Member Info for buzzfromiii

Last week I noticed a bit of a coincidence. I hold HUM but also a holding in another African junior minor (MCM) whom I always thought had great potential but always seemed to fall over at the last hurdle and had a very depressed share price. Both share prices hit 18.5p last week. I wondered how their separate ways would go? Well today MCM closed at 34-38p - it just shows how prices had be subdued for so long and all of a sudden spring back with a vengeance. I am now waiting for HUM to follow suit....

The mining 'event' for MCM was the purchase of land crucial to the mining plan - in its own right would have been resolved in due course - but seemed to cross an investment threshold. I am wondering if the conversion of gold ore to reserves is going to one such threshold for HUM?

The Buzz

A few thoughts. What is unclear to me is why they have to do the remedial work now and take equipment away from production?
What is "some" remedial work? - I have no concept of scale here.
Fast forward to next year - will they have the same production targets as before - in which case there should be a good income coming up - selling at such a "low" share price seems to me to overlook future years' production.
Assuming that they can shake the piggy bank hard enough (perhaps in the next financial year?) - share buy backs at this price will be much cheaper with a depressed share price.
The remedial work appears to have not started yet based on the words "some remediation work will be required". So 22,206oz of gold was not influenced by remedial work and is solely down to wet weather induced issues. A tad unfortunate that the wettest rainy season should occur now. Now they had previously said that they were still going to meet the production targets despite the rainy season - so the predicted failure to meet the production targets can presumably be put down to diversion of mining equipment/ any production restriction induced by the closing off of the West wall.

The Buzz

Two key elements of statement

"Trading update - full year expectations unchanged
Trading in the first half was below the Board's expectations due to underperformance at Technical Plastics."

and

"The Board's expectations for the year ending 31 March 2019 remain unchanged, with results weighted towards the second half of the year, as expected. This reflects the full effect of the new programmes, expected customer timings on projects and the anticipated improvement in margins at Wipac in addition to cost saving initiatives, ramp up in production volumes and expected higher design and tooling profits in Technical Plastics."

On the face of things, this is quite a positive statement. I always ponder when I hear 'board expectations' as to how recently the expectations had been updated! Really pleased to read that the delayed medical programs are now in production.

The Buzz

https://gallery.mailchimp.com/2a0d5dcb1eea2e0f9201740e1/files/156d63f9-7676-4e68-8402-35c57103ea6b/Interim_Results_28.09.18_FINAL.pdf

'CEO’s Statement
“2018 has been a period of substantial activity, with work programmes centred primarily on Sanankoro, where we have identified 8km of drill defined gold mineralised structures, highlighting the potential for a very large-scale gold development project. Discoveries have also been made at Tekeledougou which warrant additional work and evaluation, particularly bearing in mind the economic synergies between our asset, and Hummingbird’s Yanfolila plant located approximately 10km away. Cora’s expenditures are under budget and its work programmes are in line with forecast.'

Seems to be more or less as I had expected.

The Buzz

https://gallery.mailchimp.com/2a0d5dcb1eea2e0f9201740e1/files/156d63f9-7676-4e68-8402-35c57103ea6b/Interim_Results_28.09.18_FINAL.pdf

'CEO’s Statement
“2018 has been a period of substantial activity, with work programmes centred primarily on Sanankoro,
where we have identified 8km of drill defined gold mineralised structures, highlighting the potential for a
very large-scale gold development project. Discoveries have also been made at Tekeledougou which warrant
additional work and evaluation, particularly bearing in mind the economic synergies between our asset, and
Hummingbird’s Yanfolila plant located approximately 10km away. Cora’s expenditures are under budget and
its work programmes are in line with forecast.'

Seems to be more or less as I had expected.

The Buzz

Great set of results. They have delivered on their promises again, despite the worst rains in 10 years! Money is sloshing around with $46.2m at the end of Q2 - its cash in hand that speaks volumes. I liked the average selling price of $1312/oz.

The Buzz

http://hummingbirdresources.co.uk/_downloads/HUM_Second_Ball_Mill__Exploration_Results_190918.pdf

So HUM have gone for the second ball mill. At the AGM the concept of a second ball mill was floated but it was stated that one would only be acquired if there was a convincing financial case. So getting a second ball mill shows great confidence that they have lots of ore: the increased throughput gives more gold and enough extra profit to justify the capital outlay. It is a positive sign for Cora Gold as HUM will have more capacity to process their ore.

DB "Approving the second ball mill, in place of the tertiary crusher, at the same time as releasing our initial results from the 2018 exploration programme shows the confidence we have in increasing our Reserves at Yanfolila. The second mill will give us greater flexibility and 24% more throughput when operating on 100% fresh ore. I am delighted with the initial drill results and look forward to receiving more over the coming months"

I am not a geologist, but these drill figures look good to me with some particularly good intersection results from Komana West. But note some drilling was held back because of the rainy season, only 3,000m of the 10,000+m of drilling has been analysed and the plan is to drill 50,000+m in 2018. So lots more results still to come in. I can see us being drip fed with (hopefully) good drill results for the rest of 2018 and into 2019.

MP "...The results at KW show that the previous drilling didn’t delineate and close off the mineralisation at this deposit. Drilling at Gonka is very exciting and we look forward to receiving and publishing the results when available.”"

The Buzz

At the HUM AGM I asked if HUM would participate in a fund raising by Cora Gold. My recollection of the answer was a guarded response along the lines of we will look at the details but will participate if the terms are satisfactory.

The whole point of Cora Gold was spelled out 2 years ago - HUM wanted to focus on the main event of Yanfolila: the oddments passed to Cora Gold were really a distraction and best dealt with by a separate entity. By merging with other assets it effectively spread the geographical risk as well but still keeping an interest in their promising discoveries.

Plan B could be to further define the ore deposits useful to HUM, sell the far better defined ore body to HUM and use the cash to investigate the other deposits. This would avoid any wrangling over getting HUM to process Cora Gold's ore for a fee (HUM could process their own ore at a huge margin and ignore the Cora Gold ore until much later).

The Buzz

My take is that thy were exploring extensions to a known ore body. Gold is present in quartz seams that are in many areas. However it says that there can be quite wide gaps between the quartz seams, and so bulk mining would dig up loads of low grade ore mixed with the high grade ore. So one would get high grade ore if one only extracted pay dirt from the quartz seams. What is not clear is whether this differentiation can be readily be made by the man with the digger. The market does not seem to like this RNS as Cora Gold is currently quoted at 13-13.5p. A bit harsh if I read this right as Cora are reporting on a possible extension on one of their ore deposits that has mixed results.

The Buzz

"This is by far our largest licensing agreement to date in the apparel sector and underlines the inherent value of our design archives"

Another useful royalty and going with H&M should not degrade the W Morris brand. The link to the Vogue article
https://www.vogue.co.uk/gallery/h-and-m-morris-and-co-collaboration

shows quite a few items. WGB seem to have again been very good at squeezing yet more juice from the royalty 'lemon'. I note that H&M had a previous collection with GP & J Baker so one must presume that was successful and therefore H&M have high expectations for its W Morris collection.

This will not affect the wallpaper (and fabric??) turnover, which I suspect is being directly affected by BREXIT (that has been blamed for reduced trading in the housing market). On that premise, once BREXIT is out of the way, there will be some pent up demand that may help WGB's turnover?

The Buzz

I went to the CFX AGM yesterday. They have many close similarities with WGB. Their trading statement showed good business in the USA but more challenging European and UK markets. The USA business is benefiting from the 'booming' US economy. Much uncertainty on the way ahead due to BREXIT. I asked why they they are doing so well whereas WGB seems to have its share price almost a quarter of where it once had been. Part of the problem would appear that WGB lost a key person in charge of brands. I admitted that I had completely sold out when WGB was over £2 but had been buying back in at around 70p. I had the impression that they agreed with my assessment.

CFX regularly buy back their own shares but they are no longer finding large chunks of shares for sale and it is not cost effective to do so at the current share price. Ironically WGB once had a valuation large enough to contemplate buying CFX but now it is valued at only £46m whereas the market cap for CFX is now larger at £53m. Pure speculation on my part but my thoughts are that WGB is still a bit big to buy outright now, but CFX could buy a stake in WGB and put a bit of their magic in the direction of WGB?? Their results for the end of April 2017:
http://www.lse.co.uk/share-regulatory-news.asp?shareprice=CFX&ArticleCode=hibfxqcq&ArticleHeadline=Preliminary_Results

showed cash of £9.2m, so some activity cannot be ruled out - there is currently enough cash to buy 20% of WGB at the current valuation. There are many areas where consolidation would save lots of cash, such as both of them having showrooms in the same city (When I went to Boston both companies had space in the same multi company show room!!).

As I said in the earlier post, I would add if the price fell, so I have just bought a small top-up of 4k shares at 64.75p, but have plenty of cash in reserve if the price falls a bit more. I am still way off my previous holding size. I think that the share is now significantly under valued and many of the weak holders now seem to have gone judging by the low turn over... but I could be wrong! I have posted my AGM report for the CFX AGM on the ii web site.

The Buzz

Pound up against US$.
https://www.bbc.co.uk/news/topics/cx250jmk4e7t/pound-sterling-gbp
Price of Gold jumped - now about $1210.
https://goldprice.org/live-gold-price.html

For curiosity I looked at Gold Fields web site as they sold Yanifolila to HUM in exchange to quite pricey shares. I found this post:-
https://www.goldfields.com/reports/f2018/q2_f2018/pdf/presentation.pdf

Now if I read this correctly they paid out $185m in exchange for half of stake in the Asanka mine on 31st July 2018. I need to recognise that when the deal was probably being made that the price of gold might have been significantly higher. Asanka's annual production is given as 256koz. So about twice of Yanifolila's production. ie Gold Fields have effectively bought the equivalent of Yanifolila. HUM is currently valued at £101m or about $130m. So in very simple terms Gold Fields paid 40% more for Asaka than for Yanilfolila - or about 40p a HUM share.

.. but it is not that simple - the grade at Asanka was given as only 19,g/t and current cost is of then order of $1145/oz. Although there is a projected cost of $860/oz at the end of 2020. I might have made some gross assumptions and missed some key points, but Yanifolila on its own looks a far lower cost mine with better grades. Clearly if Gold Fields has recently bought a mine then there must be others looking at similar projects. So on that basis, HUM must be priced at least 40p a share plus a premium for Dugbe and the Cora Gold share holding.

The Buzz

https://www.bbc.co.uk/news/business-45300759

"The "consensus view" at the US Federal Reserve is that gradual interest rate rises remain the best policy, the head of the US central bank has said."

At the moment gold is currently shown at $1207/oz. Quite a bounce.

The Buzz

or online with
https://event.on24.com/eventRegistration/EventLobbyServlet?target=lobby.jsp&eventid=1822941&sessionid=1&key=09C9AB86360CCC28F7127539DEDBCE06&eventuserid=211726256

Good results. Did you spot the bit about increasing the bank facilities that is in progress? If APF can get more money from a royalty than the interest due then it is quids in. Not sure about the interest for the iron ore royalty, but I calculated a royalty income of at least 11%.

As I posted on ii, the results are boring as everything there I had picked up in various RNSs and other company statements - but the results are the opposite - they are very good and the outlook is very exciting.

The Buzz

The Buzz

Oh I think that I got this back to front! Apologies.

I often struggle with these RNSs as they always seem to have a different layout!

OK it means that Investec have reduced their holding. One can only guess why - but the market has absorbed the sales on a relatively small part of their holding and the price of WGB seems to have stayed steady. I think that is all that I can constructively add, other than now they are just below 11% they can sell another 1% before they have to declare any further sales. So I suppose that this is a slight negative. However, my perception is that WGB is now priced so low that there should be lots of other buyers out there, plus Investec will be getting a relatively low price on sales at this level.

The Buzz

This morning's RNS tells us that Investec have increased their shareholding from 10,99% to 11.74% crossing the 11% threshold. A good sign that a major shareholder has significantly increased their shareholding - they ought to be very close to lots of data and would not have added so many shares had they not been convinced that it is a good buy. I think that the current share price is very depressed and has many adverse factors built into it - and presumably also any potential fall out from the House of Fraser that wounded Burbury so much - not that I am aware of any WGB outlets in those stores. I think that Investec can further increase their holding to 11.99% without telling the market, so potentially some more support is there at the current share price.

The Buzz

Quite positive article:-
http://www.kitco.com/news/2018-08-19/Being-Used-To-Bad-News-Is-Keeping-Gold-Down-Perth-Mint.html

"Given the short investor positioning and recent pick-up in physical demand, our base case is for prices to recover into the mid-$1200s, possibly approaching $1,300 over the next six months."

I note that it states there was a pick up in physical demand for gold.

In the mean time gold up today to $1886/oz at the moment,
https://goldprice.org/live-gold-price.html

DESPITE the £ falling again against the US$.
https://www.bbc.co.uk/news/topics/cx250jmk4e7t/pound-sterling-gbp

Thought for the day:-
Go back to the preceding price of gold when HUM did its open offer at 22p to raise funds for the new mine - and compare the price of gold now where HUM now has a working mine and cash under its belt.The current 27p a share seems to me to be rather inconsistent now that the risk of building and commissioning the mine has gone. There must be a very negative view on the price of gold, perhaps today's rise in the price of gold might indicate a small change in sentiment?

The Buzz

When Gold Fields exchanged Yanifolila for HUM shares, they were valued at 56p:-
http://hummingbirdresources.co.uk/_downloads/HUM_Yanfolila_Presentation_1.pdf

I would have thought that Gold Fields would want at least their investment back in the case of a take-over bid. Agreed that they abstained from the rights issue at 22p a share some time later, so they could have reduced their average price, but on the face of things they would want at least 56p a share to be interested in selling their stake.

The Buzz

Try again - this is the full post:-

https://www.anglopacificgroup.com/purchase-of-a-4-25-shareholding-in-labrador-iron-ore-royalty-corp/

Initial thoughts are that it is a very good deal. It is also a big transaction - APF make a point that with that the dependence on Kestrel is significantly reduced. I will spell out my interpretation and let others correct me!
http://www.labradorironore.com/

The price of APF is slowly rising - currently 126.5p-129p, yet the market seems to be blind to this deal and initially all deals were sells:
http://capita.moneyam.com/trades/apf

Cost C$65.5m for 4.25% of a royalty company. Last year distribution of C$169.6m, so 4.25% gives royalty to APF if same distribution this year is C$7.2m. So the nominal yield is about 11% with quarterly payments. That sounds to me to be a very good return. The royalty is immediately accretive. There is always the option to increase/decrease this holding.

One of my immediate concerns is the price of iron ore has been hammered down by the huge iron ore mines in Australia. However we are talking about premium ore pellets with this deal - which currently command a premium of $27/t. Mine life is 25 years so it is a long term income stream. I struggled to find articles on iron ore pellet prices, this is one from June 2018 indicating the premium prices being obtained:-
https://www.argusmedia.com/en/news/1702592-prices-of-indian-iron-ore-pellet-rise-in-china?page=1

I also noted a much reduced income in the latest RNS of 7.8.2018:_
labradorironore.com
Labrador Iron Ore Royalty Corporation Announces Results for the Second Quarter...
Labrador Iron Ore Royalty Corporation ("LIORC", TSX: LIF) announced today its operation and cash flow results for the second quarter ended June 30, 2018. Royalty revenue for the second quarter of 2018 amounted to $5.1 million as compared to $33.8...

However this has been put down to an extended strike that has now been resolved and a 5 year labour agreement has been reached. The outlook statement includes “IOC is expecting good production and sales tonnages in the third and fourth quarters of 2018.”

APF make a big thing about this deal significantly reduces the dependence of income from Kestrel saying its contribution fall from 49% to 41%.

A key statement is that APF have so much cash and cash coming in that they only needed £17.3m draw down of their credit facility and without any more deal they will be in net cash by the end of the year!! So a huge purchase funded by its own cash generation.

Perhaps things might move after the analyst presentation:-
There will be an analyst presentation via conference call at 9:30am (BST) on 16 August 2018.

The Buzz

This is what I have just posted on the ii web site.

It looks like a fantastic deal that fits in well with APF's strategy. Analysts presentation at 09:30 today. Shares still a a lamentable low of 127-129 but admittedly 3p up on a very depressed closing price yesterday. I would have expected the market to have responded much better than this. Current trades look like the market has not even bothered to look at the RNS and just go with the flow:-

http://capita.moneyam.com/trades/apf

The Buzz