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Excellent points all round tbf. One thing for certain is that interesting times lie ahead
Net cash increased by $7.5m in q2, which includes the final debt repayment & gold inventory. If that happens again in q3 that'd see the company at $20m net cash. Maybe the pog will average higher or lower, maybe the aisc will come out higher or lower(you'd hope lower), maybe ounces produced/sold will come out higher or lower(again you'd hope higher, given recently maintained production targets). As far as the company not wanting to use all of this cash on Kouroussa though, with a mind to current operational costs/risks - it's not like they will have to spend it all on day 1, the development will be progressed over time, during which they will likely have other income. Rather just be able to show they have it on day 1.
With the build costs at K estimated at c$90m-$100m(meaning at a 70/30 split requiring $27m-$30m equity needed) I'd have thought by the end of q3(c2 months time), they'd arguably be $7-10m short.. Assuming pog stays where it is and there are no major operational issues in mali. That being the case, presumably the actual project is worth $10m undeveloped.. maybe that can count as part of the equity, without using Yanfolila as collateral. Or maybe as some have suggested a share issue is another option to bridge this gap.
In the end equity/debt, discounts+dilution/interest payments+debt burdens, to some degree it's all swings and roundabouts.. if the project is compelling enough.. I'm not sure it'll end up mattering a huge amount.
Hum is now not paying any debt back now so by the end of Q3 we should be closer $25m in the bank and gold inventory as we paid $4.7m in the last quarter to finish it off. If we are going to hit our yearly production targets and gold stays around here we could even be closer to $30m!
I'm not questioning the straightness of your bat, I previously found your contributions interesting. Though I'm not sure all that much has changed in the good/bad aspects of this company in 6 months. I agree dan has made quite a few mistakes, I see him as someone trying to catch balls.. but comedically fumbling each catch in turn. That said, this quarter update he got done what he had implied.. hopefully with a bit more consistency in that regards, there will be more trust. Operations guy appointment is a good move.
Between around 6:40 and 6:55
https://youtu.be/w_eaMCy0vbw
Lol tones, you've managed to agree with me, without realising.
Lets be conservative and say 14 million then as we're a month down the line from Q2. Even if Coris insisted on a 50% of loan capital fund a 100 million loan, then the capital required is already 28% covered by cash in the bank as of now and worst case scenario that grows by 3 million a month.... Ie next month the imaginary required capital would then be 34% covered by cash at hand and by q3 end 40% covered by cash at hand. Then you have the book value of assets which can be sold such as the mine, gold reserves, plant machinery, vehicles, etc etc
Once you take in the latter items into account, HUM can cover any capital requirements that Coris may have for a 100 million loan, in multiples.
Just to remind people of this Vox update on the 26th April. From about 6:30 into the video. Dan says debt financing with internal cash flow from Yanfolila. Also at the start of the video Dan is asked what will Hummingbird do with all the cash it is generating when it is debt free. He says clearly it will be used to develop other projects.
https://www.youtube.com/watch?v=w_eaMCy0vbw
Tones, you argue quite correctly that a 100% debt funding is unlikely. You also quite correctly argue that there is unlikely to be enough cash to build on 100% cash. But you then leap monumentally to conclude an equity raise? This conclusion is in no way the most likely one. Not even remotely. Management has said that Kouroussa will be funded part in cash and part in debt. There is more than enough evidence to suggest that this is not only plausible, but blindingly obvious.
The 'tone' of you posts seems to have changed a bit from 6 months ago tones(when you were holding), and that's fair enough I guess. People's opinions/perspectives change.
Feb 21 @ 24p
"It's about timing your purchases when the value of the company is rock bottom knowing it will come good when the fundamentals are strong. In my view, HUM fits that bill and these prices are rock bottom. Of course, there's no guarantee that it will only rise from here and cannot fall further, but I like my RvR at current levels and in my mind, it is skewed heavily on the reward side. Time will tell, but at an EV/EBITDA of 1.6, and FY21 EBITDA of $60-70m with mcap of £85m, I'm a buyer."
As regards development funding, it's all just speculation at the moment. I think it'd be better to do it without a placing(for shareholders), but maybe those who think this won't be possible are right.
But yes, I agree that the money put into pasofino(rather than here) was pretty sucky.
I've stopped engaging the 'capital raise' theorists. I dont give it any more thought than I do travelling to Mars. Its not that it's completely mathematically impossible, but just highly unlikely. I'll be generous and give it a 1% chance.
I'm too embarrassed to say how many shares I have riding on that confidence :D Let's just say I've been buying the dips. All of them.
Not sure why one might think they'd be an equity requirement when current FCF would outstrip any combination of funding, whether it be part cash or part debt. They'd be absolutely zero point in diluting existing shareholders by circa 30-40% when liquid capital is already sitting on the balance sheet and growing.
Kourroussa build will be a 100% debt and without any capital raising. I've got 65k shares on it being so.
A lot has changed in the positive for HUM. Another month has passed now so they'll have $16.5million by the end of the month and improving $4m (minimum) every calendar month going forward. I just cannot see 1. why Coris would withdraw it 2. why HUM could not get similar funding elsewhere.
My point is it's the intention of HUM to fund Kourroussa this way which some were trying to suggest it was not. Cassidy probably made an agreement on this as part of the sale otherwise they would be shooting themselves in the foot.
'The intention of funding is there black and white.'
That 'intention' is qualified by 'subject to due diligence and credit committee approval' and is from an RNS dated 8/6/2020. A lot can change in 13 months.