Thanks for the link. I must say the level of detail they go into is an embarrassment for comparative interviews with UK interlocuters. Haven't quite finished it but it's massively increased my understanding of the project - not least the promise of HEP in the medium term which at 4c per unit will be worth more HUMs entire capitalisation assuming the production profile sketched out by Stalker.
A couple of points that I need to consider are:
- at a project average grade of 1.8 g/t he is talking about AISC of 1000. How come HUM can only manage 1450 AISC for grades around 2 g/y. Can it all be down to geography.
- Stalker was talking about Capex for the 200/250 m oz/year facility at around $300m. Assuming half at 150m that is a hell of a lot to raise for a company currently valued at half that. Really the share price needs to rise of the guys that cash out are the ones buying in at the the share rise HUM will inevitably have to undertake to pay and continue to play. Never mind the need to scrape together enough to get Guinea off the ground.
There's a lot at stake with this mother ****er. Like one of Musk's rockets - it's taken off but will it land without BLOWING UP!
@Geezer & Taser - chaps/chapesses - take my advice and don't bother with BT. As you say he just avoids having any sensible debate and is impossible to nail down despite ridiculous & inaccurate outpourings. He clearly gets gratuitous satisfaction in winding people up and being unnecessarily rude to them.
He can stew in his own juices indefinitely as far as I'm concerned..
On a positive note I was impressed by the company executives performance in the Crux interview. We just need those accounts produced within deadline to disperse any lingering concerns about any more skeletons in the cupboard...
@finderskeepers I think you misunderstand me. Whilst I'm not fretting at this share I am vigilant. By all means automatically assume the management have clinched a great deal if you want to. I prefer to test that assumption a bit with other like minded interlocuters on this board. After all Cassidy are no fools.
There comes a point when assumed faith in the competence of management tips over to complacency. Not a good place to be.
Thanks for that Cheerful - I looked back to 2012 to see what the gold price was then in 2012. It was basically between 1600-1800 having made a long climb from under 800 in 2009. However, gold promptly declined to around 1200 in the years leading up to the pandemic. That presumably made the whole prospect uneconomic for Cassidy.
Perhaps they sold out in Nov last year thinking we can at least get some cash out of this and HUM take the risk that gold repeats it's trick of declining after an immediate financial crisis accompanied by Central Bank largesse.
Perhaps they have now miscalculated since central bank largesse continues and is now joined by fiscal generosity too.
Will they regret selling out or will HUM be the patsy - and by implication us too!
@swamp. I'm not going to defend the 150m to the death it's not the most important assumption since expenditure whether it turns out to be 100 or 150 needs to be covered. Having thought about it a bit more I think Dan and co have extra wiggle room if they want it without resource to dumb money raising either via placing or royalty sales.
It's a question of character once again. Will they creatively manage the situation and confound the likes of TBTT by taking the AAZ option or will they sell us out?
Thinking about the timing a bit more I think HUM has some wiggle room on two fronts. First finance and second operationally.
Take finance. I would expect a facility to be agreed in principle with Coris quite quickly and it should be fairly straightforward. Crucially all the cash required to be on the balance sheet won't need to be there up front. Only when disbursement begin.
Secondly operations. The RNS states "Mine construction to start within one year". What does that mean. I do not think it means "Mill construction". Thus is is quite possible and sensible for HUM to send in contractors to clear access to the site by next May. In terms of sequencing of events this must be one of the first things needing to be done. Building of accommodation can also be done. Possibly at this time an order for the mill can be put in with a down payment and not the full amount. All this type of work could easily be covered by the company without recourse to drawing down the loan. That could come much later when the preliminary work is completed and crucially gives more time to build up cash and/or explore alterative cash raising options if even by extending the period the company's resources prove insufficient.
This all requires balls - does Dan have them? Raising cash through a share placing at depressed prices or a royalty agreement suggested below would not be good for existing shareholders.
If any of you know about AAZ's history taking debt up to the max and beyond can pay off spectacularly if the underlying gold market is benign...
Swampmonster - thanks for your thoughts.
Cash in hand. Fair point at the end of Q1 they company was just shy of $5m net cash (including gold). Bung in another 4m (2m per extra month - apr/may and let's say real time the company has 9m net cash. Keep all the other assumptions the same and they just get over the finishing line. But it's tight!
As far as funding a new gold mine is concerned I'm no expert but from following other miners e.g. SRB you have to pay for the facility up front and with these sort of projects costs only go one way so from general experience I always assumed the worst...
Kamei - back in the days when HUM was a simple one mine operation having paid for the Mali license if would have gone to Coris Bank with a loan application. Coris would have looked at the balance sheet to see how much capital and yes crucially cash was there. Assuming after the initial share raises Dan hadn't spent all the cash on say Dugbe or the US silver mine there would have been some cash there. I don't have time to look back but there must have been some.
I'm willing to guess that there was probably enough to meet the 60:40 rule that TBTT is talking about. The lend a newbie miner with no experience or CV the whole amount is just not plausible as you are suggesting...
Agrogerson....
Apologies I meant 60/40 debt/cash Not equity
There is undoubtedly inflation in the industry maybe going up to $150m was a bit conservative but note I allowed for some deferred expenditure so they only had to hit a target of raising 100m within the year. I think that is reasonable and prudent as an assumption. Others might think otherwise...
Sorry I meant NO additional spend for Dugbe within the 12 month timeframe...
Ok enough of the mud slinging and mindless optimism and pessimism. I'm going to try and put some numbers and assumptions down - please shoot me down where you think I am wrong.
Key assumptions:
POG average for next year 1800
AISC - 1400 (probably conservative as many components back ended e.g. restoration/remediation)
Additional costs of drilling exploration amount to 100 per oz
Required capital costs of new facility $150m with $100m upfront to order buildings/material/labour
Loan/equity split 60/40 as per TBTT's point.
Average gold production per month 9000.
For additional spend for Dugbe within the 12 month timeframe
The balance sheet as of now roughly zero cash/zero debt
Given the above a monthly production of 9k gives a positive cash flow of 9k x 300 = 2.7m. Multiply this up by 12 gives $32.4m. Just over $7.6m short of target.
Alter any of the above assumptions and the dial moves enough to make the proposition look feasible or alternatively infeasible.
Ladies and gentlemen - you pays your money and you takes your choice....
Thanks Brucey - basically we have to pay x2 as much as for the Mali contract and then give them up to 35% of the company.
This is pretty steep in my opinion.
Does anyone know what the terms of the Mali license are - just for comparison purposes?
The terms of the deal look at bit steep 5% royalty and 1% (presumably on turnover) for the local development fund (let's hope it does what it says on the tin?). 15 years though it a reasonable period of time to exploit whatever is there.
Given HUM only has to start construction within one year, if both the gold price stays elevated and AISC does not spiral out of control I reckon we could finance through CORIS and cash flow.
There's gold, then there's a leveraged bet on gold through gold miners, for the brave there are junior gold miners and finally there's HUM. The ultimate *hit or bust investment!
I still think this has a lot of potential upside but early optimism about swift exploitation from resources in recovered territories has given way to a more realistic expectation. Still as you say a divi of 5% makes it all worthwhile!
The scale of what they are trying to exploit in Dugbe is not that of your usual junior minor and thus at first blush it looks like the grades (literally) unearthed appear to be modest. However, I suspect if they do gear up for production they will be aiming to be profitable at grade down even to below 0.5 grm/tonne. If so then what they have found potentially is profitable. For reference CEY mine ore regularly at this level and have until now made a decent profit.
I think what they are trying to communicate is the scale of what they might eventually dig up. 6km is a lot of land with potentially a lot of ore underneath. If might be nothing it might be something. I do not the Canadian share price went up by 5% on the news, so somebody thinks this development is promising.
If nothing else this demonstrates the scale of the challenge and what a reasonable idea it was to outsource the initial stages to guys comfortable with tackling a challenge at this scale. Mind you I am definitely not happy with the directors taking interests in the joint venture.
Also thanks for the various comments on SC selling out. It still sounds really dumb but I guess if they bought at 12-13p they're still making a profit. Would have made much more at 40p mind you!
Thanks for responding Juxt - for a minute I thought the only response would be from Pile of Bile BT!
I can't argue with your stats - they are what they are. Presumably you're imputing the reason for their selling?
Sure small stocks like HUM, AAZ et al are illiquid. But they've always been illiquid so why did SC end up owning over 13%. last May. It seems crazy to them to be in that position and not sell out properly in the bull period June to October when the stock was regularly topping 40p and given the enhanced volumes they would have found ready buyers for much of their stock.
Surely they haven't just lost their nerve and sold out at the first whiff of grapeshot! In this case 2 consecutive bad RNSs? It just looks so amateur? At the back of my mind I keep asking - is there anything out there that they have internalised that we haven't?
I hope not!!!
Sent a request to the company for a date. We'll see...
I'm always amused when discussion turns to real or imagined II programmed sales. Not just here just on pretty much all the boards I've looked at. Just for the record I'm a HUM holder so have no interest in de-ramping.
The cynic in me says that talk about an II persistently selling is a form of comfort blanket for disappointed retail investors and "excuses" them for their poor decisions at poor or poor timing at best. After all IIs are paid handsomely to manage their clients money. Surely these professionals wouldn't just sell in some dumb mechanistic manner when new information comes flooding onto the market that might cause them to reconsider their positions. Take HUM. It's AISC is very very high must be 4th quartile. It's a simple matter of mathematics that says the greatest beneficiaries of a rise in the gold price are those that are marginally profitable. It's leverage after all. Clearly its early days, the price might not stick, but every day it does profits at HUM (assuming no other problems) go up, cash goes up, optionality (which has a value all to itself) goes up.
Surely such masters of the universe would pause their selling programmes, at least in the short term to maximise the value of their investment.
But then again maybe not? In which case nobody will convince me ever again that markets at the AIM level are anything approaching "efficient" if the so called professionals act in this way.
It's a genuine puzzle for me...
Anybody got a hunch when these are due out? This time last year they had already been produced...