Ann: Merger Presentation, page-391

News Fresh in this Week: A

Another cents in the dollar takeover of an independent, start-up, global tier1 mine arranged this week.

Look how easy.....

Horizonte is an LSE registered company that has put in years diligently planning, gaining approvals, raising finance and constructing a mine of one of the world's most important new Nickel-Cobalt resources in Brazil.

I'm sure most here know, those are essential "green-tech" battery minerals. Horizonte would allow Tesla (as an example) to reliably eliminate child / slave-labour produced, Congo-sourced, Cobalt entirely from it's supply chain.

The original investor base was retail, of course - LTSH's. As other projects fell by the wayside, it seems they had made a really good choice, by backing the highest quality resource.

Meanwhile, as viability was proven, institutions (especially one global major) built up holdings, and a lot of other leverage over the BOD .

So, last week, HZM reconfirms their last reporting, that first line is soon ready for production, and they still have c.$50 million in the bank to complete works, and more.

All excellent.

Yes, shares were trading at half valuation, and slowly being walked down this past year. Normal enough, given some usual signatures of MM repression - all the 1 share trades, etc.

But, as is common, it could reasonably be expected that receipt of mine income would trigger an upwards share rerate, and that the bots would switch to pumping that for pay day.

Then oh-oh, suddenly..... at the start of this week the BOD, out of the blue, puts out a rather opaque, undetailed ANN.

The ANN declares new works necessary with a major cost overrun. No details, breakdowns or explanation.

So, at least 6 months of delay (vague) and a big CR.

Out of the blue? Yet, realistically, these issues must have been known and in the planning for months, concealed by the BOD including the major global investor's reps.

The ANN triggers an initial SP drop. And the fishy smell starts to permeate. So the SP ultimately drops 50% in that first day. The soon to turn cash positive NPV is now worth 4x MC.

Then the realisation that the debt-equity loan finance covenants are breached, so without renegotiation debt may be recalled, putting HZM straight into receivership.

The crashing MC sets up a vicious cycle, making refinancing more and more impossibly dilutive.

Day two of trading and this vaguely worded ANN has sent the SP down to 90% of it's (already supressed) week opening price. The mines NPV is now x20 the NPV.

Throughout this the Insto's haven't sold. The call is for the global major to step in as a "white knight" (with pals all on board) in exchange for 100% control.

Will the original retail investors even get a few cents in the dollar, from what will soon be one's of the world's tier 1 producing mines?

Perhaps, once the enterprise is taken private, the (completely undetailed) "new works" won't be quite then problem they seem today. The beauty is, we will never know.....

What we di know is that in 2 days of trading, 90% was wiped of the MC of a major new tier 1 mine on the cusp of production. That the NPV is currently x20 the MC, and the chummy gang of debt providers are in total control.

We can observe a point at which the BOD changed their communication style, reported very little for a while, before putting out a very murky "surprise" ANN that couldn't have been better calculated to put this premier asset straight into the open arms of the major finance backer.

Easy peasey really, innit?

Something to learn here?

From the real world - not just dinner-party bimbo jabberings.