The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Excellent news. I really like the no dilution bit. Leon has previously mentioned that the margin at sable 38%, so $6,450 per ton x 10,000 x 38% = $24.5m operating profit pa, plus share of JV profit. Excellent news. Well done Leon, seems like Jubilee is really turning a corner and developing into a good mid tier company.
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.
JTS, I’m not suggesting they paid more, for all I know they each paid 10k for their 19% of Dugbe, that’s the point. Why was this 39% shareholding not retained by HUM? Clearly DB et al think there’s a big personal profit here on the back of HUMs development of the project.
JTS, not sure why clearly they have invested a max of 1m in ARX, the point is we don’t have a clue what they paid for their 19% of the asset that they as directors have invested 70m Of HUMs money into. Indeed if they have invested that much why did they not invest that into HUM? We should also be cogniscent that when we end up with 51% of ARX, we will end up consolidating 51% of whatever debt they have on their balance sheet. So we will end up paying for 51% of whatever they do in terms of borrowing to pay for their earn in.
If ARX has borrowed or will borrow the 10m and we end up with 51% of the company then the actual sale proceeds are only 4.9m for 49% of Dugbe. I would like to know what the 3 directors paid for their 19% of Dugbe. Why did they not buy HUM shares instead. This is absolutely appalling behaviour.
I totally agree that we could never have devolved this ourselves. However, rather than choose a tiny company that we have no knowledge of and is likely to need financing, they should have gone to a mid tier. Once the DFS is done this company will not be able to finance the deal themselves. So all we have done is give away 49% of Dugbe, of which 39% went to 3 directors. I am a significant shareholder here with over 3m shares and I simply will not site down and take this kind of blatant financial engineering that favours directors. At the very least HUM directors should hold a web conference to allow shareholders a forum to question this deal. I have written to the Company in this regard. If they fail to do so I will ask the FCA to investigate.
At the very least this should be put to a shareholder vote. I’m disgusted..
How can this be legal. ARX pick up 49% of a project that HUM have invested tens of millions in developing. 49% is given away to ARX for 10m, ARX will no doubt have to borrow the 10m, and 3 of HUMs directors own 39% of ARX. Surely these directors are not fulfilling their fiduciary duties as directors of HUM. It’s not like HUM doesn’t have the money to progress a DFS. I’m absolutely appalled.
Makes no sense to wait for debt to be paid off, unless he believes we are not a going concern, which I very much doubt. If he waited for debt to be paid off we would likely have a BS cash figure of $120m, which is a very poor use of cash.
So between you and NGV the estimate is that we are throwing off ~$9m pm in fcf. Of which $2m goes to repay loan, 15% or $1.1m goes to fund exploration. So my question would be why can’t some of the ~ $6.5m pm excess fcf be applied to either a buy backs or dividend. Or is it the case that we are not getting the full story on what our net debt position (inc trade payables). DB should really be making statements as to how this excess fcf is going to be used.
Could someone check my maths...
Production for H2 21,082oz, revenue £16.085m, attributable profit £8.129m. So margin is 50%.
Therefore, if stable production exceeds 5,000 oz pm, then in excess of 60,000oz pa x an average H2 revenue of ~ £762 per oz x margin of 50% gives attributable earnings Going forward in excess of £22.9m. As the £762 per oz was based on the avg for H2 2019, and we know this has increased, it would not be unreasonable to be a fair bit more than this.
Any thoughts?
They haven’t stated they have sold calls, so no collar and cuffs here. This looks like just a naked hedge so the loss on the put will offset the additional sales on the increased POG.
The POG is irrelevant for HUM for the next 6 months, as they have fixed their sales by buying put options at $1,350 per oz (per last RNS). I did email the Company asking who the counterpart to this transaction was as it looks way below spot price during the period, but as per usual I have not received any response. Very poor investor relations. AW
De ramper, not rapper
Just so I understand this...
2 years ago we had a mine life of 7 years and reserves of 700k. During the intervening years we have sold over $200m of gold and debt has reduced by $30m and no appreciable increase in cash at the bank. Granted we do have a new ball mill. The situation now is we have a mine life of 5 years and reserves of 680k. There may well be additional reserves in the ground yet to be proved up, but until there is a mine life well in excess of 10 years we will not be afforded the right PE ratio by the market. I know there have been some extenuating circumstances over the last couple of years, but this certainly doesn’t seem like a stellar performance from our UK based team. Or am I being too harsh, on our expensive board. Before anyone moans that I am a de-rapper I have a very significant long position here, but am increasingly frustrated by our management team.
AW
Billy,
On the PGMs, I understand that the margin is ~ $450 per ton at Hernic so if they are performing now to nameplate, given they have control of throughput, then they should produce 30k pa, which produces a profit of $14m. The big outlier is Windsor, given that they say they have produced 5,000 plus in Sep. No idea if this is maintainable, or not, or indeed what the toll cost at Northam is, or what the profit split is. So will assume a toll cost of $300 and a 25% cut to Northam and production of 35k. This gives a profit of $14.5m.So with my earlier email, I would expect a steady run rate after FC installation of ~$53m, less HO costs, tax etc... then of course we have Kabwe. Here if you work through the numbers they have definitely been very conservative on what they will produce. So all in all I wouldn’t be surprised if at the end of 2020/early 2021 the $53m isn’t nudging towards $100m. Some might consider this ridiculous, but based on the information we have that appears to be where it’s heading. Anyway just what my calls say.
Assuming that to be the case then one could use 140k tons at Hernic at $80 per ton All to bottom line; same at Windsor with say 50% CIR, and say 70k at DCM, with a CIR of 50% and then apply the 50:50 split. The figures at Hernic and Windsor should increase substantially once the FC units are installed. So my number will be circa $18-$19m to the bottom line from chrome, increasing to ~$25_$28m once fine chrome is dialled in. Could be wrong, but just my numbers.
Billy,
The stated chrome price will be a blend of chrome at DCM, owned tailings and toll processed 3rd party tailings at Windsor. I recall that someone did a simultaneous calculation that suggested that the vast majority of the chrome processed originated from 3rd parties, hence the revenue is lower. But of course we would pick up the PGM revenues from this, all be it shared with Northam. If they are now going to process their owned tailings at Windsor along with those just purchased from Samancor at Windsor then one could reasonably assume this revenue per ton would rise by a reasonable amount.