Member Info for TigerByTheTail

HI DropInMonkey!
The giveaway is that AGG use an NPV of 5% to try and make the figures look good. And, despite that manipulation, the returns still aren't very attractive.
Too little gold, too low grade. But if gold goes over $2,000 per ounce and stays there, who knows, maybe it gets funded.
It does make Kouroussa look good by contrast.

Hi Ng!
It's just the usual mix of BT's hyper-narcissism and mud-slinging...
He says he's American, so maybe he's the Donald in disguise?

Just to keep up with Mali events... AGG still trying to get Kobada into operation, now changing name to shed their past troubles...
https://www.kitco.com/news/2020-06-15/African-Gold-Group-to-become-Avion2-Gold-announces-leadership-change.html

I'm a fundamentals numbers--over-narrative guy. But you can't ignore purely market factors.
In my mind, two things can be responsible for the current strange situation:
1. The simple explanation is that Sustainable Capital are selling down their very large stake in Hummingbird, and they don't care if they drive the share price down way below true value. They bought at the lows, so they are still in profit, and who knows why they have decided to sell now. For all we know, it might have nothing to do with Hummingbird at all - e.g. to meet margin calls on other investments.
2. The other explanation is the one I voiced a couple of days ago - which is that Hummingbird is being "prepped" for a hostile takeover bid. In connection with that I see there is a post on the other board saying that 2.81% of HUM shares are out on loan (i.e. probably being shorted). I can't imagine why anybody sane would short Hummingbird - unless they are either front-running Sustainable's selling, or they wish to control the share price before making a takeover bid.
IMO, the best thing to do is to look away for a few weeks. The market will sort this undervaluation out, one way or another, sooner or later. The key is not to get frustrated in the meanwhile.

Hi Sands!
I'm hoping that BorderTerrier selling out will be a contrarian buy signal.
(Note: He hasn't done it yet.)
I'll certainly be glad not to read anymore of his twaddle. It's been... tedious.

Hi TwoGoals!
Thanks. Dan gives a coherent explanation of a growth company strategy. He dangles the prospect of $160m to $180m EBITDA from Yanfolila and Kourossa in a couple of years' time. He explains the Dugbe deal in more detail, and states that ARX will list in Canada in due course. So far so good.
BUT, not a word on dividends or buybacks. Nor a real explanation as to why the market so undervalues Hummingbird.

Hi OldDrongo!
ARX don't have nearly the money - HUM still has a market cap of nigh on £100m.
I don't think this is a rerun of the scandalous Avesoro take private.
But what exactly it is I don't know!

I've got to say that I'm just confused.
Is HUM going to be the first ever share that I know of that trades at an EV/EBITDA of less than 1? It could be.
If Sustainable Capital are selling down, why are they doing it so clumsily, in a way that seems designed to suppress the share price? (A particularly stupid move when you consider they still own so many shares).
Or, to return to my post of yesterday, is HUM being shorted(*) ahead of a possible hostile takeover bid? And are the recent RNSs and the director buys the start of HUM's defence?
(*)When Endeavour launched their hostile takeover bid for Centamin in December, it turned out that they had quietly accumulated a holding in Centamin earlier, and they then sold it down and went short to suppress Centamin's share price, thus making their all paper offer seem more appealing. It didn't work then, but that's not to say such a tactic is a bad one per se.

OK, here's my big theory. If we were down the pub, I'd stake a round on it. But since we're here, this will have to be for bragging rights.
So, based on the following facts:
1) Management have created a new shell company, ARX, and hived off 49% of Dugbe to it, so that they can continue in the junior gold mining game if and when Hummingbird is taken over;
2) Management are maintaining total radio silence, even though the current circumstances almost demand explanatory PR%;
3) The share price is being held under control by a persistent seller who is matching almost every buy;
4) Hummingbird's share price is heavily depressed compared to its forward cashflows (without even considering LOM exploration upside).
So, from this, I conclude that behind the scenes takeover talks are in progress. The mooted takeover is not yet hostile, though it may become so. Management may even be under an NDA, which would explain their silence.
I may as well go the whole hog, and say that I think the buyer will turn out to be Endeavour. Outcome visible by the end of July.

Hummingbird tipped as a buy on Tom Winnifrith's Hot Stock Rockets - just as Cora was a couple of weeks ago.
I think their tips are pretty worthless, but I suppose all publicity is good publicity at this point. Especially as Hummingbird seem to have decided to do none of their own.

Hi Prof!
I'm wondering when a "snowball" effect starts for gold. I.e. When gold's upward price momentum starts to attract in "ordinary" investors who would not normally invest in it, or in gold mining stocks, and the metal's rise starts to feed itself.
I'm sure we'll get this effect if gold makes new all-time highs in USD. And maybe if we even get near to the old all-time high. So it's not far away. But I don't think we're there yet.

Hi Prof!
That would the US Fed's doing - they've just issued a statement after their latest conflab.
Lots of QE / debt monetisation and no U.S. interest rate increase out until 2022 (at least).
IMO that's half of the equation required for gold to make new all-time highs.
The other half of the equation is will there be inflation as well. I'm undecided about that yet.

https://www.kitco.com/news/2020-06-10/Amplats-repairs-to-ACP-Phase-B-unit-will-be-done-next-week.html

As regards Dugbe, I'm just glad that Hummingbird aren't throwing good money after bad. Isn't $70m enough (albeit most of the money was lost a decade ago)?
IMO, the exploration and development of Dugbe was largely a failure. To counter the many risks of operating a gold mine in Liberia (resumption of civil war, total official corruption, Ebola, banditism, remote jungle location, etc.), Hummingbird needed to find a truly exceptional gold discovery - i.e. lots of easy to mine high grade ounces. They didn't - plain and simple. Instead, they found a lot of low grade high cost hard to mine ounces.
In all of this, we would do well to ask ourselves if we would invest in ARX, now that they will own 49% of Dugbe. ARX will need to outlay perhaps $20m in order to advance Dugbe to a Definitive Feasibility Study. Based on what we know now, and on the current price of gold, it will be hard to get the mine build financed. Certainly, there are lots of easier/cheaper/better gold mine projects around. In fact, I'd go so far as to say that ARX's only real hope of success is the new exploration drilling that they plan to do - IMO they need to find a new high grade near surface gold deposit to justify Dugbe's huge capex requirement. Good luck to them with that.
Hummingbird's management are investing in ARX, yes. That doesn't look great. But we should remember that they are risking their money on a venture with a low probability of success. Personally, I wouldn't touch ARX with a bargepole.

Yes, Standard Life Aberdeen have sold down - by how much we'll never know as they've dropped below 5%.
At least that explains the drop of the last few days.

Hi Blackfisk!
As for Cora, surely we have to wait for the results of the test work on the plan to concentrate the Sanankoro gold ore to 20g/t before trucking it 75km(?) to Yanfolila? I'm told that this kind of concentration isn't a simple task, and so I'm expecting the test work to take a fair amount of time. And until the test work is complete, I can't imagine either party would want to formalise any possible deal. In the end, it might well turn out that the best thing to do is heap leach the Sanankoro ore on site.
I'm not that up with Cora news recently. Are there any signs that Cora are going to do any more drilling at Telekedougou? They did have one decent intercept, and it is only a few km from Yanfolila...
FWIW, I still think the market should have made more of Hummingbird's new drilling intercepts from Bolobi Coura, within their mining concession. They were pretty good results...
- 4m @ 5.81 g/t from 16m depth (KBCRC0003)
- 4m @ 16.90 g/t from 57m depth (KBCRC0003)

Hi TwoGoals!
The exact same thought has crossed my mind. But I can't imagine what that "missing" news could be - either good or bad.
They just reaffirmed guidance in the annual results, albeit with an increase in AISC, so at least production at Yanfolila must be on track.
Maybe they are planning to spin out the stake in Bunker Hill into a new company and raise some money via an IPO to advance the mine? I'd be quite happy if they did that - or with anything else that meant that Hummingbird weren't putting more money into the project.
Any road, I'd be grateful of more details on the Kourossa purchase - either an updated company presentation or a full broker note. As far as I can see, Cassidy Gold Corp. was listed on the TSX for years, but it delisted and went private in about 2016 when they couldn't get the mine financed (not so surprising back then). About $30m was spent drilling out the deposit over the years, so Hummingbird seem to have got a good deal. But there's nothing like a full feasibility study out there that I can find.
BTW, here's Mining Weekly's write up of the Kourossa deal. But it's just standard regurgitation of the company's RNS:
https://www.miningweekly.com/article/hummingbird-acquires-guinea-gold-project-2020-06-08/rep_id:3650

Hi AustroChris!
Welcome! IMO, there are two factors at play here:
1) Gold stocks in London (particularly smaller ones) are generally valued lower than gold stocks elsewhere. E.g.: It's telling how dual-listed CMCL (in New York and London) is valued higher than its London-only peer group, even though it operates in high-risk Zimbabwe.
2) HUM is cheap even in comparison to its London peer group. There are some historical reasons for this (e.g. 2018 pit-wall disaster), and also HUM PR is not the best.
We can only hope that more people start doing the maths here!

https://www.kitco.com/news/2020-06-08/Hummingbird-Resources-acquires-Guinea-gold-project.html?sitetype=fullsite

All in all, I'm happy with the progress of the company, as reflected in the RNSs of the last week.
1) World Gold Council - not that important, but mixing with the big boys may bring benefits down the line;
2) Annual Results - maiden profit, EBITDA 15% higher than I estimated;
3) Dugbe - I don't like the related party transaction, and I won't be investing in ARX if it ever comes to market looking for funds (and I think it will). BUT, the farm out means that Dugbe has a chance of moving forward, and (all importantly) that Hummingbird are not throwing any new money at it;
4) Kouroussa deal - a far superior proposition than Dugbe. Stable jurisdiction, right size, high grades, bank finance mostly in place, plays to Hummingbird's strengths (i.e. getting a mine built on time and on budget).
I fail to see how the company is not in a much better position after these announcements. It's a bit disappointing that the share price is down 15%!