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Hi Alas, thanks for the considered (if slightly cryptic) advice!

I think I can get a reasonable feel for profitability in "good times" but I'm concerned that I don't have a good grasp on the downside risks hidden in the balance sheet. (E.g.) How much downward pressure in commercial property rent / bond defaults / equity holdings could they tolerate before profits are obliterated?

Perhaps I need to go back through the annual reports in 2008 / 2020 to get a flavour...

Posted this on the L&G board but thought it was also worth dropping here:

Could someone point me in the direction of some educational resources around valuation for financial / insurance companies (L&G, Aviva, Phoenix)? General guides or detailed stock write-ups?

I find the annual reports fairly impenetrable as a non-expert, but instinct tells me that they're probably cheap given current dividends and asset coverage over statutory limits.

Thanks in advance, appreciate any help.

Could someone point me in the direction of some educational resources around valuation for financial / insurance companies (L&G, Aviva, Phoenix)? General guides or detailed stock write-ups?

I find the annual reports fairly impenetrable as a non-expert, but instinct tells me that they're probably cheap given current dividends and asset coverage over statutory limits.

Thanks in advance, appreciate any help.

Best of luck Playboy, suspect that you'll either look a genius or a fool in a couple of years time, but either way without the psychological burden of holding this (!).

This board is extremely polarised between pessimists and full time rampers, so I'll attempt to tread the middle ground...

My thoughts summarised:

The assets here are good, despite jurisdiction and continual Yanfolila own goals over the past 3-4 years. Both mines are mostly high grade open pit, so it really can't get much easier from an operational point of view to get the gold out of the ground. Even ignoring Dugbe, the assets alone justify a share price multiples of where it currently is (that's why we're all here).

But management have a pretty shocking track record of missteps, poor communication with the market, and lack of shareholder alignment. They were forced to issue shares at an all time low share price just to ensure the business didn't go under, and that's with the gold price (and AISIC spread) at very attractive levels. The business would likely be distressed at this point had the gold price over the past 18 months been closer to ~$1500 / oz. While supportive in terms of offering finance, Coris largely have the company over a barrel here (at least they do now have substantial equity on the line).

Looking forward, the underground plans at Yanfolila concern me given the potential costs, complexity, and timing required to get it up and running. Management's full-year Yanfolila guide of 80-90k oz has largely been shrugged off as sandbagging by most on here, but we really have no reason to doubt them. We know that the mining in H1 involved tapping our high grade "low hanging fruit" deposits to ensure decent cash flow generation, and I'm therefore expecting volume in Q3 to be down QoQ. On the more positive side, once up and running Kouroussa is going to absolutely print cash. It'll need to though, given the amount of debt to be paid off in 2024 / 2025.

I'll be waiting until after Q3 results to increase my position, which I expect could be pretty rough if Yanfolila volume is down and Kouroussa not up at decent levels of production. Happy to take the risk that something may happen with Dugbe in the interim, but given the additional debt announced today you'd have to think that no deal is imminent.

Some reassuring comments in the Investor Meet presentation today. Obviously it's been a bit of a disaster so far this year (particularly at ED) but James & co. seem very tuned in to the issues.

Well it looks like the business is at worst breakeven, so I don't see why it should trade below net cash. I agree that the viability of the business model is currently a concern though, and I think that it's best to assume that the algo issues don't magically reverse course.

We need to see updated visitor numbers and ad revenue to make an assessment.

Could be a forced sale if they're facing redemptions?

I've been surprised how stable the gold price has been over the last few months. Feels like we've been hovering around $1950 for quite a while now.

Also interested to understand the thinking with the most recent acquisition. They've effectively bought 12m Facebook followers - what value do they expect that to bring to top line (given the comment around detrimental algo changes)?

Indeed, so we're looking at a full year revenue drop of ~20% yoy. Feels like that sort of performance could have been communicated to the market sooner...

In terms of the traffic issues, I'm struggling to square that explanation with the increasing visitor counts presented in the 2022 update. Lots of questions. Hopefully a bit more clarity from management next week...

Expect adj. EBITDA for the year could end up being something like £300k to £500k. Not game over but some fairly significant questions over the long term plan.

Well, that didn't land particularly well with the market...

Gap down 10%

Fancy reading our horoscopes while you're at it?

Even if the YOY numbers were disappointing, the shares would still look incredibly cheap. Eventually the buybacks will force the share price higher.

I think this is just uninvestable for many institutions due to perceived regulatory risk and the lack of hedging.

Thought the team did a pretty good job there.

Would be really useful (having given a bit more clarity about the different business sections) to provide more granular numbers for each division in the quarterly updates.

Great video, have an additional subscriber!

Hummingbird are just really poor when it comes to communicating with shareholders. Would be so easy to put out an RNS to confirm / disconfirm that it's an issue, but instead radio silence.

Remember something similar about a year ago at Yan when there was some vague comment about locals breaking into site, with zero clarity given on any potential theft / vandalism. It shouldn't be hard to keep the market updated on these things, the lack of clarity just adds to distrust.

Any idea if the presentation(s) from CMD today are going to be made available?

I actually don't mind the UK property business - I think it's value is obscured by the fact that it's owned by a SA coal producer. Imagine what value you would ascribe to a property business with £10m+ of property, annual rental income of ~£1m, and a further £10m+ cash/investments. Haven't looked into the potential London development but would imagine there's probably another few £m value in that.

The way I look at it you're effectively getting the (profitable) coal business for free, with lottery ticket earnings potential if the thermal coal price tracks higher for longer again (and the rail transport issues are resolved).

On the other hand... corporate governance issues are real, and the commentary about looking for further coal based M&A opportunities is a potential concern until potential deal economics become clear.

They're only reporting net losses because of the significant amount of amortisation (associated with prior M&A). Back that out and they're highly cash generative.

EBITDA to CF is ballpark 100%.