timeframe and by that I mean - I can wait the same time as La Mancha. 3-20 years will do. PIs are normally much more impatient and they want to make money by next week.
So I think to be a general PI you want more and you want it quicker which is why most PIs are disappointed. Typically you have less data to play with (La Mancha right now can see a lot more data than we can, albeit they may be in a closed period to buy or sell shares as a result).
I don't think La Mancha care that you made money. It's part of wanting to invest in stock market listed companies. PIs provide liquidity - if it was all LTH institutional investors there wouldn't be any liquidity for them.
10% float isn't enough for them if they want it public IMHO which is why I think it's not something they want.
>>however retail investors will be diluted and diluted along the way until nothing much will be value to Private investors.
This has been done to infinitum now. They already own 51% (more including convertables) so if they take a lot more of the overall dquity structure you end up with a company with essentially 3 shareholders 90% which is pseudo private which is not what la Mancha want otherwise they wouldn't have pulled out of their other Brazilian nickel deal in September. If they wanted 90% they could have already had it.
If they dilute via third parties they dilute their 140p and 90p shares. That doesn't work for them either.
So I politely disagree, but the market agrees with you. Sometime at the end of Q1 or Q2 which will find out which is right.
Good stuff mv01 hope it works out for all of us invested here. We will know a lot more as Q1 rolls on. Bring it on I say. GLA
I think you know this stuff btw :) And as I say I'm also not an expert so you may just be testing my naivety but I don't mind....
This share is a gamble because we don't know what La Mancha, Orion, Glencore are thinking and what BNP Paribas et al are thinking and what financing options are available to them. IMO the $20m is a signal that either it's 'in the bag' so to speak or 'nobody wants to put much more in' as others have pointed out it's not a lot of money for Glencore to lose. We don't have detailed capex/opex estimates and interest rate calculations availble to determine if the mine is financeable (but all of the above do, and they will be in the data room) so we just have to make out best guess on whether or not they think it's financeable, which is all that matters in actuality.
I'm a glass half full type person in the festive season so I say Horizonte is a goer in 2024. Still have 800k or so shares so stand to make something if it survives. GLA
Both opex and the debt. The higher the opex the lower the NPV because opex is straight cost every year so it affects the return. NPV is the discounted return (discounted by an assumed interest rate) of the total return of the mine rolled back to today. So if your total return over LOM is 5-6bn then the interest rate of 8% assumed in an NPV calc gives you a much better NPV than an interest rate of 20% assumed. But if we borrow a shedload more debt (which I think we will, and I hope we do) then the terms on that matter because it will affect NPV very differently if the ACTUAL interest rate on the new debt is 8% and not 20%. NPV simply assumes a number and a number of standards are used, I believe. Even the one that was used int he DFS may not be appropriate anymore as interest rates have gone up but a lot of the senior debt is against LIBOR which can fluctuate in the future in any case.
Nickel price has an astronomical impact on NPV which is why when Horizonte had the calculator on the website and you slid the slider to $26k or $28k (can't remember what was max) you kind of doubled or trebled your NPV. That's why the miner is highly geared to the commodity price because after you factor the interest rate on capex,opex,and tax, every $ the commodity price rises is nearly a $ in your pocket (less tax).
The problem as I understand it, and here is a problem for Horizonte. Even though the long term nickel price may be assumed to be a good number, lets assume $20k-$25k. And lets assume Orion and La Mancha and Glencore believe this and this is their investment thesis, and I believe this, and this is my investment thesis. Unfortunately, BNP Paribas may not. They may look at the current spot nickel price/ferronickel price and go - based on todays number your debt is not financeable. They're banks, they're risk averse. So the problem comes predicting a future NPV based on todays nickel price where the nickel price is such a determinant of NPV, and this is why I believe it is hard to finance mines in a low commodity price environment, and easier in a high commodity price environment.
Incidentally read recently that commodities pricing relative to wider market pricing is almost at all time or actually all time/50yr lows. This may be twisted by some of the megacaps in the US which have reset the market benchmark somewhat on the wider market/Nasdaq etc but still shows we are in a relative bear cycle in commodities. That of course makes the current situation more tricky for Mr Nasr.
Not an expert by any means but that's how I see it, above.
hi mv01 i can't see there being no equity personally. in all scenarios the current sp is nonsense so as you say the current sp prices no deal. i don't think orion la mancha et al want to do equity at the current price (doomsayers will disagree here of course). so i think 'all debt' is an unrealistic assumption.
the problem is it is hard to calculate and back of a *** packet calcs won't cut it. what is the realistic opex - it is bound to be up on what the dfs stipulated. the nickel price as others have pointed out is another very big factor, the banks, and anyone lending debt, have to know you're going to get it paid back and you can handle the interest. that's why equity is 'safe' though dilutive you don't have to make that calculation.
in my thinking debt reduces overall npv but number of shares remains as is so npv/sh drops. equity increases the number of shares but keeps npv as is so npv/share drops. in practice a blend of the two.
my gut feel without precise maths is we're worth 50p+ after financing or, worst case, 50p+ after first production. a lot depends on what la mancha/orion want to, and can achieve here. it would be nice to think they'll get a return on their £1.40 at some point but that does seem a long way away at present.