Member Info for Tornadotony

I would be happy to see a one month extension.

The peso USD exchange has bottomed out. The overbought conditions on the pairing is highly extreme with everyone sitting on one side of the trade. Usually such positions can not last that long. The damage of a high peso to USD is now hitting into the Mexican economy. GDP annual rates are falling 60%. Companies that re-shored from Asia to Mexico are now wandering why they bothered and are probably making losses. We await to see what the Mexican central bank does on Thursday. The real interest rates in Mexico are just way to high.

Current shareholders as of December 2023

https://finance.yahoo.com/quote/FRES.L/holders/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAIDOzo34MsqLO7P_RIKzx0Pq1R1wFInl97K1otRhtma00k_W7v5mgk3V6R_f_9-2yKXMbS29HVdiZN-3nznTwhp3nPjXe5gGCYS7k-SwycCEsNitfZSpn0fkgUIP1Et7c1Ss9pvC8GbABMaFk1IMAMvqfBb7Lc2kmKm8FqeRMHo4

20 April 2009 it hit 416.8p.

I note at the next annual meeting in May, one of the requests to be voted on is for the company to be able to buy back up to 73M of its own shares at a 5% premium to average market prices.

Last time it was at the current prices was back in 2009 when ounces mined was less than 40M a year and half the current gold output and the company had to deal with miner strikes. We are certainly well under the Covid-19 low and 2015 bear market lows.

I do not use candlesticks patterns myself, but Fresnillo has delivered its first ever monthly inverted sell hammer.

DarkKnight

I have study a Fresnillo a lot. I agree with the analysts that revenue forecasts are going to be a lot higher than in 2023. The company exploration drilling is up 110% on last year that is likely to replace substantive amounts of mined out reserves with a possibility of maintaing levels of resources. The forecast in the annual report RNS has a good chance of 3% in production ounces in silver conversion. Probably around 107-108M ounces. I have added today but can not understand how everything is backward looking. USD gain 0.2 peso today and the share price retreated. 21 March is the next central Mexican bank meeting. With silver futures above $25, I would have expected Fresnillo above 500p. Hopefully Q1 results will be good.

The 8.5p appears to be pricing in a $25M hit on the balance sheet.

Each quarter with a debt carry and very up lift in Kouroussa production is creating this level of damage. The kitchen sink was thrown in last year as total shares moved up from 455M to 799M. One shareholder holds 41.2% of the company. In fairness to Betts, Guinea is a difficult country to deliver a profitable mining operation and for some reason productivity is not that good in the Guinea mining sector. The falling out between the mining team and the company may be more than a financial issue. If other sectors are recruiting staff away from the mine contractor as they prefer other types of work or whatever they have all kinds of delivery issues then impacting on them. If that was the case Betts has a deeper problem to resolve and needs to fix it in Q2. Otherwise the 42% holder will get the lot in a private buyout deal and they may apply the answers that the Hummingbird management team did not see.

Well Publican

It is a complete gamble. Anybody buying into this on the hope it gets resolved tomorrow is exactly that, based on hope and a prayer.

I did warn Publican not to go into Hummingbird resources. He has a shed load on that stock.

Publican,

You were warned.

Tony

JWBellamy

It is not just about PE rates. To value a precious metal miner the resources they have in the ground to be converted into reserves is a huge factor. Fresnillo can guarantee production for over 22 years at current production rates. How many years of production can HoC deliver bearing in mind we are using around 50% conversion figures from resources to reserves. Do you understand this and why Fresnillo has a plus 10 PE rate over HoC. Fresnillo is cheap and when the earnings of say $1 an ounce higher than 2023 are delivered that is $52M higher profit on the bottom line. When gold average price is a $100 an ounce higher over costs than the previous year that is $60M more profit on the bottom line. So the Fresnillo earnings would take this share to 629p which is a 33% uplift. HoC at 111p and let us assume the analyst figure is right at 145p it is a 31% uplift for HoC but the debt to enterprise value is far higher with HoC and they need to do what Fresnillo did in 2023 and that is pay off some debt. The low on Fresnillo is partly games being played with the peso currency. The Mexico central bank is under huge pressure to cut rates on 26th March and that will signal a halt in peso appreciation. Tony

Profit after tax, increases $100M on the 2023 total, with gold average at 2060 and silver at $24 an ounce on slightly less production figures for this year.

The company profits on gold sales in 2024 are up around 12% on last year. For silver it has been between 4-5% lower. However with silver in rally mode it is $2 higher than the average annual price sold last year. If silver averages at $24 an ounce would be similar to gold at 10-11%. The SP average last year for Fresnillo was 659.8. The company is outperforming both on revenue and profits. Eventually this should work through to the SP on quarterly reports.

Have 500 of these and slowly built up a stake. If it pulls back will add a lot more. I think this hits a high this side of September.

If the company does go into administration, does it mean that any shares held going into that process can be written off after 5th April 2024. If that is so a lousy £3,000 CGT limit in the UK in the new financial year can be expanded to cover HZM share losses to raise the level of when capital gains tax kicks in. Tony

The positive surprise is what they find out near little Sukari and whether feedstock ore can be trucked to the main processing plant. It de-risks the Sukari operation.

As for the final report, I suspect we only get perhaps a 2p divi as they need cash for lots of drilling and converting resources into reserves.

I believe Q3 and Q4 are likely to be very strong for Centamin. For quarter 1 there is advanced waste Sukari stripping and the same applies in Q2. I also suspect some high grading was done to hit target at the back end of last year to pull forward 10,000 ounces. The upshot is that production is likely to be on the lower end at 105,000 ounces mark and the AISC at the top of range nearer $1350 or $1375 where future quarters bring it back into range. I also suspect they may front load some sharing arrangements with the Egyptian Government to help with USD shortages. The company also has a big maintenance agenda in Q1 which happens every year.

Consequently the 106p price tag is probably priced in a modest Q1. If gold does pull back to 2050 we could see 96p area but I doubt it will slip further back as Q2 may be slightly better on production. The concern I have is that the cash pile does not grow much under Horgan. Maybe that will change during 2024.

100,000 13.9p sell and 13.97 to buy.

Yes the FRES figures were poor in 2023 for a host of reasons just like in 2019. However, those buying the stock are looking at likely earnings in 2024 and 2025. We will get a clear idea of what is happening in the Q1 results next month. Furthermore the company has 30 years of resources to convert into reserves for gold and silver. HoC and other FTSE 250 and junior miners do not have that resource. Hence they always trade at lower PE rates to Fresnillo. At $25 USD silver per ounce, Fresnillo is making serious money on the bottom line. At $26 Ag the earnings are up 25% after tax. Gold earning are currently adding 25% up on total earnings. If the current metal prices hold Fresnillo returns to around 650p on EBITDA.