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Discount rate should be north of 12%. Their cost of debt is 9%, so equity on top of that. Irony is that as they pay off the debt, the discount rate should go up.
Whilst royalty is included in AISC, I dont think they will include corporate tax in that figure as its subject to interest, depreciation etc. Not really a factor on the costs of mine. Would be very surprise if they did include it in that number.
I’m using 10% pa discount rate, which I think is already quite high. It’s instructive to look forward two or three years, when the unwinding of the discount rate will automatically see the NPV grow nicely let alone any LOM extension, Dugbe/CORA action etc.
HUM use WGC AISC defintion and royalties are always included in AISC. Anything that is a direct tax on production (revenue), should always be included in AISC, which of course a royalty is.
Corp/Company Income Tax is outside AISC
Now if they've changed their defintion, we'll find out in next Accounts due soon but dont believe they would have on this particular item. The way they sell gold dore may require slight modification/note in the accounts.
HUM need to recover the Capex costs before any split happens. In any event Mali Governments % is 10% until they pay the 10m owed to HUM for the other remaining 10%. No doubt will be paid by offsetting corp taxes, but therefore no need to double dip in FCF calcs (and royalties incl in AISC).
Fair comment on interest on loans which is outside of AISC, however we're cutting through the gross debt fast and interest payments will be going down. Probably be 3m in interest or thereabouts in 2020, then negligible in 2021 when the loan is near paid off.
I very much doubt the rolling cost of an expansionary exploration programme is $10m each and every year and doubt the G&A costs not linked to Yanfolila are £5m. G&A costs to support Yanfolila are covered under AISC
Thanks chaps for breaking my simple calcs down. I am a simpleton with regards to investments, and always appreciate comments that increase my knowledge.
Agree - I have FCF more like $60m after all those items. I think Mali Gov's 20% share is from post-tax income but stand to be corrected.
First take out 20% of FCF for the Mali gov shareholder, so HIM gets 80%.
The OP company has exploration etc, say that's $10m per year.
Then the top co has admin expense, at £5m. Then there is interest payments, tax etc.
FCF is not a simple calc. It is nowhere near $100m.
What dividends?
Interesting price action. Maybe there will be an initial sell off like 2007-2008. I am adding at this level, just seems silly at 1650 POG. Even if the SP doesn't rise I'll take the dividends as reward at this level, won't be too long.
Looks like this could bounce now - 25/25.5. Totally oversold
Correct = circa £80m
130,000 OZ at $1640 with AISC at $840 = $104,000,000
When you consider that the current Mcap of £90m is just above the £80m free cash flow HUM could make this year at the current POG the current sp is ridiculously cheap. Perhaps one of the institutions has been selling the rise? I'm surprised that the sp has fallen back so far, but AIM never ceases to confound!
Only people making money here is AIM.
usual bs on the gold market - dow down another 800 points and POG gets slam dunked again with massive sell off of futures!! Couldn't make it up.
good luck with that! Far more likey to be 30p+
At the way the markets are falling it wouldn't surprise me to see this drop below 20p again. Gl all
When gold was $1200 and we had one mill not producing gold the SP was 39p.
I know that I am coming home but it does not explain the drop.