Not surprising to see Hummingbird beginning to hit the newswires. It can’t be long before first gold pour commences and the cash starts rolling in.
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MIDAS SHARE TIPS UPDATE: Gold producer that survived near meltdown now aims to coin it in
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 Hummingbird’s 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.