The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Release an RNS to outline their strategy.We dont want after hours RNS to confirm speculation.Coirca does seem to have a decent list of clients and know what they are doing.So looks like whatever problem is Hummingbird has a part to play in it.
It is not just "short-term loan" only , future payments to lenders would be pushed too and this fiasco puts a question mark on every revenue/production forecast.This company has a habit of overpromising and underdeilvering and have only hit forecast coupke of times.It is due to rising price of gold that has helped them this year.
Hummingbird has more to lose than coirca, they should have paid when required.If this escalates it can lead to second mine closure and that is a disastrous situstion.My opinion is company is either seeking further funds to pay contractors or is trying to push debt repayments or needs lenders permissions to issue more shares and none of these scenarios bodes well for shareholders.Equity is worthless right now
Clearly company was happy with their performance at other mine otherwise would not have brought them in.Something is not adding up here, it is either incompetence,fraud or both.It is chain of reactions that can bring the company down.
So why does company not issue an RNS to clarify few things.In one of previous updates it was stated that contractors would be paid once mine is in production and that was meant to happen in Q2 2023.It looks like Coirca has been chasing them for money for quiet sometime and decided that enough is enough.Q1 results would be terrible if this drags on for bit longer.
Total cash was 7.9 million as per last update and cash flow was 0.2 millions.Suspension of mining operations at one mine would impact cash flow heavily and can result in negative cash flow.If they had money they wont be talking to "lenders" in my opinion second mine is at risk of closure too.
Problem is this update put question mark on every projection,estimate and target as there is something seriously wrong with the model.Dont think this quarter would be profitable, shareholders would be heavily diluted if not wiped out.Coirca was compelled to stage this sh** show and second mine is at the risk of closure too as I cant imagine it being "friendly talk over the table".
Do you really think that 27 millions would appear out of thin air to settle this dispute?This must have been going on for quite some time and a vague RNS was released.But we found out about it through a newspaper.When last RNS was released everyone thought it can be about a small pay rise or anything minor issue but nobody thought amount owed is 27 millions.Coirca is holding all of these cards I am afraid and now ee know why did they "need to talk to banks" in first place.
But main question is why did company let it get to this stage as they should not have a cash flow problem.There is something wrong here and some tough questions should be asked.Why would lenders fork out 27 millions for nothing?
Problem is they are contractor at second mine too and if dispute escalates further then I am sure they will use all sort of things to make company pay.But why did company let it get to 27 millions and where is money going as gold is hitting all time high.If production is suspended at second mine then we will have a company that has two to pay lenders and coirca with no income.Someone pointed it out yesterday that they are in discussions with their lenders as due to money issues.But 27 millions is beyond anyone's imagination.
Seminar on 27 should provide some information but right now we dont know who is dumping these sahres and we have a lot of traders locked in too.However they are only providing liquidity for seller to sell into.Time will tell but volume is too much to be absorbed by private investors.