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Looks like Rh stabilised at a "higher low" of $4,400, now on its way up again, currently at $4,725.

I note that in the presentation released with the Accounts, the SLP PGM 3E + Au Basket % split has been partially updated (slide 21), with Rhodium & Palladium up and Platinum down:

Rhodium: 13%
Palladium: 24.9%
Platinum: 61.8%
Gold: 0.3%

Today With Rh $5,050, Pall $1,540, Plat $970 and Gold $1,530 we're looking at a PGM Basket of $1,625 per Oz.

I'm more neutral on Q3 results and think the big move will be after Q4. Notwithstanding it appears extremely unlikely we will have a repeat of Q3 2018, people need to bear in mind a "good" Q3 will never match other quarters due to weather. I'd be happy for a mid to high 20k production figure, to then be followed by a bumper Q4 of low to mid 30k. Sept is normally the wettest month.

It's to be expected mining and production will be impacted by wet season, however HUM are a lot better prepared this year and they have fresh rock to feed into the plant, which will counter softer material that causes inefficiencies/ blockages with too much water.

Dividend less than I expected, however the sale of Grasvally will be very good news and I was previously told by SLP that they have stated publicly before if there is a windfall in a sale of an asset then this would possibly be paid out as a special dividend. Terry then gave the example of actively promoting the sale of Grasvally.

When the sale is finalised, will they be paying out a special dividend which is actually more than the annual dividend I wonder?

Out at the moment, but will be reading the Annual report and presentation in detail later.

Notperfect - I think you've nailed it, I take my "surely Sustainable Capital" back!

As per the 12 June 2014 RNS HUM acquired Yanfolila from Goldfields for 21,258,503 shares. This is the exact number sold which is then shown in 2 separate tranches as "sold" again, but likely these are the corresponding buys. So as you state, perhaps 2 separate entities bought up the Goldfields stake.

Goldfields selling tallies with someone else's earlier comment today that Goldfields are selling their non-core assets (sorry being lazy can't see who posted it).

Surely can't be a coincidence it is 12% and looks to be Sustainable Capital's exact holding? I would therefore assume they've sold.

As Playboy states be v. interesting to see who's picked them all up. Assume a major buyer has swallowed them all up, otherwise such a huge sell would have caused huge collapse of sp. If they have all been bought up and a major seller is out of the way, it bodes well perhaps to see 30p sooner rather than later?

I look forward to you pipping me to the post when Rh hits $10k! Fingers crossed.

Although for longevity perhaps I shouldn't wish for $10k. More than happy sticking at $5k and platinum and palladium slowly increasing!

Speaking of Rhodium, in US market it has hit $5,000. Halfway to $10,000 ; )

I just hope it is end-users panicking as there is a lack of supply, which would provide some longevity. Rather than say hedge funds or financial institutions buying in as they see an opportunity.

Hi Ragnar - a fair valuation and have to say recently mine was very similar to yours at the 55-60p mark. However with the current PGM basket price, when I redid my calcs today (again big IF PGM basket stays at or around $1,570), I get to around 70p.

I look at the free cashflow per annum after all costs incl. tax, on a normalised price to free cashflow of 5. This effectively takes into account a significant discount, as production life will go on to 2027 as you mention, but likely beyond ( I don't assume it though, to be conservative). When the market wakes up to the huge cashflow with little to no Capex going forward after Echo completion and likely 10% dividends next year (this year I assume it still may only be 3%), I could see it blasting past your 57p. Again my caveat is that if the PGM basket can hold above $1,500 level.

SLP PGM Basket: $1,570, minus refining fees = circa $1,300
AISC: ZAR 8,000 / 15 USD Forex = $533
Production: 80,000 Oz
Total = ($1,300 - $533) x 80,000 Oz = $61.3m per annum (before Capex & Tax - may not even cover positive impact of by-products)
Minus Capex = $55.3m (even though Echo Capex is coming to an end, again to be conservative I assume a Capex of $6m per year going forward).
Minus Tax = $39.5m free cash per annum (SA tax is around 30% and I make certain assumptions for SLP's D&A reducing Accounting profit and thereby tax on the stated profit).

$39.5m x 5 = $197.5m. Normalising for liquid Net Cash position $46.3m (Cash of $21.8m + $24.5m trade balance owed to SLP) = $243.8m or GBP 200m (Forex of 1.22). That market cap equates to 70p market cap.

Considering production life is 8yrs+, I think a normalised Price to Free Cashflow of 5 is more than fair and probably overly conservative. You then have Grasvally, Volspruit and Northern Limb as you cover which if sold, more than likely to be paid out to shareholders in special dividends (at least Grasvally definately would be). You of course then more than likely have production long past 2027, which SLP have already alluded to in presentations confirming production of at least 15yrs.

I had similar cost models to my gold miners like AAZ, SHG and HUM. I've seen the 2 former ones blew right past my conservative estimate, hence why I could see SLP at 80p if PGMs somehow managed to maintain this heady $1,570 figure. Just imagine Rhodium $10,000? Maybe we could see Dan's 90p!

What a week for PGMs and for Rhodium particularly. It's blown all the way up to $4,900.

With Plat $930 and Pall $1,490, it provides a SLP PGM Basket Price of $1,570!

I thought based on maintaining a $1,400 odd PGM basket price and SLP paying out 10%+ dividend next Oct/ Nov, we could potentially hit Liberum's 68p target in 12-15months. However if PGMs carried on like this and maintained $1,570 (won't comment on how stable it is for now - lets wait and see), I could see 80p+ being hit over course of 15 months!

It's now hitting $900 and Rhodium is $4,500!

Double bubble is that ZAR is weak at 15.3.

For now Rhodium holding strong at $4,140 Oz.

The reason I'm relatively bullish on Palladium, even in a downturn, is what appears to be a structural deficit. The overground reserve supply of Palladium also appear to be near exhausted if you use ETFs as a proxy (and if you go by the rumours, the Russian stockpile has been significantly depleted). Back in 2014-2015 the ETF stockpile of Palladium was circa 3.2million Oz. In mid 2018 those stocks were down to only 0.75million Oz only. Haven't found any up-to-date info on where they are now.

The "Real Driving Emissions" standard already partly rolled out in EU and China will become mandatory in 2020. This standard is more rigorous than the old factory testing and has meant higher palladium loading in catalytic converters. So even if demand for autos goes down, there will be more palladium per car.

Haha I noticed that too but didn't want to jinx it! It also coincides with SLP PGM basket breaching $1,400 Oz for the 1st time I can recall since being invested.

All bodes very well, but maybe in short-term we will only convincingly breach 40p if there is some juicy FYE June 2020 guidance or dividend announcement next week in the FYE June 2019 Accounts.

In long-term if PGM basket maintains these levels and SLP keep performing on production front, I could see IC tip of 50p being hit in next 6 months. 12-15 months + if SLP dramatically increase dividends to the 10%+ mark for next Oct/ Nov 2021 dividend payout, I could see the Liberum 60p+ level being hit.

Caveat emptor and all that. I'm geared towards protecting myself in a major fear driven recession (gold, silver, gold miners + SLP), so honestly don't know if PGMs will act more as a precious metal or industrial metal. Even in a depressed economic state, currently the supply restraints on Rhodium and Palladium appear to be outweighing tepid auto demand. Tepid auto demand doesn't tell the full story when this in turn is offset by stricter emission standards putting more pressure on catalytic converters and increased PGM content, particularly Rhodium for NOX emissions. Even in a major recession scenario I'm a bit contrarian on PGMs (I think they could do well in comparison to other assets). I don't think QE alone will bail out the global economy this time round. I could see countries like China and India doing their own helicopter money "cash for clunkers" style stimulus. Getting the heavily polluted, old cars + lorries off the road to be replaced by newer models with lovely PGM heavy catalytic converters meeting stricter emission standards.

Trade wars, currency wars, Brexit, German slow-down/ borderline recession, Italy elections (?), USA slowdown and FED cuts, India-Pakistan Kashmir dispute/ clash, Middle East powder keg (take your pick)... Lots of "grey swans" out there. It's going to be an interesting time in the markets.

Until HUM recoup the Capex, the 80% is a bit of a moot point in terms of working out when they hit Net Cash.

Additionally until the Mali Government pay for the additional 10% (it remains in the Trade Receivables as owing to HUM circa $10m), their % remains at 10% only, not 20%

I know HUM still have a lot to prove and another solid quarter reporting is needed (particularly to cover this wet season) to truly show they're back on track (although everything points to the fact they are on track again), but a market cap of £80m is crazy.

£80m ($96m) is less than 2yrs of annual free cashflow:

1) Gold at $1,500 and let's say an AISC of $900 (although once they get back on track wouldn't be surprised if they can get to under $850), there's a margin of $600.
2) At 120K per annum x $600 margin = $72m EBITDA
3) For free cashflow you need to deduct Interest on Debt ($4m), Non-sustaining Exploration & Capex, Tax (tax should be low due to all the D&A for the capitalised costs) and General & Admin costs not linked to Yanfolila ($4-5m). Capex is behind us after ball mill (albeit some will be in trade payables). So deducting for say $12m of costs not in AISC, you're left with $60m free cashflow. Even on a low ratio PE of 4, HUM's Market Cap would be £200m (56p). That's why circa 50p is my 12 month target.

They should be able to extend current 5yr remaining mine life by another 4-5yrs just at Yanfolila alone (>1million Indicated & Inferred outside mine plan), but they no doubt need to do another exploration campaign. I think the updated LoM due any month now may only add 2yrs, but we will see.

HUM's Net Debt is $43m. Trade Payables will probably be elevated from its usual "steady state" working capital movements due to the 2nd Ball Mill Capex. Even if there's $10m of such costs, with $60m free cashflow on like for like basis by end of Q2 2020, HUM should be in a Net Cash position (if gold maintains $1,450+).

That's not even taking into account the benefits the 2nd ball mill could bring with gold production 130-140K per annum. At 140K, with economies of scale this would push AISC per Oz right down and EBITDA would be circa $100m. Outside of Yanfolila, we have Cora's Tekeledougou 8km down the road, with drill results of 56m @2.2g/t and 17m @ 6.8g/t. If HUM don't buy Cora outright, it makes sense to purchase Tekeledougou and in the next Yanfolila exploration campaign, synergising it with Tekeledougou. With longer exploration duration and need to mob/ demob rigs once, costs overall would come down. You then have Cora's Sanankoro site which would be stand-alone gold mine.

So looking forward past 12 months, if everything goes according to plan and gold can maintain a price over $1,400, GB's £1 party may not look too far fetched. Would agree with playboy though in short-term, until there's some material news, I think HUM may only slowly trundle upwards in very small steps once/ if the market becomes more confident these gold price levels are here to stay. Fingers crossed they are.

Hi Ragnar - I hope its a guidance range from say 78-80k Oz, which would then still give a bit of scope to exceed guidance.

Accounts will be very interesting end of this month to see final figures, profit (albeit can guess from tax paid) , guidance for FY 2020 and dividend.

When the sp is distressed as it is now, share buybacks would be incredibly powerful. They could buy enough shares to cover any options and then some for future years. This avoids dilution addressing a major concern of the performance options.

I also agree with paying down debt faster if cash allows and its not better spent elsewhere. However the Coris loan comes with a 50% interest penalty for early repayment (refer to RNS of 11 April 2017). Whilst maybe badly worded I assume this means if they pay off debt early, they still have to pay 4.5% interest (i.e. Half of the usual 9% interest). By the time they're in a position to do this, at earliest it would be this time next year when there is circa $25m debt left. Paying it off early therefore would save perhaps $1.3m.

At this rate maybe we will be attending Goldenbull's £1 party in next 12-24 months. Let's hope he puts on a good spread!

I agree with general sentiment here. I believed based on gold at $1,300, if HUM showed a strong company specific recovery and demonstrated they could meet guidance, they could gradually get back to the 30s.

With gold spot at $1,400+ though, they should over time be able to push through to high 30s and beyond. The caveat of course of seeing such heady heights again is the turn-around will need to be demonstrated in the next couple of quarterly reports.

Edit: ignore my note on the finished inventories line item in 3), had number of PDFs opened and was looking at wrong quarter. However the query on update on development ore shipments and revenue from these still needs to be answered. Back in a video interview in Q4 2018, I remember Roland mentioning the 1st shipment of development ore was due to be shipped imminently. I can't see this anywhere in the Q4 2018 or Q1 2019 results.

We now of course have 3-4 development ore shipments (100tns) - these should show up in Q2 results.