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Malik is talking his book as he has declared he has an open short on MKA. He really is being disingenuous criticising McNulty on Twitter for publishing his own trades and “front running” PIs, when Malik appears to be attempting much the same, albeit he just doesn’t carry the social influence to have much effect and has now found himself on the wrong side of a strengthening share price. Current NdPr prices are in line with those assumptions set out in the DFS for 2022, so everything looks to be on track here. Malik has no visibility of the contemplated G Azoty process, costs or forecast profitability, as this has not been published, so his comments about their next moves are complete finger in the sky guesses by him, being someone with an open short position who wants the share price to fall. Suggest his views are only worth listening to if he publishes detailed explanations of his thinking, with numerical workings (as McNulty does from time to time on his blog), so his comments can be properly scrutinised. At the moment, he’s making noise and flapping as rises in the share price are losing him money.
What an asinine comment - they’re drilling full speed ahead, gravity survey results due any day, either be patient or sell. Ranting that this share isn’t going to 10x before they’ve released any Red Setter drill data is simply moronic.
Art, I think you also need to consider the market caps of those two companies you mention and the % of their respective projects they hold. Wishbone holds 100% of Redd Setter with no issues like historic net smelter royalties or back in rights from third parties. Greatland raised several times in their formative years - all par for the course in the evolution of an exploration company.
No need to throw your toys out of the pram. I was just posting factual observations about comments you have posted in writing on this site which have turned out to be complete and utter cobblers.
Your posting history is there for all to see and judge…
Clearly frustrating for you, having opined so loudly about the merits of EVR, to then have been proved so very very wrong in several of your assertions.
The problem with NPVs is carp in = carp out, as in your model.
A few observations:
1) Your discount rate used is far too high given the processing plant is already built (eliminating a lot of risk) and in light of financial environment and current risk free rate of return. 8% would be more reasonable (and is still high). This immediately increases NPV to GBP 445m, based on your figures, well in excess of our current mkt cap.
2) Your assumed recoverable reserves of 7.6m oz gold is low given known resource geometries, intersections and recent step outs.
3) Your assumed profit per ounce is far too low, given gold price, known grades, size of resource, the fact that the main infrastructure is already built and Newcrest's expertise mining block caves (Cadia). Increase this to a more reasonable $800/ounce and NPV increases to £712m.
4) Your model ignores that Newcrest will mine the high grade stuff first, significantly increasing NPV by pulling higher margin production to the front of the production profile.
The fact that Jim has appeared parroting your flawed calcs is no surprise - he told everyone he'd bailed for ORCP just before this share price screamed higher - absolutely clueless.
Gervaise verbally confirmed Firetower target drilling, on their Tasmania licence area where it's cooler, to take place this Jan/Feb. He mentions it around 7:30 mins into this vid: https://m.youtube.com/watch?v=JEPOQ4pn_bk . Not clear why they've not updated about the status of this work and if/when it's happening?
Rellim - believe you're correct that they stated they can't drill any targets in WA, such as Black Hills, while the weather is at its hottest Dec thru Feb.
"why on earth would they build in the right to more warrants at 2p"........... because warrants are NOT issued for the explicit purpose of funding a company, rather warrants are issued as an *incentive* for investors participating in private placements.
Rick Rule (CEO of Sprott Global) has spoken about this subject at length in many of his interviews. They're well worth a listen/read.
If GGP do release stellar results pushing the share price over 3p, they will have the option to trigger the "accelerated exercise condition" to request warrant holders from the last fundraising to exercise their warrants.
Seems sensible to get everything lined up ready to facilitate this accelerator if they're expecting good results and a positive market reaction. Good luck all holders.
Nice snippet from the most recent podcast:
On Gonka: "it's all open at depth and it's only shallow drilling down to about 300 metres at this stage so we'd like to think we could be on the TIP OF AN ICEBERG."
Great stuff.
Sorry RA, I have just checked and stand corrected, you are correct. This most likely partly explains where the Q2 cash went despite reporting reasonable AISC numbers.
Per World Gold Council:
The initial development of a new open pit or underground mine, including related infrastructure should be considered non-sustaining. If a second pit or a second underground mine is developed at the same operation, the initial stripping or surface underground development should also be characterised as non-sustaining if it meets the materiality thresholds for a ‘major project at an existing operation’.
So, on the basis of the guidance above, the stripping and development costs for both open pits probably were excluded from the AISC numbers entirely.
On the ball mill, the World Gold Council's guidance states:
“Non-sustaining costs are primarily those costs incurred at ‘new operations’ and costs related to ‘major projects at existing operations’ where these projects will materially benefit the operation. A material benefit to an existing operation is considered to be at least a 10% increase in annual or life of mine production, net present value, or reserves compared to the remaining life of mine of the operation. Companies should publicly disclose the ‘new operations’ and ‘major projects at existing operations’ that are considered non-sustaining. ” The determination of classification as sustaining or non-sustaining requires judgment by a company’s management.
I think HUM have guided a material increase in LoM production from the ball mill, so again, you're probably correct in assuming the ball mill will be excluded from the AISCs.
As shareminator mentions below, AISCs include capitalised mining costs, which are released over the life of mine. These costs have already been paid for as part of the mine build, so there is no associated cash spend in the year of gold production.
Using RA's "back of a fag-packet" approach to calculate free cash flow below, you'd need to add back an estimate for these capitalised costs, which he's conveniently forgotten to do in arriving at his figures.
HUM have had a nightmare in Q3 but I don't see the outlook is as bleak as claimed by some posters.....
RA - AISC does include a % of corporate G&A costs as well as sustaining exploration costs and sustaining capital expenditures, so it's not quite as grim as you imply. However, agreed that AISC does not reflect all-in-costs and the difference can be very variable (especially with cash burning events like BH).
Sentiment would improve if the Liberia MDA was finally signed. This would give confidence that HUM have full legal title to two separate commercially mineable gold assets. This recent article mentions that HUM have submitted the requested modifications to the MDA to President Weah but he has still not signed:
https://frontpageafricaonline.com/politics/fpa-weighs-in-on-performance-of-chief-executive-cabinet-ministers-for-the-year-2018/
RNS last Thursday stated:
"[HUM] expects to secure a CFA5.5bn (circa. US$9.5m) overdraft facility with Coris in THE NEXT WEEK. The overdraft facility will provide additional working capital flexibility if required. In the event this overdraft facility is not secured, the Company will provide a further update."
Since a full week will have passed tomorrow, as a minimum I'd imagine HUM should RNS the overdraft position as it's clearly material to the going concern of the company.
sands - they're my thoughts too. Better news could be issued later this week confirming that both the Coris overdraft facility has been agreed as well as positive drilling results.
If drilling results were not good, I think they'd have got a brief mention in last week's RNS.
Charliee - as I read it they’ve agreed a loan for $9.5m for the ball mill. It reads as if HUM have also asked for a separate additional $9.5m overdraft facility for general working capital purposes which has not yet been finalised by Chris but is expected to be next week. Happy to be proved wrong here but HUM do seem to struggle to issue clear concise RNS’s.