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An idle thought. Should shares which are subject to a 12 month lock in, be admitted to AIM since they cannot be traded ie a minor technicality?
September 2020
"Completion of the acquisition of Kouroussa Gold Project
Further to the Company's announcement on 26 June 2020, Hummingbird Resources (AIM:HUM) is pleased to announce the completion of the acquisition of the Kouroussa Gold Project, located in Guinea, (the "Project") with ownership now formally having been transferred from Cassidy Gold Corp ("Cassidy") to the Company.
The Company is now awaiting to be awarded the mining licence for the Project from the Government of Guinea. Once awarded, the Company will pay the initial consideration of £10 million, which will be satisfied through the issue of 35,248,441 new Ordinary Shares in the Company at a price of 28.4 pence ("Initial Consideration"). This represents 9.0% of the enlarged share capital of the Company."
As transfer of ownership is formally transferred, the deal cannot "fall through".
Difficult to see how the number of shares could change, even if they no longer represent $10 million, unless there is some caveat. If so, why the recent RNS?
Simply unfinished business.
Pressure was exerted last time to force the military to make civilian appointments.
Clearly, those appointments were intended to be puppets, a sop to the ECOWAS interference and it looks as if the military, now embedded in the government, are going to enforce obedience or push the "cuckoos" out of the nest.
Practically, the center of action round the capital is physically distanced and should not affect Yanfolila and it is unlikely that anyone will want to disrupt a source of government income. What will matter is whether ECOWAS gets involved with sanctions and their right to do that is less clear, since the military are now part of the establishment.
Sometimes, even if it is not the western model, strong government is best for all parties: Egypt is a good example and look at their recent success on the diplomatic world stage in closing down the Israel/Palestinian hostilities, whilst the western world dithers.
I hope that no bloodshed ensues and this is curtailed to the political arena and without external interference.
Plat Hunter
You have missed the point.
I have no problem with the dilution. I simply want to know the correct IRR/NPV updated for these terms so that I can judge for myself whether the dilution is acceptable for the deal.
They put the figures out with the original RNS and now the current RNS needs to have the revised figures and confirmation that Coris are still on board.
I am asking for professionalism and transparency and if it is forthcoming, it could be good news for the SP which is what all rational investors want' including me. The question has to be be why you would not want these revised figures in the public domain?
Your answer, Swampmaster, is precisely what should worry any sane investor.
When the ink is dry on this deal, for better or worse, we are committed with all the financial consequences, such as 10% dilution.
As negotiations progressed, the financial model needed to be updated and the decision made on those numbers and not on any possible improvements that they might or might not find as the final design is tweaked.
They need to give us the current IRR and NPV now, if it has changed as a result of the MLA terms: we need to know that this is still a substantially profitable project. They need to provide those figures to the market to reassure investors that
the profitability is not based on pie in the sky future potential savings/improvements.
We need to know if Coris is on board: I (and the market) want the assurance that the financing partner is still on board with these punitive terms.
It is called transparency.
The problem is, TS, that we do not know if those figures still hold good.
The market has been shocked by the terms of the licence which are bad in comparison with Yanfolila, Dugbe and other Ginea projects.
If the terms are the same as those used in the projections put forward by you, why not say so? If they are, then why have we been negotiating for nearly 12 months to achieve precisely nothing?
If they are not the same, then the market is being misled (again) by not updating the IRR and NPV.
On Coris, it would have been appropriate to inform shareholders that the company still has the full support on these terms, which would have killed all this negativity stone dead.
So much for the peasants being satisfied with the crumbs from Betts table: those six wise men from the village have walked off with the cake it would seem.
It is perfectly normal to disclose expected net present value/IRR to shareholders and was particularly important where the terms of a deal, prima facie, look bad.
The information needs to be put out for all, by RNS preferably or on the company website under the Kouroussa project tab.
The shareholders action group needs to keel haul management for their failure to do so and demand rectification: that is the purpose of such a group.
Swampmonster, this is a management which has eroded trust and need to start rebuilding it with complete transparency on returns and financing. That is required to get this company back on track and Kouroussa is a good place to start.
Coris are unlikely to proceed without a parent company guarantee ie all assets used as collateral , including Yanfolila.
That said, HUM still need to find the difference between the maximum figure that Coris will lend and total capex.
The HUM shareholders action group need to demand all relevant information on this transaction.
Management are to blame for the effect on the share price of this announcement.
There appear to be two problems:
1. The terms are bad
2. How will it be financed?
Both issues should have been addressed by management as follows.
1. In negotiating this deal, "someone" is sitting there with a cash flow, putting in the figures and calculating the return on the terms being offered. The terms, which look punitive, may still result in a deal which also great for the company and so why was that information not presented in this announcement, to share that knowledge with the shareholders and show them why this deal has been signed?
2. Coris should have been consulted on the terms and the financing reiterated as part of the deal. I would not expect the company to sign this deal without a letter of comfort indicating level and terms of the available finance and that should have been shared as part of the announcement.
The expected return and probable finance both need to be disclosed to shareholders forthwith.
Adam
You only have to look at the RNSs to see that SC have sold down their shares relentlessly over a 12 month period.
Their concern is liquidity and every time volume picks up, they sell.
The distinguishing characteristics of their trades is that they are usually blocks at midpoint (or very close to).
They had over 13% last May, when they started selling.
It won't take long to shift the balance in tranches of C.400k: they are probably already below 8 million.
The 40 million sold over the last 12 months has clearly had an effect on historical price, particularly the way they hit the sales button every time volume picks up.
Per RNS of 8th June 2020
§ The acquisition of the Project turns Hummingbird into a near term multi-asset producer with jurisdictional diversification in line with the Company's strategy
§ First gold production targeted within 2 years, with production of circa 100,000oz per annum and AISC of circa US$800 over an initial 5 year Life of Mine ("LoM")
Over time, further details of the breakdown of time has been made available, including the 6 month design and optimization and of course, first production is not the same as first pour.
Presumably, much of the costs of the initial design have now been met out of cash flow.
It looks as if it could be Volt, an exploration outfit with the Kouroussa project, 3 areas: - Kouroussa, Kouroussa West and Fadougou permits?
They are at an earlier stage"grab samples" and perhaps a more difficult time in relationships with locals. It would be interesting to know if Cassidy Gold experienced this when they were exploring.
Sympathy for the families of the dead. A moment of frustration, perhaps badly handled and lives changed for ever.
The point is that the POG would matter far less if the grade was as expected and the AISC had been contained below $1000: even at $1750, the margin would have been fabulous.
The processing plant has worked well, a credit to Senet, but the reserves are either not as resource model or have not been mined effectively. Transparent and competent management would communicate what has happened and what is to be done about it.
Part of the problem has been the failure to stock pile and blend higher grade. Certainly, a few years ago, Gonka was to be introduced in year 3 (as that, according to the original mine plan was always going to be a lower grade year).
Overall, they have been slow on exploration: early success there should have yielded further high grade oxide for blending.
Year 3, with high POG, was the year to excel, to have low AISC and build the cash war chest for Kouroussa: there is no logic in deferring cash flow. (The actual reason given was to save wear and tear on the plant, by processing oxide which is not as hard as the fresh rock, but they knew they were going into fresh rock and should have had a decent stock of spares and they do, of course,have the airstrip).
With such a poor year 3 performance, know to them far earlier than properly communicated to us, it is extraordinary that they did not hedge to protect the margin.
The reason why a decent CEO such as Stalker would make such a difference to the SP is twofold. Firstly, he so clearly knows what he is doing and secondly, he equally clearly communicates that to the market: we know his plan and we know how it is progressing, good or bad. Tiehnpo did not come up to scratch, speedily abandoned (for now) and the market was advised, but the recent infill drilling is good news, confirming continuity and the market advised equally promptly. At any point in time, shareholders are not misled.
It is quite extraordinary that the largest shareholder, Rufford, puts up with HUM management.
BT
The company's communication with the shareholders is woeful.
Rather than whinge here (or contact the company as individuals and be ignored) shareholders are working collectively to get change on this, as a first objective.
Surely, any genuine investor would want to see a better presentation, updated website and RNSs which do not mislead?
The SP is where it is partly because of management: markets do not like surprises and this late and lazy management have just provided that in spades.
Hats off to Kadavul for the initiative and ongoing effort.
Well, never mind the dividend (SHG's is coming out of the just raised equity, effectively) but getting the accounts out early is all part of a well run, transparent public company.
For the old "AMERers" no doubt HUM's accounts are "imminent", along with the Reserves and that "very soon" Kouroussa mining licence.
Bushy Tailed
If the FSA did their job properly, this would already be with them, investigating management for a number of reasons.
The question you should be asking is if the drop in the share price is due to shareholders committing financial hari kari or are they simply rebalancing their view based on information which has been known to the board for some time, but not known by the market, particularly private investors.
When HUM management said that they were re sequencing the mine plan, they failed to be clear as to what they were doing, or the financial implications for 2020 or that it would continue into 2021.
They have not provided explanation for the drop in grade over 2020 and they will not disclose the grade used when calculating AISC for 2021.
Shareholders need absolute clarity about the resource and have every right to this information: Dan Betts cannot get away with saying that the results closely follow the resource model, when that is contradicted by the grade in quarterly actuals.
Instead of prattling on about ESG, management need to recognise that shareholders have an absolute right to know the full position: anything else is misleading the market and the proper concern of the FSA.
Do you have a problem with the truth?
What they need to do is to run at full capacity and blend with the higher grades: they need to push forward with the exploration, selectively focusing on grade.
It is the reduction in oz. produced per Q which has pushed up the AISC and reduced profitability.
Had they gone, like CORA for a cheaper Capex, heap leaching operation, then that might have been a more profitable option, but they are too far down the road now.
None of us is happy with the current situation, but to say that this is going to be loss making over the next 6 months is probably an exaggeration, unless the POG absolutely craters.
It also needs to be remembered, that even at breakeven, it is still throwing off cash as depreciation/amortisation are a book charge only.
Obviously it would not be good long term, but the sustaining capital/development capex is partly discretionary and could be reined in.
I am firmly in the camp that management has to change, both for their incompetence and concealment of the true state of affairs in 2020.
What we had in one of the recent (post RNS) interviews is DB asserting that the mining has validated the resource model over all (albeit with individual variations).
What we also have is grades that are not in line with overall project.
Looking back, there were changes to the grades from tinkering with the pit design. Have these been reversed?
There is a note to say that local miners had affected grade, but that can only be true of the surface oxides: they have not been down in the fresh rock.
The final straw is the December RNS which claimed they were already in the better grade ore: the explanation is not credible as they should have been doing grade control.