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In fact I am quite sure you aren’t presenting a complete picture in your analysis Tony.

The production costs ar Kouroussa on a per ounce basis are currently unreported but we know were much higher in the second quarter owing to the fact Corica downed tools and went awol. Hummingbird then spent an undisclosed as of yet sum to hire temporary contractors to keep operations running at a base level. We also don’t know how much was spent in negotiations with Corica over returning to the mine but it could well have had an impact on the $13.5 million overall loss in Q2.

The losses incurred simply cannot be repeated if production is set to rise by around 75% this quarter, with reduced costs therefore and on top of that a higher price for gold ounces sold.

The general operational outlook in the immediate two quarters looks promising. The refinancing terms will be the next major point of discussion.

Tony the reason I asked you to shed some light on your predictions was because you provided them. Encouraging others to do some real maths as you mentioned is not helpful for anyone.

The losses in Q2 added $14 million to the debt total. You’re predicting $25 million worth of losses added in each other Q3 and Q4 despite group production set to rise significantly. I don’t believe you have accounted for this nor the higher price received for sales in the coming quarters.

@deepjoy - that’s the hope, prices may move up as we approach the end of year along with the long anticipated rate cuts which normally breathes new life into markets if the trend is sustained. I3 aren’t the only big O&G dividend player in town though, Energean Oil and Gas, Diversified Energy Company and Serica all have chunky yields right now.

I’m surprised this hasn’t made the main news. First I’ve heard of it!

@comeonvog only admiration for your optimism, are you confident Fresnillo will outperform its fellow pm producers? Quite a few share the view Hochschild is better positioned now going forward.

The likelihood of a dividend is low while net debt remains stubbornly high. The company are paying a high interest on the $360 million loans outstanding. They do have ample liquidity though!

I wouldn’t read too much into asset freezes in countries with ‘friendly relations’ to Russia. The only western companies that have been sanctioned were in Russia itself. If the West start sanctioning all and sundry that would include India and China, two counties which are highly integrated in global trade networka

@RB

After those recent results it’s a wonder why the board is so quiet!!

Q2-2024 gold production of 9,003 ounces; a 6% improvement on Q2-2023.

Palito plant processed a record quarterly total of over 55,000 tonnes of ore.

Cash held of $12.0 million with net cash up at $6.6m (31 December 2023: net cash $5.0 million).

Coringa crusher expected to be operational in August while the ore sorter remains on track to being operational by the start of Q4.

FY2024 gold production guidance remains at 38,000 – 40,000 ounces.

Fears of another heavy windfall tax courtesy of the government. Trading in no man’s land for the foreseeable. At least the dividend has been maintained and looks like it will continue

Tony appreciate your putting forward predictions here but can you expand on why you think net debt will increase by almost $50 million from the end of June through to December (given you predict AISC to average $1,715/oz.

At this time we cannot be confident what the AISC will be on 20,000 ounces, the $1,500/oz I mentioned earlier was a conservative estimate simply rounded to the nearest ballpark based on Q1 numbers. With that said I would agree that achieving lower end H2 production guidance will likely result in FY AISC closer to $1,700/oz at Yanfolila than the revised $1,600/oz. On the point of taxes and royalties, losses made in H1 can be offset, so the situation in terms of tax and royalties is not such a concern in H2. They will certainly feature more next year when the company are making substantial operational profits and are due to repay a likely sizeable amount of debt.

There are a myriad of reasons why Coris have transferred assets, not least for simplified accounting and tax purposes. The interest on the debt is significant and far more valuable to Coris than taking full ownership of Hummingbird right now. The owners of the mine wouldn’t earn anything, not while they pour everything into loan repayments. Once Hummingbird have repaid the lions share and risk has been reduced then it may be prudent for Coris to move in and take it private. The share price should be a good deal higher once the debt is mostly settled.

Of course that should say UP through the gears!!

$2,500/oz futures in Asia this morning! Gold price moving down through the gears as we approach a period of lower inflation and slower growth. Fed set to cut rates in September

Likely scenarios

1) Corica suspending works / rekindling of tensions

2) Leak to market of poor first half results (as expected)

3) Financing concerns with Coris may force the company to raise equity at a discounted price

4) Dan Betts staging a coup to become next premier of Mali

Perhaps the market had simply assigned more value to the group’s Egypt, Italy and Croatia assets and the early sale reduced the perceived future gains that had been baked into the markets valuation. Combined with the share going ex-dividend and the increased exposure to risk associated with a loss in asset locale diversification (particularly with our producing assets being in the Middle East) it helps to explain in my mind why there is a cloud hanging over the stock.

While much of the risk should already be weighed, it’s understandable how the intent to shift away from central European basin could spook holders. .

On the face of it the deal is a good one, 3x increase in investment value in 4 years, divesting later life assets, removing almost two thirds of the Group's decommissioning liabilities and releasing cash in the short term to fully repay the high interest bearing bond, with potential for a special dividend also.

I sincerely hope the board put to bed any ideas of a share raise for Morocco as mooted by someone below as that would go against their stated aims to enhance shareholder returns. If you trust the company to deliver on that then a significant raise will not happen and time should prove this to be an opportune time to be buying Energean stock for its capital growth potential and 10%+ yield + potential of a special dividend.

Interesting piece by IC, thanks for sharing!

Has the risk of CIG taking the company private increased? Given how Shanta was snapped up as soon as they achieved commercial production with debts repaid there’s a good chance Hummingbird falls prey to a similar situation, albeit with debts and legacy issues having a greater impact on market value

Yes indeed! Buyer interest is improving although it’s a sector wide phenomenon. Across the miners precious metal producers, particularly those operating high ounce, marginal mines are the top performing more recently and this will probably be true for the rest of the year as central banks begin to see the impact ‘high rates’ (relative to debt in the system) coupled with high taxes, has on economic activity.

Can understand the buying in anticipation but we need to hear details of resolution from the company.

Items to tick off

- resolution reached

- Corica return to work with revised schedule

- updated guidance

- financing situation

Glencore ‘was’ prior to the sell off on Thursday and Friday (maybe on rumours of their interest in Anglo?)