Member Info for adamsmithfreethi

Well Colonel et al. I've done some homework and as usual with these exercises you have a list of factors in favour and a list against most of which cannot be actively quantified. It's down to opinion in the end which is as it should be.
Forgive me if I'm wrong but I go the strong impression on this board that SHG provides a much better investment opportunity than HUM. Well I'm afraid I still disagree so let's look at some figures.
Firstly in terms of the mines/deposits actually producing the stuff and earning cold hard cash HUM looks to be a better bet. Both reserves and resources are higher and more than offset a higher AISC. This is backed up by relative EBITDA for the financial year. HUM 54.5m versus SHG 47.7m. And yet SHG is valued slightly higher than HUM. Also given their higher reserves and AISC HUM gain proportionally than SHG with every $1 rise in the gold price
After that you can throw everything into the mix. Resources - depending on how you cut it both claim 3-4m. In reality who knows? Is bad boy Tanzania a better place to do business than insurgent threatened Mali/Guinea? Which is the better management. Yes I don't trust Dan Betts much but then the my Zurrin is the consummate UBS salesmen. In the end it's an intuitive personal decision.
What I would say is thanks to your prodding Shanta looks a better (and better understood) bet than it did yesterday but still 2 red flags remain for me.
(1) As per a presentation given around 2 months ago it looks like they've thrown in the towel insofar as getting historical VAT back. I've checked the last accounts in the RNS and I can see no provision for losing the VAT. If so knock circa $20m off the book value.
(2) As per questions put in after the presentation, the deal with Barrick was to have been closed by now. Are they (Barrick) having second thoughts? Are they trying to slide out of it now gold is 50% higher than was assumed at the deal date? I wonder.
In the meantime my finger remains hovering over the buy button...

Thanks for offering to do that. It sounds like you know more about the mechanics of exploration than me so will be able to make more of the opportunity. Just to query your point about taking a break from exploration. Is that normal when a resource report is being drawn up? Also you might want to check that the recent flare up in fighting between Armenia and Azerbaijan hasn't impacted their exploration activities in Ordubad. I don't think it's in the direct area of fighting but you never know...

I've done well out of AAZ and go religiously to the AGM each year since they bring the whole top team and you can get really good access to all of them and they are all pretty open. The guy to speak to is Stephen Westhead who, as far as I can see, runs both the exploration and production side. Out in Azerbaijan they run a tight ship often using keen and cheap UK geology students on special projects. They've done so well to get from dead on their feet (share price 4.5p) to where they are now by diligently sticking to their knitting.
This looks to be quite concerning since I don't think they have a deep pool of talent and this Irish punt looks to be a complete distraction.

Thank you all I'll do my homework now...

Thanks Colonel - I will indeed do my research and I'll refer back any findings since you've been kind enough to put your thoughts into words.
In the meantime one small question - the AISC calculation. Why leave out some mine development costs? Doesn't look too good, why do it when it has to be noted and puts people like myself off...?

From memory they took 50% cash 50% shares. I hold shares in both AAZ and HUM and they have both recently bought prospective acreage. However, in both cases the deal was with smaller parties so I can kind of see the logic where the smaller party hasn't go the cash but doesn't want to be crushed by an industry giant so they choose a smaller player with cash with whom they can deal with more on the basis of parity rather than supplicant.
I mean 1m oz is not to be sniffed at - even by Barrick - Kenya is a reasonably safe country for property rights. They had the cash, the expertise all the knowledge with the extensive drilling etc, so why did they sell. I'm not trying to deramp Shanta but it bothers me as a potential investor.
So I think I'll hang back until I get a reasonable explanation.

My finger has been hovering over the buy button for Shanta for some time but I've chosen others to invest in for three reasons. Firstly, Tanzania is probably the worst place to mine gold in the world as far as property rights are concerned. The big men there make others like Russia and Zimbabwe look like havens
Secondly, I don't like the way they calculate AISC since they leave out important capital expenditure.
Thirdly and this is both the biggest and most difficult to put my finger on. Why would Barrick sell over 1m ozs of prospective gold to a small player like Shanta. I looked up the RNS and the only conclusion I can come to is that either they want to build up a stake leading to an eventual takeover or there are some nasties in the whole deal and everybody is underplaying. I did notice that in buying up the prospect Shanta agree to shoulder some unspecified liabilities which come along with the project. I wonder whether that's the downside.
Any comment welcome...

Personally, I think this will be an expensive distraction. Not the cash since AAZ along with all the other miners are minting it literally and metaphorically at the moment but rather in scarce management time. How competent are the local Azaris on the ground whilst the top team go down and Irish rabbit hole?

And the stockmarket just goes meh!

I just love the small mining sector. Given the alice in wonderland economics most of the world is pursuing then the POG provide ongoing support.
Why do I love them? Because this is one of the few examples of stocks rewarding the value investing approach. AIM has a number of gold miners. Some are miners in name only i.e. looking around for a place to start or embroiled in property rights disputes. Others have a real business. And many of them are competent. Just as competent as the big guys but if you do your homework you can invest in a spread of them giving diversified risk from geology to political except with much greater clarity on how individual operations are performing.
Given the paucity of posts on companies such as TSG the investing world has yet to wake up to the opportunity.
They are too busy bidding up pharma stocks to crazy prices.
Good luck with that!

As long as interest rates stay at zero or negative and the vastly increase money supply brought about by central bank purchases of bonds remains then I believe gold will continue to shine.
There is currently an informal cartel of countries issuing "reserve" currencies USD,EUR,CHF,YEN and yes GBP who are all in lockstep. No one currency is noticeably more attractive than the other at current valuations and interest rates so in which case where does the poor old investor go. Answer - bonds, equities, commodities and of course gold.
The cartel is not going to slit its collective throat by raising interest rates so I don't see anything changing unless everybody starts to fall in love with RMB.
So yes when equities, bonds & commodities have good days I expect on balance gold to have a bad day and vice versa.
In the meantime HUM and all the others enjoys gross margins of up to 300%. Nice business...

They seem to be going about extending the LOM in their usual methodical way. Given the economic madhouse we are currently in with the slow surreptitious debauching of fiat currencies there is absolutely no rush to get the stuff out of the ground as fast as possible. Unlike another but more stick black resource I could think of.
Slowly slowly catchee profit

I think this Board neatly bifurcates into two camps (with the exception of techandy) - traders and investors. For gold stocks I see myself as an investor. Yes in some cases at some times money can be made from trading but not I think from AIM gold stocks. Just look at the spread! Yup it's like playing Blackjack cept the bank takes at 15!
Given the way governments by choice or necessity are debauching their currencies with the inevitable default through inflation/financial repression gold is here to stay. Luckily for us gold has many enemies who have definitely not yet thrown in the towel.
As far as HUM is concerned I agree with others such as OthodeLagery the RSN is not perfect but look at the big picture. Liquid assets up by 9M and net debt down by 6M. Obviously we haven't seen the rest of the BS but ceteris paribus annualised 60M cash flow or anything like it on a business worth 92M will weave its magic sooner of later. And yes there is only a given of a 5 year life but I reckon there's more than a few UK businesses would give there right arm for that sort of certainty right now.
The Board needs to be boring and stay focused and I for one will NOT be trading this stock.
Good luck all

It's a fair point and deserves and answer namely that as Graham said so brilliantly in the short term the market is a voting machine whilst in the longer term it is a weighing machine.
Currently all weighing has been banned for 30 days but the voting goes on regardless.
Any specific developments relating either to gold in general or HUM in particular could change my view which at the moment is HOLD/BUY depending on your sense of timing and risk appetite.

Yes its always difficult to assess from the drilling results exactly how good they really are. I'm going to have to educate myself as to what the technical stuff actually means. They've got a great little setup going just chucking out the cash but the party's going to end 2024/25 unless they can either extend resources or decamp elsewhere in Azerbaijan with all the cost and risk that entails - particularly in the disputed part which looks like its throwing up the best grades.
As for investing in AAZ I'm already up to my neck in the stock having invested at 15,20,31 & 35. I'm hoping HUM will repeat the trick given they're about 1/2 years behind AAZ in terms of developing their prospect

I hold AAZ, HUM, TSG,Caledonia, TSG and a small amount of CORA. Plus the ETF SPGP if that helps...

All the action is in oil today. Watching supermajors like BP go down 20-30% and some big players like Premier - 50% is a once in a lifetime experience.
Governments are going to have to respond by spending money they'll have to borrow.
Then gold will move back into the spotlight. In the meantime HUM just keeps humming along churning out gold and selling it to willing buyers at close to 7 year highs, reducing their debt pile and lessening their exposure to a possible credit crunch.
It's a luxury that company in other sectors can, at the moment, only dream of!

Thanks. I take your point about Shanta reducing debt and certainly won't rule them out. After all the secret of AAZ's success is coming back from the dead on the debt front. As far a political risk. I also take your point. To be honest it's almost impossible to be exposed to interesting undervalued prospects without being in countries not overly familiar with property rights. I guess if you spread your geopolitical exposure wide enough there will be some diversification of expropriation risk. Currently my exposure includes Azerbaijan, Egypt, Mali, Russia & Zimbabwe. It's either that or back-breaking panning for gold in a wet Scottish hillside!

As I already hold AAZ & HUM I thought I'd look up TSG on your list. A quick check on share price history, consolidated accounts plus JORC figures I then looked at the interview. For once did not disappoint. Pointed questions and good answers.
I now own TSG too!
As far as Shanta is concerned not enough cash generation (yet!) plus I'm wary of the big man in Tanzania. The Acacia shakedown has obviously swelled his offshore accounts and he may want to repeat the trick with a smaller gold miner. Barrack no doubt complicit in picking up the pieces for a song afterwards.
Anyway Sir I raise a metaphorical glass to you. Fools seldom differ and all that...

Yes agree that my comment on copper was a bit of a red herring since pure play gold miners have fallen by the same or even more. As far as the exploration results are concerned I think I'll need to go to the AGM and quiz Stephen again on what he thinks unless a JORC estimate makes its way out first.