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For context Publican was unable to differentiate between net cash/debt position vs total cash and total debt.. so he sold and is back here to talk down the price. Lacking the ability to read basic fundamentals there gives me full confidence to ignore his liquidity claims here.
But to be fair he has admitted he doesn’t have a clue how to read the balance sheet.. maybe he is learning something.
Net debt of $151m means total debts are $151m more than current cash position. Hence HOC have total debts of $320m.
Thank you for posting the October Sprott report! That was an eye opening read with much significance placed on the third quarter 2Moz Syama North resource update and revisions to future production forecasts.
Focusing on this the updated Mineral Resource estimates for Syama North increased 40% with the PFS now underway to determine development options at the Sulphide processing circuit.
The basic premise being confidence is now so high in the Sulphide processing circuit and the liklihood of converting significant Resources into Ore Reserves that management are changing tack from the high capital cost ($100m) development of Tabakoroni underground and instead will expand the Sulphide circuit with lost capital cost expansion options.
"The Syama North open pit option has been prioritised due to it being lower capital, its proximity to the processing facilities and strong metallurgical similarities to the existing Syama Underground mill feed" - Q322 update
Note the high praise in the Sprott report
"We think the recent discovery of blow-outs at depth, and resultant 3Q22 2Moz resource at Syama North, was either missed by the market, or the value won’t be reflected until the company’s production and debt profile are back on course. Syama North is >2x larger than the prior discovery Tabakaroni, which is smaller, requires underground development, and has more complex metallurgy.
The real prize here is the 1.7Moz @ 3.2g/t sulphide resource. Firstly, we think this
(i) likely extends the mine life toward or over 20 years at 140-150koz pa; ideally with
(ii) the ability to cherry-pick some high-grade pods in early years to improve cash flow. The real prize though is
(iii) the ability to immediately use a ‘spare’ (requires minor modifications) ~1Mt pa capacity in the sulphide plant to grow sulphide production 210koz, or (iv) in the long-term grow to ~240koz by converting some of the oxide capacity to float, or above that with a second expansion."
The company plans to release definitive 2023 production and cost guidance to the market in January and has suggested it expects Sulphide gold production for 2023 and 2024 to average around 160,000 to 165,000 ounces per annum.
PGM majors having a strong November. Time to buy and hold from here. Target 40p+
ThePublican777 - "It’s clear your short and that’s all good , totally understand your position but the current Meerut cap has fallen to reflect this position and I am invested for the pipeline of projects and growth. Do you think these things build themselves with no funding ? Do you want HOC to stand still."
Wrong again. I am just here to highlight the truth and point out your mistaken beliefs / inability to read balance sheets. To clarify you were wrong about liquidity too and you misread the balance sheet. They have $151m net debt today with a cash balance of $169m which means they have total debts of approx $320m. You talk about liquidity without ever mentioning how much they have available.
The assets being more than worth the market cap meant nothing for POG the first time it went for an equity destroying rights issue back in 2013.
"I like Shanta but the liquidity is poor and they are in debt and have to finish building a mine , it’s low cost but risks a plenty. What if I they have teething probs ?"
Also ThePublican777..
"Been following Hoc for the past year ... it’s putting its liquidity to use in this in exciting time ... As far as I can see operations make money and they are spending money to develop projects ... Either I can’t read a balance sheet or I am incredibly stupid , so educate me roughly 150 million cash on balance for liquidity here to March the 150 million debt."
Accuses me of being short for following him over there and pointing out the bleeding obvious that HOC are in fact heavily loss making and haemorrhaging cash this year. Last quarter alone net debt increased more than 40% to $151m, bringing total debt to approx $320m. In comparison they had a net cash position of $86m at the start of the year. The guy seemingly doesn't understand or care to explore the toxic political situation there either. He also talks a lot about liquidity but doesn't seem to know what exactly is available and how net debt is calculated.
Firing in the dark springs to mind.
A rather daft admission that you either misread or cannot read the balance sheet.
As Sotolo confirmed, they are sitting on Net Debt of $151m which means their cash position of $169m is net $151m less than their total debt as of the end of September. By contrast they had a Net CASH position of $86 million at the start of the year.
In other words they have blown through $237m in the past nine months. And that's despite sizeable ongoing operational cashflows and receiving higher prices for gold and silver earlier in the year.
The market is clearly not impressed nor does it share your one size fits all risk analysis for this particular gold producer. The highly toxic political and social environment in Peru has been baking into the share price for a while now yet the situation is about as bad as it has been in years which is the reason why HOC are aggressively spending elsewhere.
Stunning performance today on news of China policy shift. Sentiment swing set to amplify gains as demand for metals ramps up in 2023 and beyond
They are heavily loss making and haemorrhaging cash.
Net cash of $86 million to net debt of $151 million in just 9 months..
Share price weakness due to delays and pushback of original schedule. The company were anticipating monthly run rate of 40,000 US short tons per month into the final quarter and deployment of the second Highwall Miner machine by now.
In the last week of October Bens Creek announced the commencement of mining on the new permitted area and that the second highwall miner will be deployed as soon as it arrives (this month?)
It's a waiting game at this point but I agree the Interim results can't come soon enough. The market is crying out for financials and the outlook as we enter 2023. At least the coal price is back above $280.
Last quarterly update strong with hedged ounces at $1900/oz
The Group maintains its full year 2022 production guidance of 345,000oz, noting the strong performance at the Syama Sulphide and Mako operations which are expected to offset Syama Oxide's lower production. The higher production at Syama Sulphide and Mako is expected to largely mitigate inflationary pressures including elevated fuel and consumable prices experienced in 2022. As a result, the Group maintains its cost guidance at an AISC of $1,425/oz.
Net debt below $100m by end of Q1 March 2023
Dividend growth should be well ahead of current 10% inflation given the sector outlook
No reason why HOC won't make new lows given operations are currently loss making. Last quarter was the strongest all year and yet net debt increased more than 40% to $151 million in 3 months. Commodity prices have since slipped further, inflation woes and now more trouble with the locals.
Of all the bombed out precious metal stocks to pick..
All sorts of companies going cheap but you would rather waste your precious time deramping here..
KEFI is a basket case that has been promising financing for years. That can will likely be kicked down the road again. It was 10p a share back in 2010-11 and it has since gone through a share consolidation. I'll stick with Shanta another 12 months at this price..
As per the Q2 results (21 July): "Singida construction is fully funded through to first production. Singida construction is 63% complete at the end of June 2022 (51% at end of Q1) and on track for first gold production in March 2023."
Fast forward to Q3 results (26 October): "Singida remains on track and on budget for first gold pour in March 2023. Construction is 78% complete at the end of September 2022."
In terms of liquidity Shanta was able to fund CAPEX of $13.4 m last quarter, $7.0 m of which went into Singida. This compared to group capital expenditure of $10.9 m and $6.1 m for Singida in Q2. There's approximately $12 m in construction costs remaining (at the end of September 2022) which is comfortably supported by ongoing quarterly cash-flow and the $14m liquidity position.
H2 cash-flow increase
As announced in May, production is weighted approximately 65% towards H2 2022. Shanta are mining the high-grade Bauhinia Creek crown pillar which began in April 2022. The crown pillar consists of approximately 83,000 tonnes grading 8.4 g/t containing around 22,500 ounces.
Singida development costs are already accounted for this quarter and next and will be met through current cash-flow so what are you talking about when you say "They have lots to lay out on all fronts and it’s very normal when building a new project!"?
You say you're not deramping but it clear you are here to talk down the stock. Gold price movements are somewhat mitigated by part hedging in the coming period ($1600-$1900/oz range).
Regardless of whether an offer is made, the company will continue to produce and sell about 6-7koz gold per month funding the forecast group expenditure of ongoing exploration and the Singida mine development.
Are we supposed to reply with our recent successes? I made silly money in MBO this past week. Buying what I can when I'm able to here.
There will be plenty here who will be loading up between now and a supposed 7-8p retracement but good luck playing the waiting game.
Transnet strike makes now the time to buy Kumba and Thungela
Herenya Capital Advisors’s Petri Redelinghuys on the charts for Thungela and Kumba as they both struggle with the Transnet force majeure and following Tasneem Samodien from Old Mutual talks the return to coal and if it’ll last.
https://www.moneyweb.co.za/moneyweb-podcasts/moneyweb-now/transnet-strike-makes-now-the-time-to-buy-kumba-and-thungela/
Both GDP and SHG on the move today. Hold for substantial rerate