Member Info for wasarunner

When the dust settled last night I found myself reflecting on how low the capex is here relative to the output. The infrastructure being quite well established in the region, hydro power for the plant etc.

What really bears this out is the stage 2 capex. I haven't dived into the DFS yet to investigate why that cost wen from $199m in DFS to $250m in the latest presentations but the furnace being upgraded to the European one will be at least one item. However. For the ECA to be ~$150m for plant and machinery we assume the same for A2. It means there is only $100m max 'infrastructure' work to build the second stage. And the mine will produce $362m gross on 14.5kt production at $25k/t.

So really, Horizonte not only has a low opex mine, lowest quartile in fact, but the capex is relatively modest at $710m for A1+A2 at 29kt/yr production. Again just to run the numbers at 29kt/yr at $25k/t the total capex is covered, gross turnover, in 1 year of production!

That doesn't of course make it easy for a junior to raise $710m, quite difficult in fact. So we shouldn't underestimate the significance of yesterday. Nearly half _of the total requirement for both stages_ has been agreed by the banks. Worth reflecting on.

I will never understand (especially junior) markets. But I know value when I see it. Still 8.6p. Buy signal :) GLA - rome wasn't built in a day and the sp belies the fundamentals as is often the case with such things. Roll on completion of finance and the naming of 'the strategic entity(es?)'.

Chrismar I see you don't have a reply to that one yet - honest truth is I don't know. It would be tempting to say 'surely they can spend the $25m now they raised in Feb, because the rest is coming' but the reality is probably not, it does sound like the debt is still conditional on the equity+offtake which may not be done and dusted. But maybe they can proceed at risk with the $25m. As I understand it you start with foundations and roads (essentially groundworks). In reality I think we will get further RNS now we will get operational updates in Q4 as well as financial updates.

FWIW I think they will be keen to build it as soon as they can. When I talked to SR he spoke of a 'window' to get Araguaia built. By which I think he means 'asap'. I was pleased in the interview JM mentions 24 months, there might be further updates on how this breaks down but we have seen longer timeframes mentioned before. My guess is they've managed to shorten the engineering window through the extra time they have had to prepare, but this could be a follow up question to the BOD worth asking.

I think they are very, very aware that they want this mine built and producing end 23 early 24. Nickel will be in a good place by then.

pp I agree - it will be the last component, so the strategic investor will be known! So the whole market will know who is prepared to contribute $100m and can position accordingly and the SP will re-rate accordingly. I just can't see PIs getting shares under 10p at that stage I really can't! It is going to be a mad scramble for the last $30m or so and I think it will be at premium to todays SP.

So in the latest voxmarket video JM still going with 'late 2023 to early 2024' for A1 to become operational. Good. 24 months build (he states)
Interestingly he says second line 18 to 24 months later. From the language I am reading that as being producing, because that was the question posed by the interviewer. That to me suggests he is thinking it gets built pretty much back to back with A1. Which is what I expect to happen - run line 1 in then immediately begin construction of line 2. They have 2 years now to sort the finance.
Happy days. In 2025 or 2026 A1+A2 will be operational. He mentions I think $28k/t capacity. I can wait that long!

Sorry I read your post properly. I would be very surprised now if there is a raise that the public (or shareholders) can participate in. It slows the process down and the strategic investor and perhaps some other IIs are probably already earmarked for the shares. I've never really considered a public RI. Also there is no guarantee that even if there was one, the discount got you below 8.8p. At risk of sounding like a stuck record I did say this when we were 6 or 7p 'buy now you are NOT going to get these shares in an RI cheaper'. I still believe that. PIs will get scraps in any offer, if anything at all.

Blimey Monkeyjack sorry to hear your loss.

The minimum raise we need is now ~$100m USD if we can assume the $25m from Feb can be used, which I think it can.
More likely IMO is ~$130m USD because I think they will raise now to fund Vermelho DFS and to fund general admin expenses.

I don't know about offtake and how much prepay they can get but so far every single component of the finance has delivered better than I (and much better than the market) has expected. So probably a good amount.

I also happen to believe equity is naturally limited by the 30% rule and I may be wrong, but I consider Teck or Glen favourites to be the strategic investor and take most of the equity and these are more limited than a third party being the strategic investor in terms of shares they can take.

Therefore I'll stick my neck out here - 2.5bn shares in issue (including options) is a very possible outcome now. 3bn remains my worst case.

I'm no trader, and in particular, I don't try to time entries. But I would say now is a good time to invest. You definitely don't want to wait for the next RNS, so at best you're waiting for people to get bored and sell. People getting bored and selling is what I see on AIM all the time so that might not be a bad strategy I don't know. We don't know how long till next news. If it were me, I'd be buying now.

Actually we got a lot more than was priced in.
$21m more debt (and by extension, $21m less equity) than I was expecting
FAR better credit terms than I was expecting. Queue A2. Libor +2 points really is - well, astonishingly good for commercial loan.
As well as the most important bit - finance being fully de-risked

TDT - I think what people selling right now are missing is - we got the certainty of the other components today. Because, simply put, the banks would not have signed if the rest of the capex wasn't already covered. Therefore the rest of the capex is certain enough, in legal terms, that the banks are happy to sign, that it is certain.

So today we had certainty on debt + equity + offtakes. We just don't know the terms of the other two. If all the previous components are anything to go by, they are going to be very good.

ON a final point on A2, yes raising debt or offtake or bridging finance from the strategic will reduce NPV somewhat _but it doesn't matter_. It doesn't matter because Horizonte's DFS was done at the $14k/$18k/t numbers. By the time A2 is ready to build, nickel will be so far above these numbers that as investors, we will accept the build being 2-3 years EARLIER than the DFS, to generate the extra cashflow earlier, that we will be happy to pay a few percentage points above LIBOR to get it. Another 14.5kt/annum production at $25k/t nickel is $362m gross/annum - well above the capex figure. It WILL get built.

The fact ECA is ~$150m USD at 2 points above Libor, and A2 capex is $250m. I already knew the figures but not the rate. Anyone who understands FCF will see that the terms on the debt (tenure and rate) make this A2 about the easiest project to finance:
1. when Horizonte is already generating FCF from Stage 1
2. they will need broadly the same equipment for stage 2 so I think it is fair to assume the same ECA may be available
3. the banks are onboard, another $100m debt (if required) at Libor + 5 points is attractive to them
4. the strategic investor and offtakes can easily bridge the $100m capex requirement for A2 if not

I _always_ believed A2 would happen far earlier than the originally published Horizonte timeline. Of course, we may not be building it by then but it doesn't matter, that Horizonte as a junior can secure such terms, and the fact that the strategic investor can accelerate a build, independent or not, the fact Araguaia can get to nameplate $29kt/annum capacity will not be lost on potential suitors.

I think people selling today are selling at exactly the worst time to sell. The certainty just increased, massively. There is significant news to come yet, both short term and longer term. And much more sophisticated investors are shortly going to enter the market on this share - why give them your shares really cheaply, at todays price?

This is the easiest 2 year hold for 40p (I liked pp's estimate, with Vermelho development it could be more) you will get.

Luke you're back! I think I'm happier about that than the RNS. Good luck, don't let them get you down. I didn't, I see a lot of green boxes now, and green is my favourite colour. GLA

I think this is easy - you can trade this for the final package complete (as I intend to do with my £50k yesterday) and hold with your main holding for production or T/O. The finance terms will be better than the market priced in, I'm sure of it (and so far, that has been proven correct), and I think the strategic investor will also be a boost (for some reason the market isn't pricing that a major might want slice of this action) so plenty of rerating catalysts to take this into double figures on a trade.

Timewise - I guess maybe slower than I hoped, the language is suggesting the other news could be a month or two. Still hopeful we will see another RNS or two in next couple of weeks though. GLA

Craig you can probably break out some champagne in Oz. Bit early for that yet in the UK (or is it :) )

Ccooper - I think $443m was the original number but it ha increased by (I forget the precise number) ~$20m as they are buying the furnace from Europe. So $460m+ total capex. I believe they will raise to do proper Vermelho DFS - not sure how much, couple of tens of $10m is what I expect. I think they will also want a bit more contingency and working capital. I think much safer for them to raise now, it is a big no no to come back to market later having run out of cash (I was told by the FD). ~$500m give or take seems reasonable - everyone sleeps easy next 2 years as they build it.

My musing re: complete package.

I think they will raise close to $500m - cover working costs, slippage, Vermelho DFS. They may not need to draw all that down (for e.g.. draw less debt), but that is the number I think they will want available.

I don't know about the offtake element but I am counting the $25m already raised towards it. That leaves ~$130m USD ~93m GBP. It's not huge. Really, I don't think there will be a lot more to raise that the strategic investor isn't covering and the equity terms become somewhat moot. My worst case calculation was if we DIDN'T secure all the $325m in debt because then the equity really starts to eat into the calculation. As it is I think they can easily massage it so some others get some equity, mix in offtake, then the strategic can stay at or under 30%. And why wouldn't you take 30% if you can get it. But if it is Teck you aren't issuing them that much more equity, 600m or so shares get them to 30% unless others get cheaper.

It is going to be a very good finance package. Every component of it so far (more ECA than I expected, more total debt as % of funding than I expected, better loan terms than I expected). Apparently Endevour, and Horizonte BOD haven't been sat on arses these last three years they have actually been getting the best deal they can. And it shows. Now why would we suppose the rest isn't going to be as good.

For me, still the biggest re-rate event to come is the entity of the strategic investor. But very happy today. Early retirement for me all but nailed on. GLA

to qualify that - I expect RNS either way tomorrow. And if the RNS is clear enough, and positive enough, on when closure is going to happen - will the shares go up, or down? I don't know, which is why I bought today.

Excellent, thank you Hazbeen. Happy days. MMs want shares and they want a lot of shares. Wonder why.
If this deal isn't tomorrow, it's in the next two weeks. IMHO.

SJ indeed, I had no intention to sell I was fishing for what they would take. If they are happy to buy 1m shares but they won't sell £3k that is interesting news because it implies they want stock. We will see tomorrow. I too am anticiparing a very positive rns even if it isn't 100% sealed and dusted. We will hear I think tomorrow. If no rns first thing, sp drop perhaps, buying opportunity ahead if rns later in day. I am wary that on a day of big news mms will play silly buggers so you go into buy and cant get stock at the stated prices. They probably try to make a lot of money themselves on a day like tomorrow. A payday of sorts.

damn just missed it - I wanted to see what they would take on the sell but too late. So I don't know if the indicated price after market close (I got quoted 8.7p) is real or not. Shame - was curious would they buy 1m shares and not sell you £3k? Because that surely tells you something. On dummy sells smaller quantities just before close I was being quoted 8.45p ish.

Anyway, we've placed our chips. Up bright and early to read that 7am RNS it is.... price goes up we can sell, price goes down we can buy more, we can't lose here, too easy this aim game..... GLA