RE: Trading update25 Apr 2024 21:52
HarChris - okay I'll break it down for you as you are still not understanding the current outlook..
Yanfolila guidance is 80-90koz this year of which they poured 17koz in Q1. Let's assume a middle of the road outcome of 85koz weighted towards the second half of the year with 20koz in Q2 and 48koz in H2.
Average group sales price including sizeable number of hedged ounces of $2,030/oz vs Yanfolila AISC of $1,616/oz provides margin of $414/oz. For the remainder of the year Hummingbird are due to benefit from increased margins as a result of a forecasted fall in AISC to around $1,470/oz (for a FY average of $1,500/oz at the mine) while benefitting from
1) the recent surge in the gold price and
2) the agreement to improve the hedging arrangements.
The average gold price received is set to be higher in Q2 and will likely remain high in the second half given expectation will be, a conservative figure closer to $2,100 /oz this quarter and approaching $2,200/oz in the second half if the price of gold remains around the 60 day average ($2,230/oz).
The above figures suggest quarterly earnings are set to rise significantly:
Q1: 17koz at $2,030/oz with AISC of $1,616 (margin $414/oz) = $7m
* Q2: 20koz at $2,100/oz with AISC of $1,520 (margin $580/oz) = $11.5m
* Q3: 23koz at $2,200/oz with AISC of $1,450 (margin $750/oz) = $17.2m
* Q4: 25koz at $2,200/oz with AISC of $1,430 (margin $770/oz) = $19.2m
First three months $7 million earnings vs next 9 months roughly $48 million. There is scope for improved performance and meeting top end of guidance which would improve AISC forecasts and the unknown price effects. Most of us are here because we believe in the intrinsic value gold offers and see the price going higher as global growth wains, rates ease into 2025 and geo-political tensions remain heightened.
It is too early to draw conclusions on Kouroussa but even 50koz in 2024 would I suspect be enough to cover the vast majority of the $77m originally earmarked for repayment with the remainder deferred with the approval of Coris bank. The lender appears to be accommodating wouldn't you say? They have funded Hummingbird's operations for years, helping the company through a number of difficult periods in it's history.
45koz production over the next 9 months would still generate approximately $25 million in earnings and that is assuming weaker margins owing to reduced output and increased third party contractor expenses.
Management have already successfully renegotiated the hedging arrangements with our buyer during the quarter and arranged for other contractors to stand in for Corica. These are steps towards rectifying the current predicament, do you not think the bank will be accommodating? It appears you are discounting any possibility of Coris bank agreeing to deferring a portion of the 2024 debt repayments. I don't see why Coris would not want to alleviate the situation and provide an adequate financing solution.