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MH - yes I agree JLP were clear on Vanadium and if they produce something, anything in Dec then that should satisfy the condition, including if that's only zinc. Perhaps it's the wording in the RNS but normally you of course don't procure or construct anything until design is complete, which is why I'm struggling with timeline, if they're already constructing the circuit but not finished design?! I therefore assume it's only part of the circuit design left to finalise and they're getting on with constructing the rest?

They are definitely moving along and that's positive and maybe I'm too pessimistic, but do you honestly think they will meet the condition of production of zinc by December? The RNS states they will finalise design and "financial parameters" by end of Sept 2018. So after finalising design you think it will take less than 3 months to complete and commission zinc circuit and produce? It's not picking holes, I don't know myself how big a job it will be to put in place the zinc circuit in 3 months... If anyone more technical can fill in the blanks it would provide assurance.

The timeline agreed with the Zambia Government only 3 months ago was production by Dec 2018. Considering only "enhanced circuit design and project financial parameters by the end of Q3 2018" will be complete end of Sept, are they really ready to commence production less than 3 months later?!

So now the key is renegotiation with the Government, after only agreeing the Schedule in April 2018! So of course sidebar and weeble are correct to be cautious. This is now a major unknown.

JLP appear to already breach the 2nd condition of the government's reinstatement of the license regarding "commissioning commencing by 30 September 2018 and the first production due by 30 December 2018"

So without any formal written assurances from the Government, it's a big risk to continue funding. If it's left until the end and JLP fund it all and still don't have formal written confirmation from the Government, the Government will hold all the cards and no doubt Blue Square will have to be called in again for their "advisory services" to smooth things over.

I wonder TBTT if you see the irony in congratulating JLP management today, who have run that company and sp into the ground, destroyed all semblance of value and sentiment, have broken every schedule, promise, production guidance and could not even do basic due diligence on a new asset.

Yet HUM board are the pariah who should be burned at the stake.

Consistent approach

I also know Azerbaijan very well having lived there in the past, oil and gas investors and AAZ investors have done incredibly well, so not clear what international investors are in the graveyard?

But irrespective and specific to recent movements, it is down just as much as HUM in last few days, some 10% and circa 25% overall from highs.

Is HUM being hit harder than others overall. It appears so, but it depends what time period you take.

Tom - agree on sentiment side of things. When I say tough few days/ weeks, I'm referring more to sentiment, as we creep closer and closer to $1,200

I had the exact same questions for CD but decided not to bother. I believe he's inferring a major institution is working in cahoots with the HUM management and stated its interest to enter into a private placing but only if sp is "X" amount. This then gives HUM money to enter into an acquisition for company "Y".

These posts of institutions behind the scenes have been a dime a dozen over the last few months, yet still nothing. A broken clock is right twice a day, so eventually...

Also take mild bittersweet comfort that AAZ another solid gold/copper miner, has been hit just as hard as HUM the last couple of days.

So when the tunnel vision is off, it's most certainly not isolated to HUM.

The last few days have been particularly tough for gold following FED minutes, as it gets closer and closer to $1,200 and many in this sector start to question the "turn-around" gold price narrative that has pervaded.

How you got to that Valuation of 35m JLP market cap compared to SLP's of 50m i'm really not sure but does not look correct: 1) JLP PGM production is less than half of SLPs. In terms of forward guidance SLPs will be updated soon, but in previous presentations now looking at 76,000oz from July 2018 and 80,000 Oz+ from July 2019 onwards. 2) SLP "life of production" is circa 10yrs. JLPs various tailing dumps are less, ranging from what 3-5yrs? 3) It is a complete fallacy JLP have lower cost of production, they just report differently. JLPs margin per Oz is around 350oz, SLPs 450oz. So SLP has bigger margin and therefore lower cost of production. 4) SLP have $14million cash in bank, no debts and a huge trade receivables balance over $20million of monies owed to them, although we will find out an updated number later this month when Accounts are released. 5) Track records and transparency in reporting - worlds apart. So on all possible metrics, SLP should be in excess of double market cap of JLP then some. Unless JLP pull off Kabwe which could be a game changer. But who knows when Zambia Government step in on a technicality to snatch it or Blue Square demand even more pounds of flesh for their "advisory" services.

If there's no growth opportunity I said to fund and I'm talking in 3 quarters time, when depending on gold price they should have Net Cash position of circa $15million. With an operational mine as collateral and having solid track record in event they did pay off early, if another major project did come along they would have no problem getting a loan at far better financing deal and lower interest. They would have more than enough funds for small growth opportunities linked to Cora and drilling at Yan. At present I'm against Dugbe unless something major changes, so care not if they dont have any funds for this. Dugbe will take years to get off ground in any event and be slow process. Awaiting DFS, ratification by President, pimping it out to get JV deal, financing for HUM's share, Dam DFS, Final Investment Decision, bidding process for EPC contractors etc etc. I'd be happy if we sold majority off and were minority partner, not operator and our portion of Capex is covered by funds released from the sale.

I don't disagree with you and nor does HUM management hence why Yan is priority and they're spending circa $8million on drilling to incorporate known resources into the mine plan, increasing LoM and long-term capacity. Where we would agree to disagree is payment of dividends. For me growth comes first, particularly in a market where there are distressed assets and companies struggling to get financing, therefore susceptible to lowball acquisitions and buy-ins. Failing that if there's no viable growth targets, I would like to see money used to pay off Coris loan in one fell swoop rather than paying it off over 4yrs at 9% interest. Even with the 50% interest penalty clause, HUM could save itself $4million+, maybe more just haven't had chance to work out the compound interest calculation.

What reality check will us wise old desk jockeys tell Dan Betts? That HUM is the only small to mid-tier mining company to ever deliver a mine below the budget in the DFS and on Schedule? Do we have better examples of how it should have been done?

HUM have stated a clear strategy of extending LOM and capacity... stated many many times

HUM have been in commercial production for 4 months with gross debt of $60m, Net Debt $15m. Talk of dividends at this early juncture is short-sighted and a complete joke.

What has movements of share price got to do with when to make an opportunistic acquisition? Not that they have even done this yet. A significant increase in sp would also infer a change in sentiment in the gold price and market as a whole, meaning the market and assets would respectively have increased in value. So you are inferring they should wait to make acquisitions when prices of assets are higher?!

By all means draft a letter to the Chairman - tell him Dan Betts is out of his depth, doesn't know what he's doing and the board is wilfully manipulating the share price to allow a third party to accumulate on the cheap in preparation for a hostile takeover. He will be all ears.

Flakey would be doing what you suggested: lying in an interview by saying due diligence is complete after a week and they're not proceeding, just because some vocal PIs are a wee bit peeved that HUM sp is stagnating along with the gold price and declining like pretty much all other gold miners. AAZ got hit 6% today too. But of course we must view HUM only in isolation.

They've invested $1.5m through a convertible loan note FFS, in a promising prospect. I'd take a small investment in Bunker Hill instead of p*ssing all our money on Dugbe. Dugbe is the type of project that bankrupts companies. Far more complex issues and far more room to bust the Capex estimates in the Dugbe DFS and Hydro-electric dam PFS. With populist politics coming back with a vengeance in Africa (Tanzania, SA mining charter and land confiscation w/o compensation), putting all eggs in 1 basket would be irresponsible. If the "optimised" DFS on Dugbe doesn't tick all the boxes, at least the HUM board have been busy looking at multiple other projects.

Surprised you don't like the strategy of Gold + Zinc. VAST... Gold + Zinc + Copper + Diamonds... damn those pesky multi-commodity companies. JLP - king of whims. Assume you have the same strong statements on those boards?

Thanks JW much appreciated - hardly "flakey and unserious" at all. Solid responses.

This LSE board truly is depressing with the amount of rubbish written. It veers from over-stating free cashflow, overly bullish and wondering why the market cap isn't higher, to panicking and posting patronising nonsense. Not forgetting the conspiracies concerning manipulation by the HUM board themselves, so some unknown entity can accumulate 10% on the cheap to then go on to take-over the company. Indeed.

I'm sure they'll take heed of the "friendly advice" on here, but in identifying assets with a solid return and bringing them successfully to production on schedule and below budget, I'm sure they'll stick to what they know already. If that's zinc in a safer jurisdiction, lower Capex and much higher IRR so be it. Or we could just spunk $300million Capex on Dugbe in Liberia, which based on what we know to date, does not have a strong IRR as one would like. But at least Liberia is a safe jurisdiction and not likely to change the goalposts during the 20yr Life of Mine with populist policies. Ahem

Ragnar - thanks for that find, very interesting read. He comes across as very fiscally conservative which is of course a good thing, but at same time you need to be pragmatic and balanced. You must prepare for the worst, but also allocate surplus funds efficiently, or else undervalue your company. Ultimately the 3 pots come down to "rainy day", "growth" and "yield".

We've seen SLP allocate funds efficiently last year by "growth" through acquiring Phoenix (Lesedi) from a distressed Pan African (PAF). They are now in the same position where they have options of "growth" or "dividend" while still leaving a sizeable cash position to ensure stability and rainy day funds.

Additionally there are other separate risks if you merely keep cash on the sides in SA Rand. There is a reason SLP earns itself 7% interest. We've seen this risk this quarter with a forex hit of $1.3million. Depreciating Rand is a double-edged sword for SLP with such a large cash balance. In USD terms, it reduces your cash balance (bad), but of course reduces your operational costs (good). To truly be conservative and like most companies dealing in multi-currencies with the final product attracting a dollar cost, they should have multiple bank accounts in currencies to spread currency risk and de-risk truly extreme worst case scenarios of bank failures in SA and major devaluations. Maybe they have this already?

SLP management have been shrewd in the past so perhaps instead of yield they are searching/ waiting for more growth options in this distressed market, but they need to be clear about this in terms of the forward guidance and strategy presented to shareholders. I'm wondering whether they're waiting to see how Sibanye-Lonmin takeover plays out. With current PGM prices it's looking pretty shakey and what happens if TO doesn't happen? Lonmin will be forced to restructure (SA government won't allow it to fail) and wondering if it has any assets SLP are interested in. Otherwise management risk some long-term investors moving on to a company that pays a dividend, or simply frustrated with an under-valued share price because surplus cash is not used efficiently. It also makes SLP vulnerable to a cheap Take-over if the share price is undervalued and the acquirer gets the benefit of the sizeable cash and trade balance, which combined make-up over half of the market cap.

Hi Ragnar - you are correct. I just checked the quarter before and working capital net movement was in SLP's favour by $6.4m, so the 2 quarters effectively cancel each other out in terms of working capital movements.

However I was expecting this trend of working capital net movement to continue being in SLP's favour, considering the huge Trade Receivables due to SLP.

In the interims SLP had trade receivables of $23.4million and payables of only $5.4million. Even with last quarters $6.4million in SLP's favour, the working capital should be heavily in SLP's favour still. This $7.2million infers that there must be a huge build up in Trade Receivables and almost no Trade Payables left at all. So SLP pay their bills on time, but they must be waiting over the usual 30-90 days to receive their monies. Like you say, 120+

When you compare production per Q x basket price - AISC, it is always far higher than cash generated, meaning quarter on quarter SLP should be continuing to build up considerable trade receivables.

So based on numbers I am a bit confused by the huge working capital outgoings this Q, but not long to wait to see the Accounts where I will scrutinise the balance sheet.

On pros side record production of 20,278, however I was not expecting the $7.2million payment for Trade Payables (debtors), particularly considering SLP's Trade Receivables is so high and considerable monies is owed to SLP.

Need to see next months Accounts to now understand the Trade Balance, as it must be significant now in SLP's favour.

Apologies Ragnar I see you had Liberum as an addition in brackets. Roll on Tuesday to get some more up to date info and hopefully a positive quarter!

Rick - agreed on getting the interims out earlier will be a big help. A lot of investors will want to see full numbers before jumping in. Net Debt is great to see, but an idea of trade payables and receivables is also v.important, particularly for HUM. As an example the Mali Government owed $10m to HUM in the last accounts, for there increase from 10% to 20% share of mine. Has this been paid or yet to hit HUMs cash balance?

Hi Ragnar,

a) I agree for FYE Jun-18 production probably at lower end of guidance of 71k, as that still means they need to achieve record 20,000 Oz + on 31-July reporting.

b) On July-18 to Jun-19 you may be right, 76,000 more conservative + realistic. This would change my Profit calcs before Tax to $25million and after Tax $17million. The "All-in" rate from last Q2 2018 report of $708 per Oz includes for Capex and is some $90 per Oz more than AISC. So against 76,000 that's a rough est. Capex of $7million in total for FY 2019.

Considering Project Echo was supposed to be $12million Capex in total (although incorporating Lesedi, perhaps little more, lets say $15million) and since end of Q1 2018 they've already spent $6-7million, I think Capex of $7million is about right and don't think I'm underplaying it.

I think using SLP's all-in costs should be far more accurate than Liberum's EBITDA calcs. I admit I have not taken into account "Depreciation & Amortization". Whilst that of course reduces Profit in the books and thereafter Tax paid, it does not impact actual cashflow to SLP which I'm more interested in. Maybe I should have termed it "Free Cashflow" after Tax, which based on 76,000 Oz I still think could be $17million.

FSJ - thanks for extremely good summary as ever.

1234... - if you really want to get pedantic, the free cashflow is simply the change in Net Debt position since last quarter. In Q1 cash was $28million and we know from Accounts Gross Debt is circa $64.5million, so Net Debt of $36.5million. Net Debt is now only $15.6million, so it's improved by $20.9million. So arguably yes FSJ is correct. Or as we don't know the exact Gross Debt at end of Q1, if you simply look at change in cash position between the 2 Qs it's improved by $18.2million.

Therefore "free cashflow" is most definitely between $18.2 - 20.9million for the quarter.

I'm not clear how you've calculated your figure of 6k on inventory, I don't recognise it.