That may or may not be the cause ... my view is that the policy announcement weakened expectation of dividend yield unless free cash flow is also paid out by discretionary special dividend instead of putting it to development and to debt reduction.
There has been no production news, no reported stakeholder activity, no corporate deals, no broker revision. Nothing to reduce the Russia risk factor.
This is not the only gold miner to have ramped up recently.
There may be a hope for better realisation of profits following debt reduction and a potential boost from more favourable USD-RUB exchange rates in future; or a belief that we are at the beginning of a sustained step up in gold prices.
A similar bubble early last year quickly popped. This one may have further to go, I have probably done my usual trick of jumping ship way too early, but I get anxious when I cannot relate a significant share price trend to actual business performance or outlook information. Speculation, or someone knows something I don't.
Since through good fortune the SIPP in question was already half way to 2018 target I decided to capture the HGM gain and switch across to EAT, as you saw, for a rather more predictable high income.
I still like the company for its low AISC and I will be back at some stage.
price increase seems to have followed this announcement on 12th December
"Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) today announces that the Company's Board of Directors has adopted a Dividend Policy as follows:
Highland Gold Mining aims to pay a dividend that takes into account the Company's cash generation, profitability, balance sheet strength, and capital investment requirements.
The Company anticipates total dividend payout for each financial year will be 20% of Net Cash Flow from Operating Activities.
The Board may recommend the distribution of additional cash on the balance sheet through increased or special dividends should those funds not be
equired for capital expenditure or debt repayment."
By my reckoning, wth net cash flow In H1 of $59M or circa £42M, this means £85M for the year giving a 3% underlying yield with the prospect of "increased or special dividends"
those buying either like the adoption of a policy and or think the opportunities for additional dividend paymentss is high.
Confession ... I have cashed my HGM holding in recent times. No real motivation, just quitting while I am clearly ahead and not too sure what is going on.
Puzzled why the sp has surged to 170p+ in the past month stimulated by ... well what exactly?
? gold dipping to $1250 before returning back to $1305+?
? end of year attraction to gold as a haven?
? clever investors anticipating something I don't understand?
? (no) news from the company?
The sp stuck in sub 150p territory for much of the year and I see no fundamental shift in performance or outlook, the miner is still doing its mining and Trump is still being Trump. Assets have been re-appraised but putting potential into production is still a pipeline rather than reality, likehood of a sustained dividend was already high, exchange rates have settled rather than swung back, so we just have a sentimental bubble at this time of year, or I am missing something?
Anyway, my conclusion is that the current nonsense about who has the biggest button on their desk is just that, we are as likely to see 145p again as not before April, when I will be back.
Hochschild announces Redemption of 7.750% Bonds due 2021
"Hochschild Mining plc ("Hochschild" or "the Company") announces that it has today (through its wholly-owned subsidiary, CompaÃ±ia Minera Ares S.A.C) instructed the trustee to give notice to the noteholders in respect of the redemption of all outstanding Notes with outstanding principal, in aggregate, of US$294,775,000 (ISIN: US204474AA86 (Rule 144A) USP3318GAA69 (Reg S) and CUSIP: 204474AA8 (Rule 144) P3318GAA6 (Reg S)).
The redemption is expected to be undertaken pursuant to Article V of the indenture and paragraph 5(b) of the Notes with settlement expected to occur on 23 January 2018. The redemption price is set at $103.875 per $100 principal amount of the Notes, equating to a total payment of US$306,197,531.
The redemption will be financed through existing cash resources in addition to borrowings under committed facilities, in aggregate, of US$200 million on the terms outlined in the table below and is expected to result in a significant reduction in the Company's interest payments."
$100 million BBVA/Scotiabank 1 year 1.75% (BBVA)/Libor+0.32% (Scotiabank)
$100 million Citibank, N.A./The Bank of Nova Scotia 2 years (1 year grace period) Libor+0.7%
"The early repayment of the bonds is testament to the strength of our operations and our ability to generate positive cashflows. Also, we are now able to refinance the balance of our debt at significantly better terms thus substantially reducing interest payments and improving the financial results of the company. As guided, we continue to deliver on our strategy to reduce debt and strengthen the Company's balance sheet."
I hope you are around. I wanted to give you the heads up on Connect, CNCT. It's paying a 10%+ dividend that is well covered by EPS and FCF. Have a look at the BB, particularly Bill's comments. It has just released the latest figures.
Of course, you are all invited to have a look. Sorry for the intrusion.
I've grabbed a further 3,500 shares this morning ahead of being ex divi tomorrow. Averaging 156p but still think they are a good defensive play should the value of gold increase on any global stock market weakness. As ever, time will tell. GLA that are holding.
Well it's all about opinion and I just think that taking out the exchange rate factor, this wasn't a bad set of results. Decent dividend and increased precious metal mined. So, I'm in for an initial 2,500 shares at a shade over 163p. GLA that are holding...
Can't see much that will propel these higher apart from rising gold price (which may well happen),
but I also sold out having held since 25p days.
I may well come back but feel around 140p is about right.
todays figures were, i thought. Borrowings up a touch, AISC up rather more, pedestrian gold output (although full year guidance unchanged) with much of the uninspiring outcome being apparently down to the partial recovery of the rouble since last time.
The yield here is the main appeal for now but better prospects reside with FRES in prospective total return terms and to a lesser extent CEY but prefer FRES overall, given the greater upsurge in the AG price of late which has yet to be fully recognised, imv. Just my take, anyway, fwiw - sasa.
The ramp up for precious metals has already started. Today's increases seem to have bi-passed some pm miners but be patient. The geopolitical risk caused by North Korea is providing the current impetus although that's not the impetus I would have liked to see. It's also fact that prices of mining shares do not track or mirror the trajectory of gold or silver prices perfectly. However, quite often they will run ahead depending on how well a miner is doing and investor nervousness.
I have doubled my holding in CEY and will do so in HGM if I consider the price right for me. I have also increased my holding in the FTSE daily short, XUKS thankfully before Wednesday this week.
The curious series of round number trades this morning - does that suggest HGM is being traded out of treasury or placements by a big corporate holder rather than on the open market between normal investors?
There must be some reason why the sp was being held back despite plenty of buyers on a surge in Gold to $1,290, to which HGM has been quite sensitive at other times. We haven't really seen the benefit of good H1's yet have we, serious sp progress might be waiting for the divdend announcement due c.25 Sep. Someone please show a chart indicating this is about to ramp, it is hard having to be so patient.
I have just bought some HGM shares as they look reasonably stable and hopefully will maintain their generous dividend. I am not expecting any stellar growth and instead, I am looking for insurance against any sudden market correction. I also hope that HGM will prove to be a useful and more profitable substitute for my previous holding of PAF. This will sit alongside my other gold miner holding of CEY.
An encouraging report on Q2/H1 production figures in an RNS yesterday with gold produced over 131,000 oz head of last year's half-way 127,000 and management are confident they are on target for 260,000+ for the whole year. Significantly, the average sold gold price of over $1,250/oz is 10% or so ahead of last year.
The H1 financials report is due towards the end of September and should include an interim dividend similar to or better than last year's 5p. Lower costs due to debt reduction, much higher revenues while the gold price holds up, a bumper profit on the cards.
The negative is having to work on tailings at unpronouncable mine no. 3 and needing to develop new opportunities into production, which is now in process but might take a while to see the benefits.
All very very good though, meeting my hopes for performance worthy of 180p, would the market please catch on now please and thank you!
Stellar in comparison to TSG, their production report last week indicated furious mining of mostly empty rock!
Hi casa - yes, I'd assumed that your adjusted AU price was a typo which should have read $10k per oz with annual production pretty static at some 2700 tons, I think it is.
The scarcity of this immutable stuff was starkly illustrated a while ago in a stat I saw which stated that 'all the gold ever mined still wouldn't fill two olympic sized swimming pools!'...
Certainly agree that the QE experiment has hugely distorted the normal economic relationship betwixt the money supply and asset valuations; the recent crashes of LTCM in '98, the dot com boom two years later and the latest financial crisis in 2008 all occurred 'out of the blue' and thus your 'gas leak' analogy is quite apt, I think.
Expecting the next 'black swan' event occurring at some point soon has to be the prudent approach, if history is anything to go by and taking on board some AU exposure in good time, is the best form of insurance that I know of, even against cash held - sasa.
Yes the Chinese and Russians have been building up their gold stocks for some while, I guess with a view to wresting away the reserve currency from the US. One thing is certain, if there is any financial adjustment in the future as surely there will be, those two countries will be at the top table with the US.
I had a touch of the fat finger malaise in my last message. The suggested price for the gold standard today is $10000 per ounce. As you rightly say, gold is not available in infinite or huge quantities and the extra that is being mined each year makes little difference to the total. That is why the price per ounce would adjust according to money supply.
Although I have been expecting a correction for a few years, the markets do not reflect a manic phase like in the dotcom boom and bust. Yes prices of individual stocks are expensive, particularly in the US but I have to keep reminding myself that it's QE that has caused this condition. The nearest thing I can compare it to is a gas leak. Nothing will happen until there is a spark.
Hi casa - any return to the gold standard, per se, is doubtful imv, 'cos of the shortage of the stuff would necessarily involve such a huge realignment of the gold price to the sort of level you mention.
When Nixon did away with the official gold price exchange rate of $35per oz to the $ in 1971, we see where it is today (+3400%) and to prevent it going even higher, the Fed continuously issues put options against it to avoid further embarrassment over the declining purchasing power of the greenback.
Until those buyers of the gold 'puts' demand physical delivery to settle 'em, the suppression will continue but such manipulation is increasingly difficult to maintain, especially with the Chinese seeking to take the Fed on nowadays via creating their own 'gold standard' in HongKong and that's gotta be good for gold going forward - sasa.
Something else that I have read about recently is the suggestion to re-introduce the gold standard. At this point, you can usually hear a chorus of groans. Thankfully it is video, not audio.
In the 1920's the UK fixed the gold standard, valuing the gbp too highly against gold. This had a serious deflationary effect on the economy and we all know the result. The government at the time adopted the gold standard at the same level as it was before the First World War. However, the war had to be funded and to achieve this the money supply was doubled by the 1920's. Now fast forward to today and the money supply has been increased massively due to QE.
The suggestion is that due to this increase in money supply, the setting of a gold standard has to be done with this in mind. The level thought appropriate is $100000 an ounce of gold.
Governments can still increase their money supply, just as long as the gold standard is also adjusted in line with the reserve currency. By doing this, it doesn't matter that gold is rare and finite. It also means that stability should return to currencies and ensure the populations' confidence in their values.
The gold standard does not guarantee that there will be no inflation/deflation or no more financial crises. However, what it does do is is give fiat money a certain value. As things stand at the moment, the only positive for fiat money is confidence. If confidence is lost, the value goes with it. Not so if backed by gold but at a sensible level.
'morning casa - yep, capital protection remains key in todays conditions; in normal times, just keeping a worthwhile % sum on deposit to earn something, pending an anticipated mkt correction, was the obvious option but not under current circumstances can you do that for long, thanks to the weird QE world we're in.
Throughout history such contrivances always unravel in the end and the safest haven of all concomitantly reasserts itself while that is worked through, so quality equities, despite a bumpy ride for the duration, augmented by some decent 'goldies' to cushion the experience, is the best combo that I can come up with... sasa.
Thanks for the info, sasa. I should have bought both HGM and CEY when they stood at under 50p and under 60p respectively last year. However, I did buy gold and silver ETF's at that time as well as some physical gold. it's not easy to catch everything when opportunities present themselves all at the same time.
I think it's a good time to buy into quality gold miners at the moment. Gold has fallen from about $1250 to around the $1200 mark over the last week. When you consider that world debt is now well over 300% of world GDP compared with around 250% in 2007. how much will it take for another collapse or at least a scare? And that is only one threat to markets, albeit a major one.
Under these extreme circumstances, capital protection has to be the number one priority for any pi imo.
Hi casa - agree your reservations about PAF - sold my holding a while ago for the same reasons you cite; political pressures are anathema to me as the implications are so unpredictable...
I also hold CEY, FRES and HGM currently. All look good value to me and pay divds, too.
HGM is expanding quite vigorously at present and has taken on more debt in consequence but it's manageable gearing with much of it being longer term borrowings, unlike POG where their horrendous indebtedness is almost 50% current which has probably alarmed the bondholders as much as anything else.
The ousting of the old BoD might be a prelude to a 'fire sale' being imminent which might involve HGM looking to acquire a mine or two on the cheap. Given HGM's low AISC of some $650 per oz, their margins are particularly healthy (provided the AU price doesn't suddenly fall off a cliff which I don't expect) so I think their yield is fairly reliable.
As noted previously, the 'connections' between the new people in charge of POG and HGM's principle shareholder is intriguing, to say the least.....sasa.
I thought I might find you here. Precious metals and their miners have suffered of late but I am holding on to my investments with the exception of PAF. The political situation in South Africa has deteriorated and doesn't look like improving anytime soon. But I still have CEY, FRES and the ETF's in gold and silver. Platinum, PHPT, is becoming interesting, at a price of just above $86. The ETF came on the market in 2004 and its all time low is around $80.
It's interesting that Peter Hambro has gone. We remember POG at prices of over £10 a share. There seems to be plenty of gold there but the debt is horrendous. How would HGM deal with that? I suspect it would have to be a very attractive deal.
I notice HGM are paying divis in gbp and, at the current rate, it is over 7%. Do you think it is sustainable?
The ousting of Peter Hambro as Chairman of Petropavlovsk, just announced, might signal a move to merge these two Russian 'goldies', as suggested in the Press subsequently.
The new BoD at POG have 'connections' with Roman Abramovich of Chelsea fame, according to such reports which would be interesting for HGM where he remains a major shareholder.
Highland produces approx. 260k ozs of gold (forecast) and its mkt cap is £475m whereas POG is forecast to produce some 420k ozs v its mkt cap of only £240m - the latter's debt being the principal reason for the implied 'cheapness' as the Co struggles to get this down.
Any amalgamation (via merger or T/O) would bring together a new major in the making with AU production aggregating some 700k ozs - interesting possibilities here? - sasa.
As Bryan correctly predicted HGM has been picked up by a screen run by Stockopedia, who rated it as a SuperStock on Wednesday. This is based on a track record of financial performance improvement, low market valuation and a lack of broker coverage - the author is suggesting it is trading below value because of lack of attention rather than speculative doubts or fundamental concerns.
Unfortunately that has coincided with the gold price falling back from $1,290 to $1,250, and the HGM sp has back-tracked below 145p in response. Clearly this miner is very sensitive to commodity price. Which is kind of why I hold it, it is good to have a gold miner in your portfolio when the world is wobbling, but it is hard to watch it go the other way. Especially when even at $1,250/oz my sums say this should be at 180p.
HGM continues to swell towards its target price of 180p, on a strong gold price and positive news about the Kekura project. The prospect of sustained profits and future potential. Other gold miners are also doing well including the larger ones mentioned on this forum.
In contrast TSG, the alternative I rejected, has been beset with production woes and low trading liquidity problems. On top of which yesterday they were able to announce an AGM on 29 June, but we are still waiting for the FY 2016 report which I thought was due today 8 June and which did not even get a mention ... as at 13.30 no news or explanation. SP down to 38p.
Chaos or conspiracy, it may explain the imminent departure of the FD Simon Olsen.
So I am pleased I doubled up with HGM and not TSG, from which I will be seeking an exit at the next opportunity.
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