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Just how far do you think it is between Dugbe and the mine?
How would this increase LOM?
Maybe that is why we are building a landing strip at the mine to transport ore.
@retiredbanker: a great deal of historic value sunk on Dugbe on the balance sheet, but zero value in the share price. Given that, spending money from Yanfolila (value positive) into a project that is being valued at zero will be valued destructive irrespective of the sunk cost. This way not only is exploration and DFS funded, but the management / admin cost of Dugbe is too. The alternatives are to continue to sit on the project risking the Government of Liberia taking it off us and draining further cash, or sell outright. I suspect the sale would be at a poor value given no DFS completed among other issues, and we would retain no upside potential thereby requiring a much bigger write off today. I will hold fill judgement for when ARX get their funding in place over the next few months, but subject to that I will be pleased that the project can be advanced.
I'm a long term holder who still regards HUM as having the potential to re-test 40p in the near term.
... but in my opinion this is not a positive RNS and the insider element is quite concerning.
Firstly we have an intangible asset (Dugbe) valued at something around $60-70m and we've just sold 49% of that for $10m ... seems we will have to take a huge write-down on that asset in 2020 accounts.
Secondly, it is clear that whilst Mali is now producing gold it has a short life of mine and we need an alternate source for the medium term 3-5yrs onwards ... which Dugbe might have provided.
Now these IRRs and NPV projections on holes in the ground are always sketchy to say the least, but that is what AIM is all about.
So why couldn't a mine with a supposed 10yr NPV of $344m attract more than $20mm valuation as stand alone venture - why not try to raise equity directly ?
Third, and this is what really makes me nervous, is that our Directors have put so much skin into ARX at the exclusion of HUM existing shareholders ... this doesn't pass my 'smell test' at all.
Whilst I've been locking in some profits on various other gold miners in my SIPP, I've largely left HUM with an overweight position looking to take profits in the 35-40p range ... now I'm going to be looking to take profits in the 30-35p range, maybe even lower !
I'm an owner of the company as a SH - I can take any opinion I like. Please dont provide advice on what any investor should or shouldnt do - you have no right or authority to say that to anyone - no one does. If you're a Dan fanboy great - but thats not how a market works. You should look it up and educate yourself.
Dropinmonkey. Just sell up and move on. It's the same broken record again and again.
2 of the 3 directors investing into ARX are linked to Capital Group, and Mark Denning. Ernie Nutter is ex-Capital and only on the board through their investment back in 2016. Dan is Mark Denning's son in law.
The BoD has Dan's father. That leaves only 3 independent directors.
Strand Hanson have apparently signed off on related party - they are a Nomad and not really experts in valuation. Strand Hanson also of Lekoil fame, who recently signed off on a transaction for $184m loan that turned out to be a fraud.
How this is seen as a normal signed off transaction is hysterical - one needs a great deal more transaparency.
The problem is Dan has history with these sort of things - Capital Group as a major investor - related party, (see BBC investigation), Bunker Hill, ACS, etc etc. If the SP was at 60p a share, likely no one would care - but Dan's action are the reason the SP has underperformed. You cant sugar coat this.
AW2124 -Three things to consider if you decide to ask the FCA to investigate.
i) You should consider/make sure that Hum won't use it's money defending Betts before doing it
ii) If you think it is beneficial to HUM share holders for a FCA investigation to be carried out you could ask for further signatures from PI boards and from large IIs
iii) Please post Hum's reply to your original letter
Can we be clear: the three HUM directors have a stake of 39% in ARX, but that is before the equity raise required to fund the $10m, so I assume they have collectively stumped up $2m for the exclusivity deposit. So $780k, on average $260k each / £200k. The remaining $10m (maybe $8m if the deposit is in the $10m) will dilute them to c.8% of ARX and therefore a see-through 3-4% of Dugbe. We’re really not talking a ridiculous play to the disadvantage of HUM, especially when it is patently clear that HUM shareholders do not want to fund and take the risk on the next steps on Dugbe. As they also say in the announcement other investors had been working and had made proposals which were not as attractive and I can imagine given the relative novelty of this mine in Liberia, the pricing of a 100% sale would have been penal to such an extent that the same people moaning now, would have been spitting. Progress the project at now risk for 2 years and then see if it’s sellable or developable at that point.
GoldenBull, thank you. A beacon of sanity.
I did find Dropinmonkey's posts most counterproductive. There really is no need for such narcissistic rants and Trumpian name calling. We are better than than.
Quite frankly I give much credence to reasoned and properly researched arguments an have no belief/trust in those that revel in name calling.
"If he devotes his working life to the company he deserves to get rewarded". - In real capitalism, the shareholders should be rewarded, he should be rewarded based on a proper and fair remuneration policy voted on by the shareholders.
This 39% stake is an example of managerial capitalism, where the profits accrue to the mangers rather than the owners of capital. The government need to legislate to allow shareholders to have binding votes on remuneration, to develop a cheap mandated way of allowing PIs holding shares through platforms to be able to vote and to encourage IIs to challenge these deals. I am kinda shocked this type of RNS can happen. Then again it is AIM. Also It is true that 50% of something is less than 100% of nothing. But if the project is improved so much by $12 mil dollars, why not do it ourselves?
One more thing. Anybody realise on of the board of ARX there is someone who used to be a director for Goldfields, the company who owned Yanfolila before HUM. The Bunker Hill director was also linked in a weird way to Hum or goldfields [I think I remember].
Good to know droplnmonkey, I just wondered as your record shows that you do not post on other boards. Looking back through your posts, forgive me for thinking you are a little negative . Why would you want to hold shares, are you in some way masochistic?
In answer to your question. I am trustee of a private pension fund which holds about £60000 plus I own a similar amount personally. We hold Cora, Barrick Gold & Fresnillo and consider Hummingbird a quality investment producing lots of cash. I am looking forwards to the Q2 production figures and how we intend to use the cash.
I have to agree that Dan Betts could be better on communications but he has delivered a cash cow mine under very difficult circumstances. I can understand that our patience is being tested but if it takes a bit longer , so be it.
If he devotes his working life to a company, he deserves to get rewarded, something IIs will appreciate. If all you pay is peanuts, all you get is monkeys.
Lots of truth in old sayings because like gold they stand the test of time.
Try and be a bit more positive or pack up investing before you get ulcers.
Pretty interesting... So we just had a 10%+ drop in MC because of an RNS about an asset that had no bearing on the MC to begin with. Jealous of whoever is buying in right now as personally see it as a great op'
I think this is more that stochastics & MACD had started to turn negative over this past week with the cooling off in gold price. Combined with some people viewing this as an opportunity to sell and things spiralled a bit beyond
Recon that we'll see a bit of consolidation action happening in the next day or so, and then subject to gold, resume the attack on 30p... Shame as just the slightest of well timed positive news could of taken this over and we'd of been able to start clawing back those prices from early 2018!
DIM
i am and also cora , sml and barrick gold. Having a cracking day :(
@goldbull - are you a SH?
@goldbull - yes I have shares in HUM
The RNS tells you about ARX. Betts et al have 39% of the private BVI company. Dattels is a wheeler dealer that gets involved in many dubious transactions - POL - GCM etc. I just don't trust Dan now. I will probably look to exit HUM when / if the SP recovers a little.
Olddrongo, what makes you think Betts is behind ARX and who are the Dattels? Just passing as saw the drop, so apologies if I missed something obvious. On a side note, the drill results don't look great to me. Deep and short intersections, that said, it depends where they sit in the bigger picture.
But nobody will buy Dugbe in its current state, Dropinmonkey. It needs an updated DFS at least, either by HUM themselves or via another route such as this one. HUM can sell Dugbe in two years' time, post-DFS and hopefully for a lot more than it can today. That potential reward is worth any reputational risk arising from the process itself.
Will ii's not see a net debt positive gold mine going into a gold bull run that 'might' focus on dividends rather than a highly risky exploration play in an untested country?
I sold out of Solg to heavily invest here because I will hopefully see short-term upside to this gold bull run and not a high costing mine in Liberia that might be economical and up and running in 3 years time. I'm here for the gold now and that involves Mali.
Probably more out of hope than anything else, but I wondered if this deal was an indication that Hummingbird might be taken over in the near future. I think DB must know that most investors would accept a 40p takeover price. That kind of takeover price doesnt really value Dugbe and the efforts DB and others made many years ago. So maybe the thinking is that if Hummingbird is taken over soon, he at least gets to realise some rewards from Dugbe down the line.
Am I missing something or has Betts just taken 49% of Dugbe into private ownership. My gut feel suggest that Betts is deliberately keeping the LOM low and hence the SP low to maybe allow ARX [a BVI private company founded by the infamous Dattels] to do a full takeover of HUM into private hands.
Just out of curiosity dropinmonkey, do you have shares in Hummingbird?
AW....I agree that there is a fiduciary responsibility here and whilst RPT is noted, it begs the question that is HUM being leveraged by DB to feather his personal non avian nest.
That said, the market may have reacted in terms of SP, but frankly the volumes are all low. I can see this as PI’s being disgruntled, but there re hardly any big sellers out there today.
This has created a buying opportunity.
DB really needs to announce a dividend strategy going forward. Forget buy backs, he’s got to show long term commitment to returning shareholder value IMO.
Couldn’t agree more, and perhaps more importantly brings into question DB’s fiduciary commitment to HUM.
I find it hard to believe that they will fund this through current equity. So my assumption, perhaps incorrect, is that they will borrow to fund. But I would suspect that DB eat al have not stumped up 39% of 10 to 12m. But these are all questions that the directors should answer.