Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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ODL, surely with gold at over $2000 we could expect more cash than that! The more I look at these results (drill results aside) the more sceptical I am becoming. Shame!
Punter64 - yes I believe Betts gold inc. has something to do with it. Conflict of interests comes to mind.
It's so frustrating - I sold at 34p here for the very reason that I suspected the Q2 update would be a crock of turd. But the gold price has bouyed it anyway. So frustrating...the only reason I sold, and missed out on an extra 20%, was because of Betts. Otherwise, I'd have stayed happily invested in HUM and would continue to hold now. Gold at $2000, this should be going bananas.
@miagi365: no point pretending that it’s all gone to plan. Additional costs have been incurred mainly due to the pit wall and terrible 2018 wet season. However, it’s all reconciled in the accounts and clear - have you been through them in detail? It’s time well spent. The company has paid down debt and creditors consistently since then and appears on the verge of reaping the benefits of that and the higher gold price. DYOR
No wonder we are nowhere near a dividend, cash just seems to be evaporating into a black hole!!
Or is it to help Betts gold inc. Clarity rather than obfuscation for a change would be nice.
The achieved pricing is a matter of when sales were made in the period. Given the build up of gold inventory in Q1 (11k oz) over a third of gold sales likely happened in the first week or two of Q2 when the gold price was at its lowest in the period. That will have affected the average. Moreover it’s gold dore sales, which are at a discount to spot.
OtL - but this is not a one-off. It has been going on since first gold pour...
And perhaps that is why Bert M left - did he have too much integrity to stay I wonder? I've contacted Bert a couple of times in the past, and he always came across as a down-to-earth and decent bloke.
No, I completely disagree with that. The working capital position of the business was very clear in the annual report. At some point those liabilities need to be paid. The frustration is that there has been no guidance when that should be expected and what normalised working capital looks like. However, if they have been paid, then it’s not a recurring outflow and we will therefore expect much higher cash conversion in H2. This is not a big deal.
yes, the lack of clarity is a concern. Come back Bert Munro.
Honestly, I'm at a loss, truly. If this company was operating well, they would have cleared $15m free cash flow in Q2. Instead, what do we see? After accounting for the reduction in cash and gold inventory, they barely made $2m. One assumes they paid down "trade payables" - that seems like a bottomless pit which they've been paying down for years. It's nuts. This should be a cash cow - and should have been for at least a year now, and yet excuse after excuse after excuse. And what's with the realised sale price of $1660 odd? Smells of rotten fish - it's the same as what Shanta got and they were part-hedged at $1250!
OtL, I appreciate what you are saying, but if I drill down to the absolute basics what do we see? We see a company that is making hardly any free cash flow - it is barely profitable. And it's not a one-off. It's a recurring theme. If they are consistently bleeding cash for this that and the other reason, then it must be baked into the AISC - otherwise it is creative accounting.
@Miagi365: on Q2 Cashflow usage – it is not clear where c.$10-15m of Q2 cashflow generation has been used, post overheads (c.$1.5m), drilling ($3-4m?) and interest cost (c.$700k) during the Q2 period. My expectation is that we have seen another big bite into the trade payables / accruals / other net payables number which were c.$36m at 31 December 2020. That is not a bad thing in itself as it is reducing the ‘non-financial’ liabilities, but as has been said rightly HUM could have been more clear so it did not raise unnecessary questions. Normally the CFO would give helpful guidance on working capital trends, but we are somewhat lacking in this regard. The interims should make it all more clear; they were helpful last year for those prepared to invest time in reading the financial statements. Reading the announcement, some additional investment in stocks, reagents and other materials have also been made – won’t be huge but could account for some of the cash as well as the airstrip construction ($1-2m combined?). Overall these are reasonable explanations and will leave the business stronger as it looks to deliver $60m over the next 6 months (1 of which is already done). All the best.
Must admit that although drill results were great I am struggling a bit to understand where all the cash has gone
If this is what is happening here, where is all of that cash going? It's a really straight-forward question. Can anybody provide a sensible answer that holds water?