We're waiting for first gold pour from what is, on paper, going to be a an extremely profitable mine. The multi-million dollar plant is fully constructed, the operations crew are on site and, as of a couple of weeks ago, the project was on time and budget for delivery by year end. I expect both Dan and Bert are on site now as they will both want to witness the culmination of 10 years worth of effort.
What we are not waiting for is news on debt financing or drill results like junior miners and oilies do.
We are waiting for a different calibre of news. It is worth making the distinction. First gold pour WILL happen and it will happen soon.
I think you are right about country risks. i was a shareholder in Mariana Resources who made a large high grade gold discovery in Turkey and were bought out by a Canadian mining royalties business called Sandstorm. In my view the country risk was greater in Turkey than in Mali and I am sure that Mariana's TSX listing did a lot to raise their profile. Whilst I accept that a TSX listing involves some modest costs and a tighter regulatory burden than AIM, I think Hummingbird are making a mistake not being listed on an exchange that likes and understands mining ventures.
Malbrad - it creates not just confidence in the management but in the whole operation (the operational staff and the equipment). HUM will join the ranks of the elite few that can say they have built a significant mine on time and budget.
I'm going to put an extremely low probability on the first two scenarios - the mine is located in the south of Mali a thousand miles away from the trouble zone and within a district where there are quite a few other large active mines operated by majors. Believe that Mali is stable other than the Tuareg problems in the north.
Price of gold falling - well nobody can predict that one in the short term. With an AISC of $700/oz it would have to drop out of the sky to seriously damage HUM, and along the way it would bankrupt half of the world's existing producers and result in such a supply deficit that price would re-balance. No, I think a significant down move from here is pretty unlikely.
Global collapse in share prices - many agree that this share bull market has been going on too long. At some point it will collapse - it always has done in the past and there's is absolutely no reason to believe it won't again. When is the question - central governments are great at kicking the can down the road such that to try and ensure that these recessions don't occur on their watch...As for the impact on HUM when it does happen? Well, as a producer of gold HUM will be exactly the sort of share that will thrive in the raging gold bull market that will ensue. There may be a very temporary drop as those with no understanding of what is happening sell to those that do, but after that I imagine it would be a one way ticket.
TSX listing is literally a no-brainer to me. Get access to that vast pool of savvy Canadian/American money - I've no doubt there would be significant interest from them for under-valued fairly high-grade open-pit ounces with a 150koz processing plant sat right next to them. I haven't heard anyone give me a single good reason why listing there would be a bad idea yet. I have raised it with Bert and he seems lukewarm to the concept. I've got to say, that among all their brilliant strategic decisions with Yanfo so far, I think that they are making a significant mistake there.
I agree with your comments about delivering the mine on time and to budget as being a major achievement that helps create confidence in the management. I certainly hope to hold Hummingbird long enough to see its significant potential realized. A sub 30 share price in the next few weeks would require either the unexpected such an an attack on the mine or an unfavourable change of regime in Mali, a major fall in the price of gold or a global collapse in share prices. My guess for what it is worth is that the last two threats are perhaps more likely than some unexpected adverse event. That said, the performance of management so far is outstanding and that counts a lot for me, particularly if low gold prices test Hummingbird's very competitive potential production costs. I also agree with your comment about needing a TSX quote.
Malbrad, guess we'll just have to wait and see wrt share price movement into first pour. The market has surprised many of us twice this year already:
a) the early move upward in August
b) the lack of significant movement in the last couple of months
The market may yet surprise again, now expectations may have been somewhat dampened.
Getting first pour done is a MAJOR DERISK, let's not try and play it down. And then there's the MAJOR ACHIEVEMENT of getting it done on time and under budget (proving the management and their team's exceptional capability, as well as having plenty of cash reserves to start motoring into the ramp up, early explo on Yanfo and the AGG deal). This is something that very few other miners have achieved and many a naysayer said it wasn't possible.
With all that, 38-39p is going to look seriously under-valued by anyone's metric, nevermind the Canadians, who value their miners much more highly (I want to see a TSX listing to tap into that). IF the price stays at this level into first pour, which would beggar belief quite frankly, then how is anyone going to sell?! It already looks cheap! Does anyone really think this is going to drop to the low 30s - just how exactly would that stack up against a working mine fast on its way to $60+ million profit/yr.
Talk of LOM not being up to scratch - ya di ya di ya - it's been gone over a hundred times already. There are more options than you can throw a stick at to get that extended.
I agree with Malbrad: new investors should not buy into HUM in the belief that "first pour" will have some magical instant impact on the share price. If anything, "news" like this tends to lead to a fall for companies listed on AIM, hence the mantra "buy on rumour, sell on news".
I also agree that HUM's share price is more likely to go up in significant stages through 2018, assuming POG holds up, production develops steadily, there are no terrorist events, broken equipment and the like, and the cash from real sales rolls in regularly until it can no longer be discounted or ignored.
As a shareholder in Hummingbird I share the widely held hope that the share price will respond positively to news of the first gold pour. However, we are all only too well aware that there have been many occasions recently on which good news from companies has not been reflected in the share price. In some cases it has been possible to think of company specific explanations for the failure of good news to push up the share price but there are also cases where the only plausible explanation is adverse market sentiment. In short, I think news of our first gold pour ought to push up Hummingbird's share price but am less certain than I was that this will be the case.
We know that the market tends to under value mines with a short life and will want to see evidence that we are extending the mine life, hitting production targets, achieving the grades predicted and experiencing costs in line with those used in the investment proposal. At the moment, holding shares in Humminbird is not just about a punt on delivering first gold on time; it is also about having confidence that trading results will be in line with expectations during at least the first half of next year. Put another way, a share price that significantly outperforms the market may be a few months away rather than an end of December 2017 event.
First ore introduction is IMMINENT (it may already have occurred) - a momentous occasion as it signifies the end of commissioning and the start of production. Then two weeks to get that through the plant and into the first gold bar.
The South Africans want to be home in time for Christmas, and the operating team are trained and have been on site for several months already. Therefore, it is very likely we will have our first pour by the 22nd Dec at the latest; that's 10-11 trading days max.
It will be our turn high up on the risers chart soon.
About 0-1 trading days (ANY TIME NOW!) until the first ore is introduced to the plant - a momentous occasion as it signifies the end of commissioning and the start of production. Then two weeks to get that through the plant and into the first gold bar.
That's approximately 11 trading days, give or take, until first pour now.
It will be our turn high up on the risers chart soon
MIDAS SHARE TIPS UPDATE: Gold producer Hummingbird Resources that survived near meltdown now aims to coin it in
By Joanne Hart, Financial Mail on Sunday
PUBLISHED: 22:06, 2 December 2017 | UPDATED: 12:53, 3 December 2017
History: Dan Betts family has nine generations in gold
Gold is in the Betts family blood. Betts Metals is the oldest independent gold refinery in the country, founded in 1760 and now run by Charlie Betts, the ninth generation member of the business clan.
This genetic predisposition to gold has no doubt stood brother Dan Betts in good stead at Hummingbird Resources, the exploration firm that he founded in 2005.
Hummingbird floated on Aim in 2010 at 167p, when operations were based in the middle of the Liberian jungle, with an estimated 800,000 ounces of gold to its name. Estimates rose steadily but the gold price fell and with it Hummingbirds share price.
Midas recommended the stock in March 2011, when it was 143½p. By September 2016, the price was just 22½p, following a tumultuous five years, during which the group almost collapsed and Betts shifted the focus from Liberia to Mali.
The performance was hugely disappointing, even though it primarily reflected difficult market conditions.
Midas suggested that existing investors should stick with the business and that 22½p could turn out to be a bargain price for new investors. Today, Hummingbird shares are 38¾p and the group is just days away from pouring its first gold at Yanfolila in southern Mali.
Ore has been mined for three months, stocks are building up, the processing plant is undergoing final tests and activity should kick off in earnest next week. The Mali site is expected to produce 130,000 ounces of gold annually from next year so Hummingbird will finally become a commercial producer, seven years after listing and nearly 12 years after it was founded.
Coining it in: The company also intends to produce a collection of decorative, one-ounce Hummingbird gold coins
Brokers expect revenues of around $120 million (£90 million) for 2018, rising to $157 million in 2019. No revenue is forecast for this year and there will be losses of around $6.5 million but in 2018, the group is forecast to make almost $16 million of profit, rising to over $60 million the year after.
The company also intends to produce a collection of decorative, one-ounce Hummingbird gold coins, available to shareholders, using gold mined at Yanfolila and refined by Betts Metals in Birmingham.
Midas verdict: Shareholders saw their investments dwindle almost to nothing before Hummingbird staged the beginnings of a recovery over the past year. But the company has survived, testimony to Betts perseverance. The future should be smoother and the group still has a vast asset in Liberia, which could yet deliver value in the years to come. At 38¾p, the shares are a strong hold and new investors could benefit from snapping up a few and even purchasing a commemorative coin.
Traded on: AIM Ticker: HUM Contact: hummingbirdresources.co.uk
Agree 'Elviron' this has at least 5fold potential from todays sp. Imhho so undervalued with gold on the up and first pour imminent. An Rns due anytime and may well miss the 40's and fly straight into the 50's.
Yes, those calcs are centred around the reserve ounces at Yanfolila only (as at the time - summer last year - it was all about Yanfo and the ounces in the mine plan - the inferred ounces (~1 million), Dugbe and the Cora concession were given negligible value).
Fast forward and nothing has changed! Yanfo's inferred ounces, the potential AGG deal, Dugbe and Cora (now fully spun-off) are still given zero value. But the value of those inferred ounces and the ounces that the AGG deal brings has gone up, at a rough guess, 5 fold.
At the time HUM raised £53 million last summer (50 mil equity raising and 3 mil private placement later on), the mcap was about £25 million.
Add in the fully drawn-down debt of $60 million (£45 million).
At the rock-bottom base case, let's assume that the money raised has created assets of equivalent value and you get:
£123 million = 25 + 53+ 45
At today's close HUM is valued at a paltry £6 million above a straight conversion!
It's absolutely nuts; the part of the equation that is totally under-valued there is the £25 million - ounces in the ground become SERIOUSLY more valuable when you have a processing plant sat right next to them.
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