Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
You are right, SGD: each core is probably only a few kilograms.
It looks, from today's RNS, as if Sustainable Capital have also been selling down Shanta ( I have double checked and hope that I have it the right way round this time!) It does seem such an odd moment to be reducing holdings in junior gold miners, particularly where both Shanta and Hummingbird have acquired such good grade follow on projects and exciting exploration projects.
"Grade refers to the extent of mineralization of a deposit of metal ore. The higher the grade, the more gold there is inside a smaller space of rock.
Miners want large deposits of higher-grade ore because it makes their operations more efficient. Higher-grade deposits yield more gold while requiring less work. Discovering a deposit of bonanza-grade gold is rare and bodes well for the future of a junior miner.
The World Gold Council defines a high-quality underground mine as having a gold ore density between 8 and 10 g/t (grams per ton), while a low-quality underground mine has a gold ore density of 1 to 4 g/t. Some view bonanza-grade as more than 34 grams of gold per tonne or more than one troy ounce of gold per ton.
Put another way. . .it means big profits if it is discovered in large quantities. And those profits will be passed on to shareholders as the gold explorers move the project into production."
Spot on SDG.
The relevance of the final column is that if you divide that by 31 to get troy oz. then there were over 40 oz just in that first 18 meter core!
As everyone is saying, extraordinary (bonanza) grades and over a big interval.
How odd: lots of asterix in my last post.
"It is just a listing vehicle, virtually a shell, with one insignificant projest , to raise the considerable funds required for the project.
The 51/49 split remains unchanged in ARX and the fund raising/dilution takes place at the Pasofino Gold level.
So, if the whole 49% of the shares is transferred to Pasofino, that must mean that the HUM directors no longer have any shares or will they do a **************? In any event, the intention is to raise a lot of money and so they will be diluted out of sight: the current market cap is minuscule, by comparison. Meanwhile, HUM gets to keep its 51% with no risk.
I would have thought that an RNS would have been appropriate, to let us know that Dugbe is getting a listing and let the more adventurous take a punt on Pasofino."
It is just a listing vehicle, virtually a shell, with one insignificant , to raise the considerable funds required for the project.
The 51/49 split remains unchanged in ARX and the fund raising/dilution takes place at the Pasofino Gold level.
So, if the whole 49% of the shares is transferred to Pasofino, that must mean that the HUM directors no longer have any shares or will they do a ************** ? In any event, the intention is to raise a lot of money and so they will be diluted out of sight: the current market cap is minuscule, by comparison. Meanwhile, HUM gets to keep its 51% with no risk.
I would have thought that an RNS would have been appropriate, to let us know that Dugbe is getting a listing and let the more adventurous take a punt on Pasofino.
Hi Ash,
Yes you are right.
I took it from UKGeorge on the ADVFN GEMD board: I should have checked the RNS myself before relaying it on. (Not in GEMD or diamonds myself and so not following that company or the invest ability of that sector ).
Apologies.
Just for interest, confirmation that Sustainable Capital has been selling down across the board: recent RNS out on GEMD, where their holding has also been sold down by 1%.
Fingers crossed that their fund will soon be rebalanced: presumably, there is a time lag between giving notice on requiring return of funds and any payout and so the May sales will be re the initial panic.
This is so undervalued in comparison with its peer group: a market cap of £140 million minimum would still be really good value for the current production and multiple future prospects, both organic and inorganic growth.
So, $90 million funding for a new mine went largely unrewarded here, whilst a mixed package of the dreaded convertible loan and debt was rewarded at Cora. (That said, well done Bert, cracking on with the job, unlike those AIM CEOs drawing salaries and making no progress with exploration or the next stage).
This must be due a real rerate, once Sustainable Capital have got themselves sorted or perhaps we get another major shareholder on the register.
Well, we have the upcoming AGM at which to make our views know.
We can vote for Resolution 6 re the buy back
We can all write in and ask why they would not implement this with immediate effect, when the SP is such remarkably good value and it would help out their major shareholder, undoubtedly a forced seller re flight of capital and rebalance supply and demand (and cheer everyone up to get this over 30p and keep it there, to give confidence to the market and mover swing traders into the next range).
For those who don't have time to listen to the Vox markets podcast, the strategy was set out with remarkable clarity:
Not growth for growth's sake.
Disciplined selection of projects to get out a consistent message: scale, capital cost, free cash and high margins and looking for higher multiple to reflect lower risk.
Rightly, Betts kicked off with extending the mine life at Yanfolila: the low hanging fruit.
Secondly, Kouroussa: a compelling set of numbers. 9.2% dilution to double output inside 2 years, with 200k oz. pa and 160/180 million pa EBITDA. Not only excellent grades when fully diluted but some staggering grades (for those not familiar, over 30g/t is deemed bonanza grade and Kouroussa found 300g/t, which would be high for silver and is extraordinary for gold) and so high hopes for exploration potential). Emphasis on the synergies, with team in place (only 160km over the border and a remarkably similar project. The perfect rollout program and that is rare in mining.
Finally Dugbe: either develop or lose the licence, with a full write down. ARX to pay the annual costs of $2 million per year,plus the $10 million dedicated exploration and then the feasibility including drilling (eg. all the holes for hydro, siting of mine, tailings suitability etc.) A different proposition from the HUM high margin model, but it should realise value for HUM through a Canadian listing. (those who want a slice of the cake will be able to invest directly).
Summing up: a high margin, multi asset producer, aspiring to be the ESG miner of the future in a market anticipating a flight into gold..
Well, it would appear that the Hummingbird aspiration to become the flagship ESG miner of the future (Betts, in the Vox markets interview last Friday) is direct from the Sustainable Capital book: .Betts must be their blue-eyed boy!
"We integrate economic, social and environmental sustainability (ESG) information into the investment decision making process through adjustments to the company fair value calculations. In addition to the integration approach, we apply a norms-based screening methodology to exclude companies that fail to meet the minimum requirements for inclusion in the investable universe. This norms based screening methodology is based on four main categories of international standards and principles: Human Rights, Labour Rights, Environmental protection principles, Anti-corruption practices."
It was a very strong interview, with absolute clarity of vision: I am surprised that anyone would want some fluffy PR, when they can have such a hard hitting, direct presentation from the CEO (who seems to have upped his game somewhat.
Sustainable Capital Africa Alpha Fund is an open-end fund incorporated in Mauritius, so it will have to sell down to match any funds arbitrarily withdrawn.
The Fund's objective is to provide long-term investors with active equity ...
The Africa Alpha fund is a long-only, valuation-led, concentrated African equity fund (so it will not be trying to game the shorting opportunity: that will be the in-the-know, city insiders).
The Alpha Fund is a concentrated 15-25 stock equity portfolio that presents the opportunity to take material positions in small and medium sized companies. The aim of the investment process is to identify selected opportunities where the market price of a company has deviated materially from its fair value. Portfolio construction is driven by a disciplined, bottom-up research process with an emphasis on detailed, company-specific due diligence.
Buy-sell discipline is led strictly by valuation using a long-term investment time horizon. Investment decision-making is informed by first-hand, proprietary data. Stock selection is informed by fundamental research conducted in-situ in African countries. A company’s position in the model portfolio is a function of the strength of the investment case, the level of conviction of the investment team, margin of safety (downside risk) and the extent of the discount (premium) to fair value.
They are an interesting outfit and HUM so exactly fits their model, particularly with the new plan to double in two years through Kouroussa.
It is a shame about them being an open-end fund.
For those who want to take a quick look:
https://www.sustainablecapital.mu/africa-alpha-fund/
DIM
Well, buy back is resolution 6 at the upcoming AGM
"Special resolution 6: Purchases of own shares by the Company
Resolution 6 to be proposed at the AGM seeks authority from holders of Ordinary Shares of the Company to make market purchases of Ordinary Shares, such authority being limited to the purchase of 10 per cent. of the Ordinary Shares in issue as at 02 June 2020. The maximum price payable for the purchase by the Company of Ordinary Shares will be limited to an amount equal to 105 per cent. of the average market value of an ordinary share for the five business days prior to the day the purchase is made. The minimum price payable by the Company for the purchase of Ordinary Shares will be 1p per share (being the amount equal to the nominal value of an ordinary share). The authority to purchase Ordinary Shares will only be exercised if the directors consider that it is in the best interests of the Company and the Shareholders as a whole.
They, of course, got the court authorisation several years ago.
A lot of well thought out posts re the HUM conundrum.
I saw the recent RNSs as unalloyed good news.
Rubbing shoulders with the great and good: it should improve the share register.
A solid annual update with excellent EBIDTA and a maiden profit (and looking good against our producing peer group) and the added benefit of good exploration results.
Offloading the potential "money pit" od Dugbe for 2 years whilst keeping control and moving it to DFS.
Kouroussa: "mark 2" Yanfolila.
The market either is stupid or dishonest (and the seeking alpha article pointed strongly to that).
At the first sniff of good exploration results extending LOM (Yanfolila or Kouroussa or Dugbe) this will get taken out, unless management preempts that definitive moment.
Looking at cash flow, they are now net cash positive and can borrow for Kouroussa, with repayments to start in two years time, which leaves a slot when the spending of EBIDTA is discretionary. Whilst I would prefer cash to be invested in the new project, I can see that allocation of some of that cash to a share buy back represents fantastic value for holders and would support the SP: good for both remainers and leavers!
If management do not give consideration to this in fairly short order, they will be out of a job: market correction comes in many guises and a takeout at this market cap in the current POG environment becomes a given.
Simple answer. Management have to invest in the spun off company to attract 3rd party equity funds into the start up. They do not have to do that for HUM, since it is not raising funds: that burden has been passed to ARX.
Why not contact HUM and ask if there can be an open offer to HUM shareholders, to invest in the spun off company on the same terms as management?
I personally would not be interested in taking up such an offer, as pure exploration is high risk and generally a game of beggar my neighbour.
If the market was correct, then there would be no opportunity.
The best example I can cite is SLP, languishing at 6/8p a few years ago, with nearly its market cap in cash on the balance sheet and Miton, a large shareholder, a forced seller.
This is a dead ringer, the HUM cash cow now intact and with the risk ring fenced and the reward retained. For me, Dugbe was always a risk: potentially a vanity project for DB, but he has been mature and worked on a first class deal (it's not the financing, but the new management skills).
Nothing more to be said other than sheep will always be followers.
CD
You are missing the whole point here.
The new team want DB & co to put their money where their mouth is: that is common practice, somewhat akin to any bank demanding personal guarantees.
Instead of mindlessly bashing this commitment try and look at this in the round, in the context of greed AND fear. The greed aspect of this has been done to death, but what about now looking at the high risk? Dugbe is not an easy project and this is very much the start of the new chapter.
What we do not yet know is how the rest of the funding will be raised. It is perfectly possible that this will be another Cora, listed on AIM and there for all of us to risk our hard earned. Being honest, I am unlikely to invest, as it does not suit my level of risk taking: for that reason, I am glad that I have not been "involuntarily enrolled" in such a high risk "early days" opportunity and having a 51% share of a project that has been sorted out and "build ready" suits me far more.
The strategy now seems quite clear to me. Escalate the already built Yanfolila, our cash cow, by organic growth and add super value by keeping or obtaining stakes in other projects during the risky exploration phase, letting someone else do the "heavy lifting" and thus having a valuable share of a proven asset to build or sell. Ultimately, that is quite a smart business model.
Well, today was an opportunity and it will be interesting to see how the market eventually digests these last pieces of news: in some way, it has been a total overload of information, with no real chance to digest.
In the light of today's announcement, the WGC seems less important, but might deliver good contacts down the road.
The accounts were all we could have hoped for: a maiden profit and superb EBIDTA, better than most predicted.
The exploration results were mixed, but the near surface grades on the new greenfields exploration were really good and that has tremendous implications for high grade near term mill feed at a low cost and overall LOM.
Today potentially is the start of unlocking an elephant asset and the focus on exploration is interesting. They could be expecting to materially increase the resource by better grades as well as the expanded area.
The figures are a lot better than some are saying.
HUM invested $50 million net, since part of it ($15 million) was funded with the repayment deferred out of profits. The new outfit are looking at far more than just the $10 million for exploration: they also are funding the DFS, which is costly: I have rarely seen one at less than $5 million, plus funding all the overheads and costs associated with the project over a two year period. The package is probably closer to the original figure of $30 million and is therefore a reasonable apportionment for a junior share. Given the caliber of the new management, it does seem like an excellent deal.
It has been an extraordinary week: when will the market wake up?