Europa are delighted to link with I3E and look forward to early September Serenity appraisal spud. Watch the full video here.
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@IWTO - as likely as not the deal is already done - announcing it is something else of course - plenty of time left to bore people out down here ...
Some good posts today and good discussion.
Really hope that they deliver the RNS tomorrow and do not give Mr Market reason to say they missed the stated date.
Agree, my favoured way forward is to sell Dugbe. Three months DD and the sale proceeds will be available late-Q4. Even if production hits guidance for H2 at Yan it won’t provide a huge amount of cash - $15m? - and all the while Koroussa will be eating up capital. Better to regroup, get Yan sorted and in six months time things should be looking rosier. Easier said than done, though - I bet you’d have to wrench Dugbe from Dan’s cold, dead hands.
Don't be stupid... If H1 is expected to be cash flow neutral then that means Q2 has to make up for what Q1 lost.
So this is looking a near cert for a placing :-(
I'm a whisker away from getting my 10.5p order and now I don't know whether to just cancel it and go for my original 10p that I mentioned months ago.
I think I'll halve the order and wait for maybe 9p later.
There's plenty of time for this to drop more until good news is incoming, is my thinking.
All in all, it sounds like Dugbe should be very much 'on the market' and we should be concentrating at arriving solvent to a first pour at Kouroussa.
Correction H1 cash flow neutral
One should consider the implications of what Q1 cash flow neutral means.
Remember what I have said many times.... AISC and FCF are not the same
OK I said I'd cover what I thought was now the main risk - liquidity. Again this is my interpretation on what was discussed not the gospel truth.
It's pretty clear that the plan when $100m was borrowed that although the majority of the cost of Kouroussa would be met by the loan Yani was expected to at least break even in cash terms and hopefully contribute to the cash spend.
Clearly things have not turned out that way. First the bad news:
- Yani has underperformed and has been a cash drain resulting in a likely shortfall of cash to complete Kouroussa
- in case anybody hasn't noticed there is world wide inflation and thus budgets are under strain and are likely to overshoot
- the VAT issue was not budgeted for and it thus a negative
And now some better news:
- Dan confirmed that the Kour project is still wthin budget. All the materials are fixed price but some other costs e.g. travel consummables will not be. Despite this is believes it is still within budget. He professed surprise that they have not yet received unexpected costs due to inflation but they are on red alert for this
- the $100m loan is covenant light and thus the bank is unlikely to call the loan in except in the case of outright default
- $20m of overdraft facilities are available and unencumbered
- there is room to flex working capital as it is not particularly stretched right now
- there is the possibility of going back and requesting another $30m. Whilst not guaranteed Coris bank are keen to diversify away from BF and amazingly Mali is seen as lower risk
So all in all it's squeaky bum time. If we reach the promised land then Anthony was laying heavy hints the grades at Kour are even better than officially stated and having learned the hard lessons of mining at Yani, know how will kick in and it will be a much slicker operation at Kour.
Maybe we'll get to see that day or maybe not.
Basically it's sh*t or bust. No middle ground
That's all I have to say on the matter for the moment...
Cheers for your efforts today BB2 very much appreciated, especially as you had more important things to worry about... Hope you get to sort your percy shenanigans out without too much upheaval.
Yeah it's pretty common for countries who face sanctions to start withholding VAT rebates. In my experience you may as well write the rebates off when this happens as the next incumbents really don't like inheriting liabilities. Could be the reason why Goita is finally processing legislation for a civilian handover. Probably running out of cash and putins promises likely wearing a little thin.
This was the sole reason why Glencore abandoned it's operations in Zambia post 2008. They're still owed over a quarter of billion in vat rebates if memory serves me correctly.
That was pretty much my understanding on the VAT issue too. The only addition to make is that this I believe they said that reclaiming the VAT is built into the budget and required alongside Yan coming good in order to completely fund Karoussa. It is pretty much out of the companies control.
Yes. that is correct. Have a look at my latest post. Is this fairly common? Talking afterwards it seems HUM were not expecting a full amount back but certainly more than they are now likely to receive. A risk of investing in Africa, I guess.
My notes are a bit vague on this but from what I understand HUM can in effect claim VAT back on VAT paid. I understand that this is generally a it hit and miss and they do not "account" on receiving all of it back but rather a part of it. Since the ECOWAS sanctions on Mali the Mali Govt have basically said no refunds will be paid until sanctions lifted. HUM did receive one claim back (or offset against other tax) and a one-off but have now been told no more while sanctions remain in place. This is running at approx $ (I think) 1.5M to 2m per month and I think was stated as approx $18m currently. Obviously this is funds (at least some of it) that HUM were expecting to receive back (or offset) from Gov't.
The fact that these funds are not being received along with Q1 poor production equating to a loss on the quarter has meant less available cash than expected. Obviously this money will be owed to HUM in the accounts but when (and how much) it will be received is unknown.
Please note that is my understanding of what was said but my notes are a bit vague. Please do your own research !!!!! Perhaps someone can confirm this and better still give a more detailed explanation.
Fair assumptions indeed
Seconded Guvvi's comment.
If you get time at some point BB2 would you mind updating what the VAT issue is... Is it a case that Mali isn't processing rebates at the moment or something similar?
I dread to ask but.... VAT issue?
Good to meet you yesterday, too.
Thank you for your thoughts and workings.
Let's hope we get a positive R&R update tomorrow.
For what it's worth my take on what Q2 report might look is something like the following.
The FD said that they budgeted for the first half to be cash neutral with all the cash flows coming from the second half. He also said that Q1 was lower than expected. Implications are that they were expecting Q1 to be loss making (but not as much as it was) and Q2 to be cash producing and cancelling the loss. Q1 they produced, 15.5kOz with an ASIC of $2235. This implies a cost base of $35M roughly. They were down on ore processed 300,000 t compared to normal somewhere around 365,000t clearly due to the replacement bearing on the mill. Assuming that they have an increased throughput to normal figures and the same grade then we should see around 15.5 koz x 1.21 = 18.8 koz. With a cost base of $35M this would equate to an ASIC of $1860. My personal feeling is that this is the lower bound of what to expect in Q2.
The team were confident of meeting the guidance. So given that 87k is the minimum and I think realistic numbers for Q3 and Q4 are around the 24k and 25k oz levels then that leaves a number for Q2 of 22.5 koz, this would give an ASIC of around $1550. My feeling that this is an upper bound for Q2.
With the increased availability of the excavators in Q2 and it has been pretty much the whole of Q2 (since 8-10 weeks ago) then I would be hopeful of an increase in grade by virtue of the fact that they have more choice in what to process. AK said that they used to get a lower grade in the mill compared to modelling but that they are seeing a more predictable grade. He didn't confirm whether it was actually more or less than previous but that's not surprising given that would be market sensitive information. Any way a 10% increase in grade would take my lower bound expectations to 20.7koz at an ASIC of $1690.
So my hope for Q2 are for ozs greater than 20k and with an ASIC less than $1750.
I'm starting to feel firm in my long-held 2022 H2 boom for Gold shout I must admit - flash crashes aside but boy am I eager for a flash crash to happen in all things Gold-related in the weeks ahead ...
Yes, I thought that was the case prior to yesterday.
Hopefully, FCF for Q3/4 (not sure we will see much if any in Q2) will "replace" monies used from loan to support Yan. The VAT situation following sanctions is a concern though).
AK certainly talked VERY well so I do currently trust him to deliver. However, in my opinion, there is no (or very little) room for any more unforeseen setbacks (whether bad luck or poor management). It is now time to deliver.
One other point. Listening to AK, it did make me think that once we get Kou into production (and we hopefully learn from mistakes made at Yan) then HUM could be a real cash machine. Just a question of how much debt (loans (existing and any possible additional) and overdraft plus outstanding creditors) we will have when to get there....
I see that Bonker.... US technical recession a certainty now imo
US GDP Q1 FINAL -1.6% BTW ...
From memory they have already reduced the drilling budget this year to $2m.
Kor funds being used for Yani is no surprise really given the lead time and invoice factoring for Kor capex with the funds being raised at group level.
Given that exploration is budgeted for over 10 million a year plus circa 5 million held in gold. I don't really see an issue re liquidity concerns, so long as we start to see incremental increases in yan production over Q1 Drilling campaigns can always be suspended and gold can be sold.
Also, to add to this and as I've stated before AISC and FCF are not the same.