Hummingbird Resources Share Discussion Threads

[roguetreader] 21/9/2020 17:32

Cheers Redtrend good post

[new_buyer] 21/9/2020 13:50

Communication has been an issue for a long time now but I suppose in the last year or so you could argue the BoD have got their heads down and been working through some previous issues and learning from mistakes, as can be seen by how the last rainy season was handled and how this one seems to be being handled.

[casual47] 21/9/2020 10:06

BH came amid a host of other issues which gave the impression to some that Dan was treating HUM like his own private fiefdom.

[casual47] 21/9/2020 10:00

The problems most folk had with BH were not so much about the asset but e.g.

1. The people behind BH are/were arguably very dodgy,
2. The timing,
3. The communication or lack of it

[redtrend] 21/9/2020 09:52

There is no environmental liability on Bunker Hill, they are indemnified by the DoJ. Any potential environmental liability going forward is the same for any other mine operation and they will continue to be indemnified for all historical pollution and present pollution caused by previous mining.

It's a huge silver and zinc play with world beating grades in a safe jurisdiction with infrastructure, roads and easily trained workforce on the doorstep. The Capex is in same ballpark as Yanfolila and Kouroussa ($100m), with even better earnings potential now silver is $26oz. It's shame at the time more PIs didn't understand what a good project this could be (a huge silver play) as HUM could have taken a bigger shareholding. I was pretty much the lone voice singing it's praises (not the mis-handling of the original HUM loan though).

Whilst I contact the company regularly as I have a large shareholding and was one of the only PIs to attend the 2019 AGM, on this occasion I do not need to contact them as it's in B&W in the Accounts. It's not guidance, it's clear they are following the WGC definition:


"all-in sustaining costs per ounce are non-GAAP financial measures which are calculated based on the definition published by the World Gold Council (“WGC”)" (pg.31 of 2019 Accounts)."


On PE ratios I agree with HUM 5-6yr mine life and even though we LTHs know it will be "rolled over" for many more years, the "market" as a whole will never value it on a PE more than the formal verified mine life. For my own purposes I currently use a ballpark PE of 5 for all of HUM (which undervalues the LoM extensions and all other assets, but like to be conservative with current risks).

Only when HUM hits Net Cash position, Kourossa, Dugbe, Cora and/or BH really kick up a gear could it be valued on a far higher PE, or if gold miners reach a "parabolic" phase and PE ratios really take off. Also with the uncertain Mali political situation and ECOWAS still required to agree from sanctions perspective whatever Mali transitional President is nominated, this could hold back the share price. Let's hope the Mali military chose a public non-military figure. It's good ECOWAS have agreed to the 18 months transition though and even the sanctions may not be impacting miners, as some articles I read seem to infer normal cargo is getting through (albeit have not been able to verify this myself yet).

With the huge build-up in inventories, stocks, spares, chemicals and other costs in Q2 2020, I'm hoping "free cashflow" in Q3 2020 will actually be more in line with Gold price achieved minus AISC this quarter, once interest costs + capex are deducted. With Net Debt at $12m (when you include gold inventory), could we finally in Q3 change from Net Debt to Net Cash?

[dickbush] 21/9/2020 09:48

Wall St Futures have been declining all morning, currently down 1.8%, and the European markets are almost as bad as ours. Bloomberg reporting fears of another lockdown. Things aren't great here but a lot better than Spain and France.

Dollar benefitting from this and pressuring gold, under $1940.

[kennyp52] 21/9/2020 08:21

What for ? You spend all your time on here moaning . What a waste of money .... give it all away and bring yourself some happiness

[laurence llewelyn binliner] 21/9/2020 08:20

#Redtrend, interesting... I have been trying to make sense of the AISC as it is misleading and not as all inclusive as the name suggests, other administrative expenses are listed separately but what they are I am not clear (yet)..

Auramet is the refiner, we do not know exactly what is in the Dore, but it will have some Copper and/or Silver in it for credits to come back so this will form a part of the offset to POG after refining and possibly transport/insurance costs..

[redtrend] 21/9/2020 07:16

UKG - I do take the time to read both Accounts and Interims - show me exactly where they state head office/corporate costs are not included in their definition of AISC, because I certainly can't find it.

You seem to be getting confused with AISC and AIC (All-in Costs). The reason net profit and cashflow might not directly match AISC is more linked to the costs outside of AISC (Interest, non-sustaining Capex + Exploration, other asset costs (Dugbe until recently), BH, Kouroussa moving forward), Tax etc.).

In fact the 2019 Accounts explicitly state they follow the World Gold Council (“WGC”) definition for AISC. And such definition explicitly includes Corporate G&A linked to the mine. For those interested the below slidepack is pretty helpful on AISC and AIC (particularly page 8), the differences and what is not included in AISC.


hxxps://www.ey.com/Publication/vwLUAssets/EY_-_All-in_sustaining_costs_and_all-in_costs/$FILE/ey.com_gl_cost%20per%20ounce.pdf


Did you read the Accounts?

[ukgeorge] 21/9/2020 06:53

LLB I like your enthusiasm but the mine life is around 6 years so expecting a P/E ratio above that imo isn't realistic.Almost all African gold mines do not have any silver credits, I've never seen them mentioned in a Hum presentation. The runway as you mention should see the cost come down. Most African miners use Swiss refiners or the rand refinery. I think hum use a relatively unknown refinery and couldn't find them mentioned in the results.

[ukgeorge] 21/9/2020 06:44

Redtrend if you take the time to look at the accounts and quarterly results you will see that the stated numbers do not include any head office costs. I would also argue that as it is currently a one mine company that it makes sense to allocate all the HO cost to the mine. Either way the company level cost of producing an ounce of gold is closer to 1200 than 900.

[ukgeorge] 21/9/2020 06:39

It normally works that the government doesn't get the free carry interest of 10% until the company has regained the capital cost, this may also include previous exploration costs. Do hopefully will be a while.

[casual47] 20/9/2020 22:03

The ownership presumably doesn't really matter until there are dividends.

[andrewsr] 20/9/2020 21:56

Thanks for the correction, it was a while ago. I was referring to the discrepancy between UKG and HUM's AISC figures. IMO HUM should state the ownership % and buy-in rights in their presentations.

[redtrend] 20/9/2020 20:18

HUM's ownership of Yanfolila is 90%, however Government were due to increase their holding to 20% but still require to pay circa $10M to HUM.

This is completely separate matter to AISC and what discrepancy in AISC are you referring to?

The AISC is linked directly to Yanfolila and does not include Interest, Tax, non-sustaining Capex (if you're looking at cashflow) and Exploration, and General & Admin costs not linked to Yanfolila.

For some reason UKG likes to make an assumption all G&A costs are excluded which would not be the case or if it was, would be an incredibly poor method of cost recovery/ tax efficiency. Every major company I've worked for which is multi-regional and multi-asset forces you to "timewrite" to specific projects/ sites even when in "head office". If you work across assets, you make a ballpark % figure for each.

[andrewsr] 20/9/2020 19:33

It was mentioned in a presentation by Bert Munro a while ago that HUM's ownership of Yanfolila was 85% (15% owned by the government with a right to buy a further 10%)- does this account for some of the discrepancies in AISC? Their ownership % doesn't seem to be mentioned anywhere in presentations/reports etc.

[temujiin] 20/9/2020 19:26

LLB, ah I see, so it's AISC + G & A. Cheers.