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That is absolutely fair, and as you have often said previously it is actually the results which matter

Responding to the issue of China’s gold reserves, their build up is an inevitable consequence of the sanctioning provision of western nations on Russia, and particularly the exclusion from SWIFT. Given that China will want to maintain its freedom to act in foreign policy the desire to decouple from any US controlled system is inevitable, and will continue for the long term. It is also correct that they will not wish to advertise this . As Frisby correctly points out to reveal the actual level of reserves would cause a substantial revaluation of the Yuan and cause serious deflation, heaping further catastrophic woe on the current economic troubles they are facing.

Dugbe does include Tuzon which is the main asset. Dugbe refers to the whole claim in general which consists of multiple targets and resources. The amount so far discovered only touches the surface, but the cost of delivery is way beyond sensible for Hum alone. The difficulty is finding a good JV partner, or out right sale at a sensible price. The uptick in the GP might be just what is needed for that, specially if it is sustained. Time will tell. But HUM developing it alone would be a recipe for disaster.

Anon your comment on Yan is marginally incorrect. They always stated in this year’s guidance that it was 80-90k ozs, and latest guidance is that it will be top end or marginally exceeding. Obviously we have to wait and see, but a figure of 90-95k is probably the ball park we are looking at. And with gold now at $2040 the final quarter figures could be quite healthy, especially if there is a decent final month from KOU. But as David Brent keeps reminding us it is results that count and not speculation, and there is an unfortunate history of disappointment to manage.

David you are quite right to point this out, and as you have said before it is the results which matter, but in the event the debt is paid down on time (as it was for Yan - the problems there were subsequent to the pay off, and the managers of that have since been changed) then I wonder how you would value the company? Do you have a figure in mind?

I am not displeased by the RNS. Yan is clearly positioned to beat guidance for the FY with KOU coming on stream in line with company forecasts for 2024. They have explained the issue around recruitment. Anyone remotely familiar with African local village life and politics will know this is the most tricky issue. You have to employ the right ratios from the neighbouring villages, drink tea with the right local officials, employ the right security guards etc etc. Its all murky, but above all it takes time. We westerners think time is a precious commodity to make other stuff happen. Africans take the view that time is to be savoured for company and community and relationships. You cannot expect conversations to be short, but once the relationships are established it will be fine. So if the plant is mechanically working well, which seems to be the case, and the outstanding issue is employment its tedious in western terms, but it will be resolved. The Guineans will want this to work too.

The comment was that they would be at the top end of guidance and possibly even beat it. That would imply somewhere between 15-20K ozs across the group this quarter. It has been the rainy season, which is now safely past. If Yan produces anywhere near 20k in Q3 that would exceed expectations.

LL it depends what you mean by ‘strengthens’ in regard to US Treasuries. THe US$ goes up when yields strengthen (so you get paid a higher yield on the coupon so its more advantageous to hold $s), which conversely means the price of US Treasuries in circulation actually falls, or weakens. Of course then inflation comes into the mix as if you are getting 2% on your yield, but inflation is 4% then you are actually losing 2% real value on your investment. There are many factors which will affect the pricing of both $ and US Treasuries. They are closely related, but there are a lot of external factors, eg the ‘reserve currency’ factor, global security, balance of trade etc etc. Sorry if that is all obvious but it felt like you were asking an honest question.

Well we have been told the interims are due by the end of this month, and whilst they won’t reveal much in the sense of new financial information they usually come with some sort of update which will either surprise or disappoint. So I doubt very much that the pennant will live through to 10th October.

I think you may be remembering the sad incident at Yanfolila when artisanal miners protested as they were starting to clear KW for mining. The army intervened and two miners were shot dead. It was not a happy moment, but the company were not actually directly involved in resolving the protest. The government were protecting their (significant) interest.. Further back there was also an incident at Dugbe where the locals got a bit upset and the UN intervened. But that is at least a decade ago.

The other thought to consider is whether they would do a joint venture

Punter I think that large investors may well be waiting until the West African political situation calms down, and there is the perennial question of inflation on the one hand push old price up, but also costs up, and the cost of holding gold vs the level of opportunity cost due to interest rates which of course pull in opposite directions. My own view very much, but I think that given the DFS was done a year ago now if it was going to fly easily it would have done so. So whilst it is absolutely not my preference I suspect that to unlock fair v they may need to consider doing it themselves. Others may well hold an entirely different view on all that just as validly.

No indeed it is a possibility, but HUM has made its successes in relatively small mines that are undervalued as prospects as the majors don’t want them. Dugbe is a large but relatively low grade project which is different in nature. The question is whether there are better options for HUM to buy into that fit its current profile as against taking on a large high risk multi year project which will push back the time when the company will mature into making returns to shareholders. I really hope they find a buyer at a decent level, but the market is not favourable for that at present, and they have been trying for some time.

There will be some update at least alongside the half year results which typically are due third week of August. Don’t forget that in the Q2 update they said that the Kou plant was already operating at 65% capacity. Now of course we don’t know at this stage the ore grade that is being put through, but it will mean significant amounts of gold are being poured, which will reflect in the Q3 statement. In the meantime I sense the market is being really spooked by the prospect of a wider west African conflict.

Its dated 13th April 2023

Indeed, and as Kouroussa get a couple of quarters of full production under its belt the political risks will also seem less large, particularly in relation to the debt. I suspect the market is pricing in some element of disruption at Yan at present given political turbulence in Niger, and the presence, possibly growing, of Wagner in Mali. The reality though is that Hum is paying a good deal of tax in Mali already and the junta will not want that disrupted. Locally my understanding (going back many years) has been that a combination of company security and the army, (who depend in Yan for their wages, though not directly) keep things nice and tight. Long term holders will remember two instances of army intervention, one when local youths tried it on by blockading the camp, and the army dispersed them in double quick time, an the earlier one when artisanal miners were being cleared and ignored warnings with a couple being shot dead by the army. The locals know that HUM brings them a lot of good in terms of benefits, wages, projects, health and teaching benefits, but not to mess with the mine security.

The point is this is a conservative estimate on only Q4 production. This 30k guidance is not even factored into the guidance of 80-90K oz for the year yet, and the hint is we are told updaed guidance will be given in the Q3 trading update. Adding in the 30K ozs that would take us to 110-120 on the company’s own figures, with the possibility of upside on Yan. Given they have already produced 51k ozs in H1 even at only 20kozs per quarter for the next two quarters we will be at the upper edge of the envelope, so we could reasonably hope for a modest uprate to full year production of 120-130 FY production. Historically Q3 has been at the lower edge due to rains, and Q4 better. We are also told that the stockpile is at good levels with the remaining KE blasts done so mitigation for rains is already in.

On the other hand 45% of the population of Uganda is under the age of 14 and 60% under the age of 30. Population decline is a western world issue. The problems of population growth elsewhere are also apparent (such as the lack of formal jobs for those finishing in education resulting in huge youth unemployment).

Well aside from the history it is really good that they are flagging a trading announcement, I think for the first time ever (and I have been a holder from issue at 168 - a long time and a lot of heartache ago) which I think bodes really well. Hopefully a good update on the ramp up to name plate a Kou, good progress at Yan with SE and KEUG opening up shortly and a sensible update on reserves with an exploration plan.

The thing about short selling is that sooner or later the positions have to be closed. they can’t g on short selling if it rises as the margin calls get too big. (Some of us are old enough to remember Nick Leeson).