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Going back to SHG, I always thought it was too early to even discuss a dividend policy. But to be fair to them, it was always ever just a placeholder for a policy and not a dividend itself. However even a policy was a year too early.

Even in best case scenario that the $20M is returned to SHG and we are suddenly in a place SHG have single digit Net Debt, I would much prefer these funds are recycled back into developing Singida and getting SHG to over 100,000 Oz p.a. goal across 2 working mines. As well as expediting exploration near to New Luika with some very juicy drilling targets close by which could be satellite sites and provide feed to New Luika. I believe this is far better for shareholder returns than paying a dividend at this stage.

I was always of the opinion a dividend policy should be discussed at earliest this time next year, with maiden dividend year after that, depending on VAT returns and spot gold price.

Noel - I fall somewhere between you and TBTT! I wouldn't call ACA "caring" (I wouldn't call any business caring), but they are no more uncaring either than any other entity. They could have handled many of the situations far better and there has been a number of issues which raise serious potential compliance concerns, but no point getting into it on SHG board. My over-arching point is it's never black and white, particularly the conditions ACA and its mines work under. It's lazy to lay all blame at ACA's door.

TBTT is right in that the police were paid by ACA to provide security at certain points, but I very much doubt there was a "shoot to kill" policy by ACA itself!!! And ACA reimbursing police does not mean they have any control over them, like a usual private security contractor. Just like ACA don't have any control over how the taxes they pay are spent by the Government.

They just are trying to do business and make a profit whilst paying all reasonable taxes in what would ideally be a win-win situation to the host countries and shareholders. Those taxes have now become unreasonable as has the blackmail suffered and the fraud/ false claims by the Government stating the ridiculous unpaid billions of lost revenues/ taxes. As clearly seen when the Government has refused to allow an independent inspection of the concentrates impounded at port. It's a shake down, pure and simple. The geese that laid the golden eggs are being stuffed. As is in the long-term is the great country of Tanzania by its politicians and the "opportunity loss/cost" of these policies in lost investment and capex. Not just mining sector mind you, but Tanz's vast gas reserves will never be progressed at this rate and they've lost out to Mozambique being first to development.

He went for ACA because he's a dictatorial populist and it fits his ill-thought out agenda. ACA are the biggest after all. He's treated AngloGold Ashanti with the same contempt, hence why as a precautionary step they've commenced international arbitration proceedings with UN Court.

AngloGold have form and experience with arbitration and likely put up much more of a fight and be ready to follow through on international arbitration.

AngloGold's Geita mine is actually the biggest in the country producing over 475,000 Oz per annum. It needs significant Capex to increase life of mine past 2025. Obviously they will do sweet FA to it until they get assurances from Tanz Government. So not only is no new investment from outside drying up, but the existing miners in Tanz will also not invest for the future based on current government policy.

There is a lot of movement recently in Tanz which hasn't hit international news yet which makes me believe 2019 could be a positive turning point and some of the more extreme policy errors may be reversed. Lets hope we get some of our VAT rebates so we can actually invest in the country and develop Singida.

Noel - whilst I partly agree with you, to frame this in the correct context of SHG:

1. SHG have an incredibly good safety and nationalisation record, far better than any other miner I'm aware of in Tanzania. In fact there record benchmarks very well across Africa and would be in the top percentile. They have never operated under what the Magufuli Government consider a one-sided "MDA" (Mining Development Agreement) which the likes of Acacia and AngloGold Ashanti operate under. SHG operate in accordance with the national mining laws in force and had no MDA that superseded this. For these reasons and more, it is a good indicator SHG may be treated more favourably than the likes of Acacia. As can partly be seen as the only entity that did receive a VAT rebate, albeit minimal and more needs to be done by Government.

2. Acacia and AngloGold Ashanti operated under MDAs that were transparent and endorsed by international bodies, in line with international norms for huge long-term projects and Tanzania was the jewel in Africa in terms of business and foreign investment. It took decades for Tanzania to build this reputation and now Magufuli's dictatorial anti-business misplaced socialist policies are undoing all this, making it the next Zambia. Financially it takes time to feed into the economy and he no doubt thinks he's doing a stellar job, but foreign investment is drying up and it's only now 3yrs later he is actually starting to reverse some of his positions. It may be too little too late. With no investment in new mines, overall production in Tanz will start to recede, as happened in SA and Zambia.

Acacia have a bad safety record, no doubt. But lets be clear, the vast majority of these are deaths that have occurred on their mine site by illegal miners operating in very unsafe conditions and dying through no 3rd party or ACA involvement. Other trespassers were killed in certain situations by heavy-handed police. This is incredibly unfortunate and could happen to any large mine site. HUM in Mali had artisanal miners that refused to leave and were acting violently (according to Government reports) and the military opened fire. HUM were not involved at all though. In rarer occasions, ACA's security contractor was involved and for that the blame lays squarely at ACA alone. The safety issues ACA has faced are far more nuanced than "for which they are to blame".

ACA's bad safety record does also not detract from the appalling fraud and blackmail being administered by the Magufuli Government. If he believed the MDAs were one-sided (which is arguable and not as one-sided as made out as seen by ACA's annual reporting of all tax and royalty payments to the Government) there are better ways of going about it. Tanz is now one of the least business friendly countries, particularly for mining (taxes on revenue (royalties and export tax) have gone from 4% to 7%), VAT of 18% is not being returned, 16% free-carry interest for starters etc.

I share your sentiments Ragnar and thanks to you too for your very informative posts.

Palladium continues its rise, dragging Platinum kicking and screaming with it. Rhodium also continues to eek higher which not being readily tradeable from an investment point of view, but more fundamental supply, makes me think Palladium has more room to run and is not merely speculation. Although of course many no doubt have jumped on the bandwagon and which is why Pd is prone to large movements up and down on daily basis. But the trend should still be up.

And still grossly undervalued on any metric! You should be doubling down here SM rather than putting money in CEY ; ) 1/3 of SLP's market cap is covered by $20M cash balance and $18M trade balance in SLP's favour. On top of that EBITDA is forecast at circa $40M, which was estimated based on lower basket price. SLP have circa $8M of Capex for next 2 quarters, to complete bulk of Project Echo and full integration of Lesedi (formerly Phoenix acquired from PAF). After that Capex is negligible and the cash generation at this basket price will be huge.

Are you all taking into account the Profit share? Strider's train of thought is actually worse when you take into account it is not Profit before tax that should be of concern or measured, but profit to CEY after the 55:45 profit share (moving to 50:50 share in June 2020).

The free cash flow in the accounts is a far better metric and is most cause of concern, being only $63m. the 2019 guidance is of course another secondary area of concern.

As usual in the opening statements CEY always exaggerate their actual cash + cash equivalents, which as per the income statement is $282m (in their opening statement they always bundle in some inventories & receivables). With the drop of 20% today, once you remove/ normalise for cash position, you still get to the market cap of £1bn.

Based on actual Profit to CEY taking into account profit share, the PE is more like 20 region ($1.3bn/ $63m).

The $63M free cashflow was based on $1,267 gold price and gold sales of 484,322. So 2019 may not see a major change to this scenario, based on guidance of 490-520K and arguably there are indeed more under-valued gold shares. Of course all miners should rise with a rising gold price and CEY should be no different after this much needed correction, but some will do better than others.

Shareminator - you know better than others being invested in TSG, there are many other more under-valued gold stocks that should do better with a rising gold price. Not just on LSE, but TSX and ASX too.

Anglogold Ashanti are the 2nd largest

It has not just been the ACA dispute and the general attitude of the Magufuli Government which is extremely negative to investment sentiment in Tanz, but the lack of returning VAT rebates due to SHG.

SHG are owed USD 20million+ by the Government. It is the return of this money that will see SHG re-rate significantly. We would be in single digit Net Debt by now if it wasn't for the Government withholding this VAT due to SHG and other miners, in direct contravention of the tax laws in place.

To be clear they can roll over the hedges to later quarters. So they are still exposed to these high gold prices. So let's say they roll over half of them, we could still be looking at avg. gold price of $1,285.

I didn't have time to have a proper look at the presentation and interims yesterday. I found the dividend policy in the Corporate Governance Tab of the website, but it's what's stated in the presentation. A bit disappointed by lack of clarity, however a few other things jump out from the Interims that are positive:

1) Forecasted "base case" EBITDA has gone up to $40million for FY 2020, 2021 & 2022, based on much lower Palladium & Rhodium price than we are experiencing. Considering they have no debt and very little Capex in these years (see below), for once a Company's EBITDA's will be close to its actual free cashflow (of course have to take into account Corp Income Tax of 28%).

2) Forecast Capex has decreased for these years, with forecast of $8m FY 2020 and $3m for 2021 & 2022

3) Guidance reduced slightly to 73,000 - 76,000 Oz for FY 2019, meaning for 6 months to June 2019, to meet lower target output would need to be 39,000 Oz, which would be very good outcome.

4) There's a fair bit of Capex to get through these next 6 months to June 2019 (est. $8million), which may explain why dividend policy is still quite high level and cash generation for next 6 months may be limited. But thereafter as per item 2) above, Capex drops off considerably.

5) Cash + Trade Balance (Receivables minus Payables) is $38.5million (half the market cap). This coupled with the cash generation going forward & life of production, SLP remains grossly undervalued in my opinion. If they sort out the dividend policy properly come June 2019 and make it clearer what all this cash is going to be doing, particularly 2x dividends per year, it should start to realise its true value.

Am I going mad but I can't see the updated dividend policy that the interims and presentation say is uploaded on the website. There's 2 pages in the presentation on dividend, but largely repeating the preambles in the accounts.

No. 2 I assume is Anglogold Ashanti with their large scale mixed open pit and underground mine Geita in the North. To protect their interests they lodged proceedings at United Nations Court of Arbitration as is their right under their Mining Development Agreement (MDA) back in July 2017 whilst they continue dialogue with Tanz Gov. They took issue with the 2% increase in royalty and the 1% export levy.

Northam - the gross debt is 61m and cash 21m, so we're currently sitting at Net Debt of 40m. Considering the bulk of remediation works and current ball mill costs occurred Q4 18, I expect the activities haven't hit the cash position yet and the majority of costs will be sitting in trade payables. So once they pay their contractors it will of course hit the cash position. So to be conservative and normalise the Net Debt of 40m, perhaps add circa 10m+ on top. For an operation of HUM's size, would expect normal trade payables to be circa 15-20m. In Accounts for 2018 we will likely see this elevated due to all the additional works in Q4 18. One area I agree with Strider is HUM need to start reporting capital expenditure, non sustaining exploration costs outside AISC and changes in trade payables + receivables. Most producers include this as a 1 line sentence in the financial section of their quarterlies.

I know production wasn't as expected due to the issues stated in the update, however even with this low production they've managed to increase cash by $2.5million and this is in a quarter they pad $1.4million dividend + buyback.

So after all costs and with production of only 14,097 they still generated $3.9million free cashflow ($1.4m spent on div+buyback) after everything. And this is still in periods of relatively high capex where they spent $2.6m in the quarter.

With a basket of $1,200Oz+ and if they can get back to production levels of 19-20k, the free cashflow will be tremendous. It looks like market focused on the production drop which is fair enough. But under the circumstances the cash generation was very good.

Indeed I am well aware of SOLG's market cap of £700million for lots lots of jam tomorrow. They aren't even going to be at a Bankable Feasibility Stage until earliest 2021. Production if the BFS comes up trumps, many many years after that. So lots and lots of lovely equity dilutions. No thanks.

You misunderstand on payables. SOLG had trade payables of 10m end of Sept already which it has omitted from its cash metric and you repeat... something you take umbrage at HUM for doing. SOLG's imminent update on TSX for end of Dec will no doubt show consistent high cash burn for all those lovely rigs which don't come cheap.

As for AISC, I don't no a single miner that doesn't follow the basic principle that AISC is based on the mine plan in place, mine plan covering both production profile and life of mine. Any work to change that mine plan, for increases in production and/or life of mine, is non-sustaining outside of the mine plan and hence not included in AISC. You can "absolutely disagree" if you so wish, but you have a lot of emails to write to every single gold miner for them to change how they all report AISC. HUM is far better than most. Most miners play it loose and don't even include Capex for sustaining the existing mine plan in their AISC.

Northman - AISC includes all costs of any nature to "sustain the mine" based on the mine plan in place and production therein (which is not 130k oz). It's far easier to state what's excluded, because as a general rule of thumb, AISC should include all costs. To use HUM as an example of what is excluded.

a) Exploration to increase life of mine (circa $9m)
b) Capex to increase production or increase life of mine. Currently we have ball mill which should increase production (circa $13m)
c) Other HUM costs completely separate to Yanfolila (Dugbe etc.)
d) Interest on debt
e) Income Taxes (Royalties on the gold sales are included in AISC)

Miners can be pretty broad on how they adopt AISC. Pit wall remediation is a classic case in point. Most miners would probably have badged it as a one-time cost and excluded it. However HUM took it on the chin, increased AISC to the unpalatable $1,600+ as even though it's 1-time, it is still an operational cost.

So Gold price minus AISC will of course give a good indication of free cashflow, but you then have to deduct the exclusions and take into account delayed trade payables/ receivables hitting the cash balance. We focus on trade payables for HUM, but people forget they have a large receivables balance and owed circa $10m by the Government for their last 10% share of the mine.

Strider - fair enough, HUM accounts may be released come May and you'll have another quarterly report to digest too. Picture will be far clearer then. But to be consistent, when telling people how much cash SOLG have, please reduce it by $10m which SOLG owes in trade payables would you? Otherwise it's incredibly hypocritical to bang on about trade payables here and keep hush hush over on SOLG.

For HUM the Net Debt figure of $40m is much much less than I expected, so there will no doubt be a large sum in trade payables for ball mill and remediation works etc. This is to be expected considering it's recent work from contractors.

Errr just read my last set of posts to realise I do not have "rosy specs" on.

They had near $9m earmarked for exploration but couldn't tell you how's split over the quarters - so yes quite a bit. Ball mill another $13m. Dugbe and other costs completely separate to Yanfolila also of course not covered in AISC. 9% interest on $60m Gross Debt also a big chunk. Historically they had huge amount of Capex in the books that was in Trade Payables. I kept banging on about this and it was quite clear the AISC could be reconciled once you dived into the accounts in detail. I have no idea what you mean by "we only see the long term debt". Trade payables is trade payables! It's not hidden. So you may have expected their position to be much stronger, but that's because your expectation did not understand the accounts or AISC in full.

Please tell me which AIM company releases P&L and full balance sheet every quarter?! This isn't the TSX.

Strider - the FULL balance sheet and P/L statement includes items completely separate to AISC. AISC as an example, does not include non-sustaining capex or exploration, interest payments, D&A etc.

It's pretty clear to see if they hit guidance (and that is of course a big if at this early stage in 2019) and oil price stays around these levels, they can no doubt achieve AISC of $800.

As I've tried to explain many times here, Gold price minus AISC does not equal free cashflow. It's not HUM's fault if some don't understand what is and is not included in AISC.