The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen 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.
Hi I Want That One!
Looking at that RNS comment again, it makes me wonder if - in addition to going after extra high grade material now whilst gold prices are high - they are not thinking of mining extra low-grade material as well.
There is a large amount of oxide ore around 1g/t to 1.5g/t at Yanfolila. At $1,250 gold this material was probably classified as strip - i.e. not considered worth processing. But at $1,750 gold it may well be worth processing.
This, if you like, might amount to an increase in life of mine without actually doing any extra drilling!
The next update should prove interesting.
Fair comment, TBTT, though I've just re-read the comment in the RNS and it does imply to me that the bulk of the excess cost is Covid-related: "We continue to experience cost pressures related to COVID-19; particularly employment costs and logistics costs coupled with, potential, extra material movement later in the year as we look to take advantage of higher gold prices and re-sequence our mine plan to ensure the long term profitability of the mine. These factors may contribute to as much as an additional US$100 per ounce in our 2020 ASIC....."
Truth be known , there are a few Shares limping requiring crutches.
If we can get over 39p , this could be oxygen to portfolios.
Feeling more optimistic now. Hope it is not short lived. Once we get to 36p I think I am in profit then and HUM can carry my other lame investments.
We learnt from past experiences.
We now have two bridges and stockpile ore.
Hummingbird have Rainey season sorted.
Nice to see thirties, looking forwards to the roaring forties.
Hi I Want That one!
As regards the extra $100 on AISC, it's not just the extra costs of the dreaded lergy.
The last RNS also said that they would be speeding up mining (i.e. incurring extra costs) in order to stockpile ore and to process higher grade ore whilst the gold price was high. This should fed through into higher production and higher revenue in Q3.
Since I've criticised management a fair amount in my time, it's only fair to add that (IMO) is well thought out.
HUIM said the AISC would increase by up to $100/oz due to Covid - so well over $900, surely? I'm not quite sure why the increase is so high, especially considering the cost of diesel will have gone the other way and must be a fairly significant item. Still, great to be back in the 30's.
At the year end there were $ 93.5m of current liabilities of which $29.8m related to the bank debt. The current assets were $38.2m, so there was a shortfall of assets of around $55m to meet the expected liabilities known to be due in the following 12 months.This meant the suppliers were owed around $24m at the year end. The deficit should be comfortably met by the free cash currently being generated from the operations, but as to what the cash position of the company is at any point of time depends on the dates of payments for the gold against the dates of payment to suppliers. The net debt position shown in presentations only relates to the cash and gold held position compared with the outstanding bank debt. If the gold price is maintained it is quite possible that current assets at the end of 2020 will exceed current liabilities so then the company will genuinely be net cash positive when supplier debts are taken into account as well.
Thanks all makes a bit more sense now.
@Northman1: trade payables are in the AISC to the extent that the cost of mining is in it, but there are timing differences on when items and suppliers are paid. So looking forward the cash impact of previous period creditor build up won’t be in ASIC but it still comes out of cash flow. As at December there c.$35m of payables / accruals that need to be paid, though of course as a going concern what they pay off will be replaced with new creditors month-by-month, given normalised working capital. So question is whether the $35m is normalised or if we’ll see much net cash outflow. I suspect there will be a bit, but hopefully not enough to mean we’re not actually net zero debt or very close to it as at 30 June.
Trade payables are a balance sheet item. AISC is primarily a measure of P&L costs. The two should not be confused. The only impact on cash for the period regarding trade payables will be the movement i.e. whether it is higher or lower at the end of the period than it was at the start of the period.
Cheers, Ash
Straight up.... Hummingbird is currently net cash flow positive and debt free. That's a fact
Jammer
I keep hearing about these trade payables. Can you elaborate on what these are and why they get excluded from the ASIC and why they don't seem to get report in the updates. I find it quite annoying that companies can't be straight up about such things.
As a small aside, I think people are getting carried away with the significance of the airstrip. This will be for internal flights only, so will have no bearing on being able to ship the gold abroad.
A little too optimistic Northman. They have some significant supplier debts as well, and we don’t know when the trade payables become due and impact the cash position.
So if you have $800 @ current gold price, if we see $2000 for gold we are topping $1000 clear.
Think clearing $1000 an ounce this last quarter is probably a bit optimistic. last quarter ASIC was 839 (be nice if they got this down next quarter) but they have warning for extra $100 due to Covid, I'm assuming that is on top of the last quarter ASIC.
That being said should still be in region of $800 an ounce so 24 million for the quarter approx.
End Q1 net debt was 34m debt less 17m in gold and 8 in cash so 9 million net debt, so this quarter we should be net debt free and a very healthy balance above that unless there's been any ****up's. Aslo of course hopefully drill results sometime soon
I'm assuming the airfield was completed so hopefully been shipping the gold OK. Anyway all to hold for.
Q2 Could well be accompanied with $1800 gold.
Oil down , virus costs up, still heading towards clearing $1000 / ounce.
Hummingbird flying north.
Clearly some will be held as gold inventory when Q2 comes out, hopefully later this month. Not being too conservative, debt should be down to $29m, gold retained inventory of say $18m and balancing cash held of $23m is one scenario.
So net cash positive of $12m. From $9m negative at end of Q1
A $21m net positive change in one quarter