Member Info for Juxtapose

A good solid update, scheduling the updated reserves from the 2018/19 drilling campaign.

All the excitement of further update of reserves and exploration drilling success is to come

"The Company has recommenced exploration activities after its successful campaign in 2018/2019 where 230kozs was converted to Indicated Resources and 62kozs of Inferred Resources were delineated."

If they can do the same again, that would extend LOM by a further 2 years (and if high grades, suitable for blending are found, that could seriously increase annual output/reduce AISC).

Recommenced = have already started ie proactive and not resting on laurels.

Deals also afoot: Dugbe will be absorbing management time.

A solid cash cow, with massive potential upside and the expectation of regular news flow in addition to the quarterly production updates.

Harry Agnosteras Adams: Kefi

A direct comparison.

Both bought projects off 3rds parties (Kefi: NYO and HUM : Goldfields, similar geology, similar size projects, slightly better grades for Yanfolila, but Kefi acquired Tulu Kapi, several years before Hum grabbed Goldfields).

Kefi has been a string of broken promises centering round the financing myth that it could be debt funded and the reality has been drip, drip drip dilution.

HUM bit the bullet, took equity finance sufficient to catch a poor part debt option and then swapped that out for a better option along the way. The mine was delivered on time and on budget and managed to weather the pit wall collapse and even motored ahead with the second ball mill, which (together with luck on the POG) is now delivering a fabulous return. Without that second ball mill, management could have comfortably drawn salaries for years, jam for them: instead, they have taken a course of actual which lowers AISC and that, just for once, means jam for us.

Unlike some, I don't need anyone to hold my hand and pop out an RNS to calm my nerves: I want "show" not "tell" and the "show" of Q3 and Q4 have given me confidence in this company.

Don't even start on the list of failed CEOs just in the gold space, is is endless: so many of those liars standing by a hole in the ground.

10 years on and what is the lovely Mark Childs doing at CNR, other than minding the hole in the ground for Jim Mellon?

It is a reasonably thoughtful article, but some aspects are not properly understood.

The company was quite clear about what happened to the cash:

"In addition, the Company has continued to strengthen its balance sheet including reducing trade and other payables."

It has already been discussed here, but trade payables were exceptionally high and creditors have been remarkably patient over an extended period of time. In the light of that, the company's explanation is credible.

Dugbe is more difficult to "justify" since it depends on a very personal point of view. I believe that funds are better concentrated on Yanfolila and getting return on the capital expended on the already built plant, but I can see why others feel that HUM should hang onto the additional 4 million oz. and take the quantum leap (with all associated risk) into the next league of gold producers. Of course, like everyone else, I do want a good deal for Dugbe and it is frustrating to have some but not all details revealed. What has been shared so far, looks like a new, special purpose vehicle, to lay off the risk (and $15 million of liability on our balance sheet) whilst retaining some of the upside.

Exactly so, Ctw.

The debate does focus the mind on the potential here.

What we are all saying is that H1 at $1350 has the potential to pay the whole year's fixed debt and H2 ( plus any upside on the $1350 throughout the whole year and net of admin./Capex) will be pilling up on the balance sheet.

It is extraordinary that this remains at such a lowly market cap.

DIM

Spelling the debt payment protection out more clearly.

We have been told that debt to be repaid in this year is $30 million ie that is a cash requirement in this next 12 months, as the company is de-leveraging at a phenomenally quick rate (and will leave the company as a cash cow).

Above $1350 per oz. is being regarded as "super profit" great to have, but not essential for debt repayments.

If gold drops below $1350, management want to protect the whole margin between the AISC of $850 ish and $1350, an amount of $500 per oz. and on 60,000 oz. that calculates as $30 million.

It is a specific hedge for the debt and will not be expensive, as it is unlikely to come into play: just like life insurance or mortgage protection insurance: you hope that you will not need it, but wise to have, until you have decent savings.

The administration costs are irrelevant, as they should be covered by the profits on the unhedged portion of production and in any event, some items are not cash (eg. share bonuses, ) and some will be discretionary spending.

Personally, I don't see the hedge coming into play, but had it not been taken out, a basic step in risk management, I would not increase my holding here. As it is, I see this as the next SLP, held down by unwarranted fears of a short LOM and failing to take on board the proximal opportunities to convert existing resources and underground exploration.

I am hoping for 120,000 oz (given the second ball mill), AISC of $850/$950 for 2020 and a clear road map for the upgrade of resources and exploration. The latter should provide the periodic RNS excitement to an otherwise solid year of production/pay down of debt.

DIM

It is the wrong way of looking at the hedge, which protects debt repayment in the face of Armageddon.

So, with AISC (a reasonable approximation to cash flow) at around the $850 mark, the hedge protects that cash flow in the sum of $500 per oz. and on approximately 15,000 oz. per Q coming to $7,500,000 per Q or $30,000,000 per year.......which just about equates to the debt repayment scheduled for the year. (I assume that they may, closer to the time, hedge again for the second half, unless they are swimming in cash from H1, in which case, no need for the precaution).

It is a hedge fit for the specific purpose for which it was designed: comfort for shareholders and creditors/lenders that we are not going to be caught in the leveraging trap and hand over valuable assets for peanuts, as is seen time and again in the resources sector.

Give credit where it is due: this is an entirely transparent and wise management decision and should be welcomed.

Why would shareholders not vote this mechanism down and negotiate a company purchase instead?

This way, the failed management get their hands on the money, but in a company sale, funds go direct to the shareholders.

It has to be LOM, GB.
Focusing on Yanfolila, further exploration and proving up of resources, is what will increase the SP.
The news on Dugbe is good, since it potentially retains upside, whilst passing the risk to a separate entity.

"What's next" has to be rolling out an active proving up and exploration program proximal to Yanfolila ie. sweating the existing asset.

Well, I continue to hold for Serenity.

In truth, this is a share that has hit a low (several in fact), both doubled and tripled, been gang banged by the "mafia" and enjoyed a shed load of insider trading during an exciting drilling campaign: the market struggles to place any value, let alone a true value on it!

For that reason, looking at comparatives is the most useful exercise at this point in time. Does anything else out there have more potential for less money and with less risk (either at this stage or production)?

Freshair

There has been stock on loan on I3E and as at 30th November the figure was
GB00BDHXPJ60
I3 ENERGY PLC 0.01
522787.09 (stock on loan)
75560344.04 (issued shares in public hands: less than issued share capital)
0.69
That will be in addition to any spread betting.
I have not seen any stock on loan until recently.

Only the larger individual shorts are recorded on short tracker.

Stock on loan gives the total of shares being "borrowed" at the latest figure I have is that quoted of 1.92%: that figure was over 2% earlier in the year when HUM hit the bottom and disappeared as the SP recovered.

All part of reading SP movement and understanding posting motivation.

This is a story of consolidation to move forward.

What we saw last Q was substantial cash generation shoring up the Balance Sheet and moving the financial dial from risky to safe and that was reflected in the share price, prior to the previous shorting attack (that was how it was taken down so low and then bounced so hard).

Once there is a sensible buffer, then this can move forward again with strength and energy.

This is the ABC of traditional business and reflects a maturer approach than the **** or bust normally encountered on the AIM: the dam wall obviously provided a wake up call on basics.

I am no particular fan of Dan, but I see this company as another SLP, which finds its feet and then becomes a solid cash cow, rolling out schemes to continually enhance the return for shareholders from existing assets: the second ball mill is a good example of that.

We should be looking forward to more exploration. working with CORA and a plan for Dugbe, all of which are the next sensible options and all within grasp as our Balance Sheet stabilises.

So, stock on loan 1.92% ie this is being shorted again.

No wonder we get the continual drip of subtle poison here, masquerading as half a glass, but always half empty!

This was sold by Goldfields because it was of insufficient interest to a major. It would need establish (probably in cooperation with Cora) a significant gold district before the likes of Endeavor came knocking and that process would, of course, attract attention on the way with the resultant effect on the SP.

A partner for Dugbe is the more likely next announcement and that probably requires a bit of time and money to get it into shape: probably update financials reflecting the improved energy proposals.

Periodic Review of Constituents
8.1 Review Dates
8.1.1 The FTSE UK Index Series is reviewed on a quarterly basis in March, June, September and
December. A full review of the FTSE All-Share, FTSE All-Small and FTSE 350 Yield Indexes will be
conducted in June.
The index reviews will be based on data from the close of business on the Tuesday before the first
Friday of the review month.
Any constituent changes will be implemented after the close of business on the third Friday of the
review month (i.e. effective Monday), following the expiry of the ICE Futures Europe futures and
options contracts.

https://research.ftserussell.com/products/downloads/FTSE_UK_Index_Series.pdf

I did get a response to that question: it is a question of timing it would seem and so this next quarter will be critical, to see if we have done better and have an "up" one.

"Re gold price we sell a dore so that reduced gold price achieved but equally reduces refining charges to sell it as pure. The reason was down to price at the time the gold was being sold as it’s not a completely even event. Hopefully we will be up some quarters but this quarter we were down sadly!"

There is a reason for the late LOM.

It is costly and needed more drilling and interpretation: the proverbial hit the fan and they had to prioritise funds, which they did: the remedial works and the second ball mill.

Now they are in funds again, they can get cracking.

The question for those saying that they should have stuck to producing the LOM update, what would be the point of that, if they went bust in the meantime?

I do think that the delayed LOM is holding this back and look forward to the update. It would be a real bonus if at the same time they were able to announce some arrangement with Cora, either an increased stake or some closer form of cooperation.

http://www.stockchallenge.co.uk/ftse.php

Sadly, this is in the grip of the shorters and fundamentals are not the driving force here.

4th December is the key day to get it ejected from FTSE100 in this Q's reshuffle ( forcing trackers to dispose of the stock and free up sufficient to close out such an extraordinarily high short position held here, in relation to available stock).

If they don't get what they want, then the sheer volume needing to be closed out will be rocket fuel and with the increased precious metal prices and Herredura coming on stream, I doubt if they will get another chance in March 2020.

The big difference between profit and cash flow, particularly in mining companies is depreciation/amortisation: the earlier poster putting forward EBIDA as an approximation for cash flow is far closer to the mark.

H2 is difficult to gauge at the moment, though higher precious metals should make a positive outcome.