Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
After the bombshell with Horizonte, I had a quick look at their flowsheet. Their basic ore is a laterite. understand the crushing, screening and drying of the ore. I find it most unusual that the ore is not concentrated prior to going to the furnace.
The ore cannot be predominantly nickel. I would have expected some magnetic separation and then jigging or other gravity concentration to upgrade the ore prior to the furnace which is a very costly exercise.
I would expect the company that had the contract to design the plant and do the DFS to be hauled over the coals. Plus Horizonte management should be 100% to blame if this is the case.
It's a legally separate entity, that when the parent company goes into administration the asset doesn't
That's correct and do you know why shareholders own the parent company and not the subsidiaries.?
Who is paying all you guys
I have never seen anything like it
I came to this thread to try and get away from rubbish and here it’s worse than ever
Like Rover I’m out
So intense and clearly with agendas
Such a shame
This is not about shareholders discussing companies,this is about people who probably mostly don’t hold any shares with agendas.
Some genuine people here-you know who you are but can’t do the egos anymore of most
The stage is still yours guys-enjoy
Clever.. respect… no … have received a response. The market will confirm
Shareholders own the parent company and the parent company owns the subsidiaries
Yep-another negative slant response
Almost predictable-lol
These are businesses that have already invested a significant sum in this project and now they are being asked to contribute more.
No doubt they will be doing extensive due diligence before making any decisions.
The bottom line is, these business people will always do what's right for their own company's interest.
You also don’t very often find all the representatives from 5 international banks and 3 high power financial institutions/mining companies being bothered to be “entertained” flying to Brazil to get their due diligence ready to bring back to the table if they are all seriously thinking about an administration scenario.
The effort is going in to make this happen NOT administrate it.
Why even bother otherwise
MV01, usually a share issue would be based on the total number of shares. ie HZM case with approx 250 mill, a further 750 mill would be issued (at 30p, this would raise $225 M) and would amount to a 75% dilution. Not ideal. It would also need an EGM to authorise the additional shares. it has been suggested that some equity in the operating company could be sold, as HZM own 100% of the equity, up to 49% could be sold to raise additional capital without losing operation control. this would reduce attributable cashflow to this project, but would leave the other assets intact. or even a rights issue and a partial asset sale to reduce the solution. The point being that administration is a last resort for all parties. if the lenders beleive that there is a realistic chance of the a solution being found, they will release a limited out of funds to continue on a care and maintenance basis, as it is in their best interests to do so.
Billy, your rampy posts far surpass even my dear friend Lawrence's rampy posts when he was in his prime long ago firing them out.
Be ready for the shafting Billy, the Snake and Retter are going to double team you this time. No mercy....
Mv01, page 75 of the annual report, shows the eleven subsidiary companies 100% owned by HZM plc. (known as the group)
The assets are 100% owned by a subsidiary company.
It's standard practice for the plc to be the parent company with subsidiaries holding assets.
HZM plc 100% owns the subsidiaries, HZM plc shareholders do not.
So if i understood this (and thank you all for the lessons!) a 3:1 rights issue on half the shares is a 5 fold dilution.
Meaning if that were sufficient to complete the mine and roughly take the current stock back to £1.40 say, that means a current price of 28p factoring in the dilution?
So roughly 4x from here with those 2 big IFs:
Indeed the moneys to raise is 30p a share.
And the rights issue ration being 3:1.
Not bad nor grand...
Mumbles, I like your reasining and I sincerely hope you're right. One worry I have is WE DON'T KNOW THE COST OF THE OVERRUN. So I'm speculating the reason terms couldn't already be agreed is, it's a big number, or the parties need to do the due diligence to check it (I get the latter point, especially if it is a big number).
But I do think the fact that the market doesn't know what the number is is making the market very nervous = 10p shareprice. If it's $200 or $250m and all parties sign up to that number, we can maybe hypothesise a solution. What if it is (playing devils advocate here) $500m? What's the route then?
I think part of the problem is the overrun figure Horizonte have determined (or not yet) hasn't been published. When/if it is, people can start to make educated guesses as to how the company can pull this off with the cornerstones.
By the way I want it to succeed by god I do. I didn't buy it and hold it since 2018 to see it all go down the pan right now.
So we are holding shares in a company not possessing the asset?!?
If it went into administration, for a default or similar, it would just be the parent company going into administration, the asset holding subsidiaries wouldn't.
Most likely scenario would be a restructuring process, funds raised and completion of the construction.
The only thing missing would be HZM plc shareholders as their shares would probably be cancelled from the exchange and worthless.
I hope hzm are looking at other options eg selling a chunk to a competitor ..rather than just relying on the holy Trinity to bail them out.
We can expect the feasibility study soon...which is a shame as the uplift in sp won't be great.
I wonder if they could sell that to raise cash.
It is a xxxx show....is the cost typical of one of these projects ? Or have they just been frittering away cash?
Unsurprisingly, there is considerable speculation regarding the ultimate fate of Horizonte, i.e. whether it will have to go into administration or whether Horizonte will find a solution to complete the project.
Administration: The receiver needs to obtain the best possible price, considering the creditors in following seniority, Government, Lenders, staff, and then equity holders. Further speculation has been that if the company goes into administration, the lenders will deal with Glencore or a consortium of the cornerstone shareholders to pick up the project for a low value.
RNS advise that USD 131.2M of the senior debt facility is available to draw on, assuming that specific criteria are met. This infers that 215 million of the 346 M facility has been drawn down. HZM also advise that $429M has been spent so far. The spend is, therefore, split roughly 50/50 debt and equity holders. The three cornerstone shareholders hold approximately 50% of the stock, inferring they stand to lose over $100 M on the administration route.
The banks will look to make themselves whole on any sale of the assets. Consequently, they will be looking for $215M as a minimum and will resist any haircut. Therefore, any new buyer must come up with $215M, + 136M + 200 M or $551 M to finish the project. The big 3, would have to add their equity losses to this, consequently a further 100M would be added to their contribution. To mitigate this, they would look to the lenders to take a haircut, The lenders will be resist this. Assuming it is refinanced on the same basis as now, they would still need to come up with another $220 to finish the project. This would give them 100% of the P&L.
However, if they were to have a 3:1 rights issue at 30p, it would be oversubscribed. They would only have to put $100M and maintain their current equity share.
My point is that unless the banks are prepared to settle at a significant discount to their current loan value, there is little value to forcing the administration route. Glencore already has the offtake, so that doesn’t enter into the equation. my own view is that this stock is worth holding, at 10P its definitely a buy
My mum died in 2010…be very careful cont
Has Jeremy picked up the red phone directly connected to Billy.
Billy get your medicine please and stay off your mum and dad's SIPP for god's sake.
This one in particular I love
From Billy the pump
Awaiting Jeremy M to respond to my message….I will keep you fully appraised. I know he’s busy securing multiples deals…but he will provide a response confirming non market sensitive details to my questions…game on…
Tell u what Joseph Goebbels propaganda chief would have been jealous. Keep it up desperado
Billy you make me chuckle so much - You have an armoury of pumper's quotes ready. Now Elon is interested! Ha ha. Yes he was drinking pints down Jeremy's local the other day
Yes - I meant Ver… A2 is doubling prod at Aug… I beg your pardon!
A2 is NOT Vermelho! It’s the second line of production at Araguaia!
Yes that’s what I said! A2