The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Well - I have now listened to the presentation and have committed some more funds!! Now my average is around 10p as I see that even if we get 1500ozs a week from kourroussa this gives us 63,500 a year and with 80000oz from yanfolia we should produce over 140000oz this year. Say a total cost of $1800 (aisc is not the total cost) then at $2250 for rest of year average we still make $63m which we can pay off debt. Aware that just like all banks being slightly adrift is fine as long as a plan is in place and if it all works out, LOM gets increased for both and aisc and total costs come down then I see a rosy future!! DYOR but these targets are not overly stretching and we would be fine imo
Hi Beadlem - I agree with you that the shares would even in a share offer scenario be worth more than the share offer price as they have a huge backlog and the financial distress would be removed. What I was highlighting is that a 10:1 dilution in shares does not decimate the share price as the added value is added to the value of the company and even if the raise was priced at 15p it would not have a huge negative impact on the share price as it is already at only 23p and the most it would go down to is the raise price (which would demonstrate if sold out that the company is highly valued and the offer price was too low) and if offer sold out then I have little doubt the sp would be over 23p where it was when I made this comment. It would not be a shareholder wipeout which the previous person was stating and likely have limited impact on current sp and at this price not a total loss.
Hi Badvoc, you have to also add the value added to the company/ reduced debt etc. If shares get diluted 10 to 1 but raise 600m (15p a share) this has to be added to the value of the company. Hence new company might have 4.5bn shares instead of the current 520m (with value of 120m) but would be valued at say 0.7bn which means the shares fall from current 23p to only 15p. Very rough but gives a picture of the impact but is a going concern with 8bn backlog.
HI Gold investor even at your figures of 120koz at $1800 costs we are not too bad! 60000 at say $2100 (due to hedges and reduced gold price at start of year) and then 60000 at $2350 (less than current gold price) we would still make $18m and $33m which is $51m we could pay off the debt and as we both know once we hit commercial production the IASC would go down significantly and the amount of gold produced would increase and we would next year be in a great position. Nor concerned at all even with your figures.
Actually the current situation is much better than I expected as we are producing decent gold. 'Since 18 March 2024, operations at Kouroussa have continued with the processing plant operating at the expected levels with mining via the small existing ETASI support mining fleet and the Company has achieved several weekly gold pours averaging c.700 oz per week.' Averaging 700oz per week is 3000oz per month and over 36000 oz. per year from the lower grade and with gold at say $2300 this is near $30m at say $1500 aisc and 80000 from other mine with AISC of $1700 and $2200 price for gold (most hedged at $2150) that is another $40m and this is not far from our debt payments even without the ramp up! This is a huge de-risk in my view.
On margin call - the hedge is over a 9 month period so at present the exposure is near nothing as for most of this period gold was under the $2150 - it is only for the last month and also as it spread over a number of months our exposure is limited at present and spread out over a longer period (if it is even on a margin call)
As gold goes thorough the $2400 barrier - I again looked at the potential figures for HUM. If they achieve 150,000 ozs this year (start mining soon again!!) even at an AISC of $1700 this will still generate $90m for debt repayment (60000 at hedged price of $2150 and 90000 at $2400). Way over what they require for debt repayments and figures used are a higher AISC than forecast and with less gold produced than forecast). It just shows the potential if this starts mining at todays price and how bright the future could be if we can get the gold out the ground (the million dollar question)
The one positive from the RNS is that they are looking at keeping ALL of the work/pipeline and getting guarantees for this - no mention of cutting down on work or workforce or cost-cutting exercises. Also this removes any doubt of them as a going concern - it is just about how much dilution but with a stronger balance sheet and huge profitable pipeline this is not a company that is planning for failure.
I think the point he is raising is that our gold is hedged at $2150 so the upside above this figure is limited. Also the producing mine will have high AISC and reducing gold until the underground section is producing which is H2 2024 - so not yet! Obviously getting $2150 for the gold we produce is still a positive but this is probably only about 15-20,000 ozs at moment a quarter from BOTH mines
Hi DB -it was widely reported and yes originates from the Corica statement which stated 28 days / here is one example https://kommunikasjon.ntb.no/pressemelding/18060143/corica-mining-services-corica---suspension-of-mining-services-for-hummingbird-resources-plc-at-kouroussa-gold-mine?publisherId=90063 the 28days is today so should be update on Monday as this was made public even though no need to do so.
Corica set a deadline of tomorrow for settlement of debt and deed of company guarantee so will get an update one way or the other on Monday. Corica as a company has never entered into litigation with any company so hopefully a compromise will be reached.
We all should take considered risks and keep an open mind. I am invested at a 12p average (and am not averaging down) and am relatively comfortable with this investment. All people can state what they want - as long as they are not trying to mislead on purpose I see no issues. Ultimately Hum is a producing gold mine in 2 countries with dugbe to add the cherry on top. The risk/reward with this share is very positive in my view and if you have done your due diligence then you too would not be overly concerned. Every company has ups and downs and Hum will produce over 100,000 ozs this year no matter what (issue resolved at some point and some gold still being produced). Even at these figures and with AISC of $1700 we would still be valued higher than we are currently. Short term blip which will soon be overcome - we have had other challenges before and always will but the company has always kept going.
Paul - the big difference in your example is that PFC needs extra money only because they have all of these additional contracts and could decide not to bid for them or even outsource some of this work (reduces their level of guarantees). This was not an option for GKP. PFC decisions are still within their control as at present they can decide to drop some of the backlog and reduce this but simply wish to retain them as they want the profit from the contracts. Hence extreme measures do not need to be considered as they have the option to reduce including workforce and will also get legacy patents and guarantees back soon. The need for much greater liquidity is because they also want and expect to have an even larger backlog of work in the near future which will need even more guarantees. Having a huge backlog is a nice problem to have
And not breaking financial covenants and an update coming next month. They are also having ongoing discussions with clients around the required scale and timing of performance guarantees - if they get these reduced or timing changed then there is even less of a requirement to get the money in quick, do a D4E etc. Seems fine to me
Looks like our hedges may cost us money soon - but a great problem to have only getting $2150 per oz for our gold (limited to only 60,000 ozs) which I would expect 10000 ozs already have got the full rate and not impacted by the hedges. Worst case scenario I see 40000 ozs out of our 160000 ozs this year not getting full market rate which if it comes true is great as it means 120000 at over $2150!! Can see us rising significantly shortly
I agree with never investing more than you can afford to lose. However in this investment I do believe it is heavily weighted in the investors favour as PFC are in control of the outcome and their decision-making gives a clear steer. They bid for the work expecting to get some and got more than they expected (not a major issue but has caused cash flow issues) but they can reduce their bidding pipeline if they wish at any time (they haven't), cut costs if they thought there is an issue (they are currently increasing their workforce and putting new roles on their website every day!!) and have employed a specialist (on huge wages I am sure) to steer them safely through what I would call slightly rough waters as they have been to successful in pipeline bidding!! The actions of PFC are not of a stricken company who sees no future but rather one that is taking the right steps to ensure they are as successful as they can be. GLASH - I am pretty confident we will get good news soon but always dyor
On TAX: For Guinea (Kouroussa) doubt there will be anything but min or no tax paid in first year as we have $60m deferred tax when we bought it from Cassidy Gold and tax deductable costs for the build - so expect zero here and we also may have some tax offset for Mali as well. Overall expect not to pay less than $20m(30% tax rates in both jurisdictions) which is covered in my example by the $25m. Obviously interest payments etc. will reduce over time and tax increases once the tax credits are used but it should easily be covered by our gold if we get 150,000 oz. out the ground which is under the lowest value given.
Don't see the repayment of debt being much of an issue tbh!! Even at $1500 AISC and with production of 150000 ozs (below the lowest guidance) with an average gold price of $2000 (which since HUM have hedged 60000 ozs at min. this price, there is an even lower risk of not achieving this price as a minimum) we would still make $75m and have $25m leeway with the recent fund-raise! Hence the chances of not paying the debt is very low!! Hence once commercial production reached we should start the re-rate!