Member Info for Swatton

I think that is a good idea. I might do the same and also ask where we are at with regards a new chair of the board. Given what's happened it makes me real nervous that Dan is effectively taking on that role too. I did write to the chair last year after the issues and he did send me a reply which I was surprised about. But the shareholders don't really have anyone to turn to at the moment.

Well maybe that is Schroder ISF Global Gold Mutual Fund bailed out. They had 11.8m shares as of 30th June. Matches the 11.8million trade just gone through.

Don't forget also they are reclaiming VAT now. They were hugely in credit to the government when discussed at the AGM. Can't remember the exact figure but I think $20M. Now that sanctions are over they are recovering this and they mentioned in one of their recent RNS that VAT will be cashflow positive in going forward. Whether they manage to reclaim all the amount owing to them who knows!

I'm not convinced that there is any 2022 drilling campaign. They only set aside $2m for this and I wouldn't be surprised if that was cancelled with cash flow being tight for Karoussa.

The RNS was obviously very positive with some amazing grades reported, but I am more interested in why it has been posted today. These results were from last years drilling programme and they have been the best set of results reported to date. Hum has obviously had them for a long time so why post them today? In my head there are three possible reasons:

1 - They have cut back on having the results analysed to save money and they have only just had the free cash to get them analysed. If this was the case then that would be positive for future cash flows. But I don't really believe this to be the case as it would be pure luck that they have turned out the best and reported last, so unlikely.

2 - They have kept them back deliberately to build some momentum behind positive news flows for the company. If this is the case and Q3 figures were going to be bad then I don't believe that they would not have posted this today. I believe they would have left this RNS to after the Q3 results. So I wonder whether this is early indication that Q3 is going to be ok.

3 - Like two above they are building positive momentum to support the share price ahead of an equity placing round to try and build support for the company. This is entirely possible but in order to gain maximum benefit from this RNS there would have to a placing round announced very soon. Maybe even a few weeks.

My gut feeling is the reason for the RNS today is number 2 above and my take away from this is that this is an early indication that Q3 and cashflow is going to be ok. As time passes and we get closer to Q3 results and point 3 doesn't happen then the more confident I will be that Q3 will be good and there are no major cash flow issues that would require equity financing.

It is worth noting that these are the finally assay results from last years drilling programme. So there is no new good news from the drilling programme to come. Another reason why todays RNS was carefully chosen to be today and significant in my book.

Just my thoughts, obviously DYOR etc...

The trades this morning weren’t mostly sells. I could get buy and sell quotes for 7p at the same time.

Meetings to review the constituents of the FTSE100 and FTSE Mid-250 are held on the Wednesday after the first Friday in March, June, September and December.

Just saying ...

Hi BillyBoy. I think it will be very tight. When I talked with the team after the AGM I got the impression the plans are 24k oz and 25koz. They haven’t done any where over 25koz for quite some time when they did actually achieved 30koz. I think this was actually using pretty much all ore from KE. So that is absolutely the top it could be. I would love them to post over 25koz but I wouldn’t bet on it. I think they could but that would mean them using more ore from KE instead of SW.

There are two dynamics at play I think. They need more KE to stay profitable and pay for Karoussa but that is at the expense of not depleting KW as they can only process circa 360kt of ore per quarter. They will want to deplete KW quickly to get the poor ore out of the way to make for a much better onward story at Yanfolila. So I think they will be doing a balancing game.

The good news is that if they do need the cash desperately they could now probably turn KE full on if they wanted too I think.

HUM have been exhausting the Sanioumale West (SW) pit, grades are 1.86g/t. This is due to be completed by H2 2023. They have been adding ore in from Gonka at 3.15g/t but I suspect that the excavator issue has prevented much new ore from Gonka being added in during H2. With little extra ore being excavated I believe that they have also been using ROM stockpile ore which is currently at 1.19 g/t to back fill which has diluted the ore grade again. Now all excavators are on site and operational that should improve. They are also going back to Komana East (KE) which has ore grade 2.99 g/t in H2. I think they are also reducing the SW operation but they won't want to reduce it to nil as they will want to use up this poor grade ore and get through its fast as possible..

My expectations are for 24kOz and ASIC of $1600 in Q3 and 25kOz and ASIC of $1500 for Q4. The ASIC might come in a bit lower if they have some cost savings due to fuel prices reducing and the sanctions lifting.

If they do a placing at these levels then we are talking about a massive dilution. It would only make sense if they had to raise circa £10M plus which would require a dilution of an extra 125M shares at these levels. That would be a disaster and seriously limit the potential upside to the share price! I would rather they seek alternative routes first to the finance if they need to.

Wonder if we will see a director purchase reported soon?

Lol snap :)

Well if there is any positive to this RNS it has to be that they reported the results pretty much a month earlier than last year and really quick after Q2 results. So my take on that is that they wanted to get out the last of the bad news ASAP so maybe onwards and upwards from here.

Companies guidance of 87koz unchanged. They were confident of achieving this at AGM. I know you can question that given history and I am doubtful. But to do that they need to hit 25koz per quarter. Given costs may have peaked with oil prices declining then an increase in gold by 25% will reduce the ASIC by a similar amount which is circa $1500. Whilst not going to generate lots of cash hopefully it will be positive cash generation and not negative.

And Rhodium prices seem to be ticking up too. That’s got to help this quarter.

At the AGM they said that they are considering all options. They mentioned that a sale wouldn't be quick because of the necessary due diligence. I felt that they were honestly looking at what is the best to maximise shareholder return as opposed to doing something quick to get the company out of a hole.

I'm interested to know what people think about expectations for the earnings for Q2. I.e. what do people think Mr Market would consider the earnings to be ok and for the share price drop to stop and start a turn around. My own feeling is that HUM need to report at least 20 kOz with an ASIC less than the price they sold the gold for say $1800. What's everyones views?

That was pretty much my understanding on the VAT issue too. The only addition to make is that this I believe they said that reclaiming the VAT is built into the budget and required alongside Yan coming good in order to completely fund Karoussa. It is pretty much out of the companies control.

For what it's worth my take on what Q2 report might look is something like the following.

The FD said that they budgeted for the first half to be cash neutral with all the cash flows coming from the second half. He also said that Q1 was lower than expected. Implications are that they were expecting Q1 to be loss making (but not as much as it was) and Q2 to be cash producing and cancelling the loss. Q1 they produced, 15.5kOz with an ASIC of $2235. This implies a cost base of $35M roughly. They were down on ore processed 300,000 t compared to normal somewhere around 365,000t clearly due to the replacement bearing on the mill. Assuming that they have an increased throughput to normal figures and the same grade then we should see around 15.5 koz x 1.21 = 18.8 koz. With a cost base of $35M this would equate to an ASIC of $1860. My personal feeling is that this is the lower bound of what to expect in Q2.

The team were confident of meeting the guidance. So given that 87k is the minimum and I think realistic numbers for Q3 and Q4 are around the 24k and 25k oz levels then that leaves a number for Q2 of 22.5 koz, this would give an ASIC of around $1550. My feeling that this is an upper bound for Q2.

With the increased availability of the excavators in Q2 and it has been pretty much the whole of Q2 (since 8-10 weeks ago) then I would be hopeful of an increase in grade by virtue of the fact that they have more choice in what to process. AK said that they used to get a lower grade in the mill compared to modelling but that they are seeing a more predictable grade. He didn't confirm whether it was actually more or less than previous but that's not surprising given that would be market sensitive information. Any way a 10% increase in grade would take my lower bound expectations to 20.7koz at an ASIC of $1690.

So my hope for Q2 are for ozs greater than 20k and with an ASIC less than $1750.