Generally, news that a company is about to undertake an operational, financial and strategic review is not seen as a good omen. 

So what is going to happen at Hummingbird Resources (LON:HUM) – which late last week announced that it had just received another $20m loan from CIG SA, its largest shareholder? 

It is also about to launch a comprehensive group-wide review, aimed at delivering operational improvements and realising the company’s potential as a multi-asset, multi-jurisdictional gold producer. 

The Business 

Hummingbird Resources is a leading multi-asset, multi-jurisdiction gold producing company, a member of the World Gold Council and founding member of Single Mine Origin. 

The £54m capitalised group’s stated vision is to continue to grow its asset base, producing profitable ounces. 

It currently has two core gold projects, the operational Yanfolila Gold Mine in Mali, and the Kouroussa Gold Mine in Guinea, which will more than double current gold production once at commercial production.  

The company also has a controlling interest in the Dugbe Gold Project in Liberia that is being developed by joint venture partners, Pasofino Gold Limited.  

The final feasibility results on Dugbe showcase 2.76Moz in Reserves and strong economics such as a 3.5-year capex payback period once in production, and a 14-year life of mine at a low AISC profile.  

However, it is believed that the company is looking at potentially divesting its non-core assets including the Dugbe Gold Project in Liberia, where it holds a 53% stake in Pasofino, which is an owner of Dugbe. 

Hummingbird has already engaged in informal, non-binding discussions with several parties regarding the sale of certain assets including the Dugbe Gold Project in Liberia. 

The Loan Facility 

The group secured a loan facility of $30m from CIG SA, including that new $20m loan and a consolidation of a previously announced $10m short-term loan.  

The loan, which is unsecured, carries a 14% interest with an initial maturity of December 2024.  

The company anticipates transitioning this loan into a longer term fixed-rate, gold-linked loan note, details of which are currently being finalised.  

There are several opportunities to increase the size of the ‘Gold Loan’ due to additional interest, with the company making further updates in due course. 

The company is bringing in third-party consultants to review its corporate structure with a view to identify cost efficiencies and improvements in governance including Board and management changes.  

Management Comment 

Chairman Dan Betts stated that: 

“As we continue to navigate the challenges at Kouroussa, we are committed to taking decisive actions to strengthen Hummingbird’s operational foundation and unlock its full potential as a multi-asset, multi-jurisdictional gold producer.  

The Group-wide review is an important step towards optimising our production capabilities and enhancing shareholder value. 

While Kouroussa’s ramp-up has been affected by various unforeseen factors, we are focused on reaching commercial production in Q4-2024.  

Whilst we are confident of commercial production in the coming quarter, it is dependent on us and our partners delivering meeting our production plan and expectations.    

Our focus remains on sustainable growth, securing additional financing, and completing leadership transitions to ensure the successful delivery of our ambitious growth objectives to deliver 200 Koz pa of gold. 

After 17 years of building Hummingbird from a grassroots exploration company to a gold producer with an annual run rate exceeding 200,000 ounces, I believe the time is right for a new leadership team to guide the Company through its next phase.  

I am proud of what we have achieved and will continue to focus on strategic opportunities and key relationships as Chairman of Hummingbird.” 

Analyst Views 

Tim Huff and Alex Bedwany, at Canaccord Genuity Capital Markets, now have a Speculative Buy Price Objective of 17p on the group’s shares, based on a 50/50 weighting of their longer term NPV (at 1.0x) of 28p, and their near-term EV/EBITDA weighted value (at 4.5x) of 6p. 

Prior to the results of the Review, the analysts have estimates out for the current year to end-December to show an EBITDA of $38.5m ($11.2m), leading up to a massive $206.0m EBITDA next year, worth $11.92 per share in earnings. 

In My View 

The company believes that this latest support and new Review will help to capitalise on the strong platform that it has built to date, while enabling it to evolve into a robust mid-tier gold mining company. 

Four years ago, the shares were up to 43p and have been down to a low of just 4p since then. 

The question now is whether the shares, at just 6.7p, are ‘option money’ on some very big returns in due course? 

The Watches of Switzerland Group has announced the acquisition of Hodinkee, the world’s foremost digital platform for horology enthusiasts.

Founded in 2008, New York-based Hodinkee has become the global epicentre for luxury timepiece aficionados. The platform boasts an impressive reach, with 22.2 million annual unique visitors and a social media following exceeding one million. Its offerings span digital, print, and video content, alongside exclusive watch collaborations and specialised insurance services.

This strategic acquisition aligns perfectly with WOSG’s Long Range Plan, which emphasises leveraging growth opportunities and expanding online sector leadership. The integration of Hodinkee’s commercial activities into WOSG’s operations is set to provide the group with access to a highly engaged, captive audience of luxury watch enthusiasts.

The acquisition, funded through existing financing facilities, is not expected to significantly impact WOSG’s leverage position. It marks a significant step in the Group’s strategy to remain at the forefront of the luxury industry, particularly in the rapidly growing US market.

With this latest addition, the Watches of Switzerland Group’s has an impressive portfolio of luxury watch retail and media including Watches of Switzerland, Mappin & Webb, Goldsmiths, Mayors, Betteridge, Hodinkee, and Analog:Shift.

“I am thrilled to have Hodinkee join the Watches of Switzerland family. We have been avid followers of Hodinkee for many years and have long-respected Ben and his team’s success in creating the undisputed destination for luxury watch enthusiasts,” said Brian Duffy, CEO of the Watches of Switzerland Group.

“With the support of the wider Group, we will enable Ben and his best-in-class editorial team to keep doing what Hodinkee does best: further expanding its passionate and loyal community by being the most authentic and authoritative voice on the industry.

“Our strategy at WOSG is focused on staying at the forefront of the luxury industry, aligning with brands which inspire us and whose partnership offers a mutually beneficial outcome. The acquisition of Hodinkee directly supports our ecommerce business, driving traffic and brand awareness across our markets, and particularly in the US, further enhancing our sector leadership online.”

There was a mild bout of optimism in UK equities on Thursday despite ongoing tension in the Middle East as the housebuilders and Tesco outperformed and helped the FTSE 100 higher.

Tensions in the Middle East remained a major concern, although they took a back seat to news closer to home on Thursday.

Positivity emanating from an upbeat Zoopla report on the UK property market and strong corporate results from Tesco offset weakness in miners as the index gained 0.3%.

After announcing rising revenues and profits amid action on lowering costs, Tesco was the top riser as investors cheered a 15% jump in operating profit.

“For a company in such a competitive market and with an already dominant market position to be taking share is quite the feat and that’s something Tesco has achieved in the first half of its financial year,” said AJ Bell investment director Russ Mould.

“The supermarket also demonstrated its confidence in its future prospects heading into the crucial Christmas trading period with a healthy increase in the dividend. This is underpinned by strong cash generation, which is also enabling Tesco to invest in the business and compete effectively on price.

“Its focus on value is clearly getting customers through the doors and the tills ringing and, alongside measures like its Clubcard discounted prices, should help to engender loyalty. A fairly astonishing 23 million households now have a Clubcard membership.”

The latest Zoopla House Price Index showing transaction activity increase 25% has been taken well by investor who saw a chance to jump into the housebuilding sector.

Persimmon shares added 3% and Barratts rose 2% after Zoopla’s revealed an improving environment for housebuilders and a 1% increase in average prices over the past year.

“The number of sales agreed is now 25% higher than a year ago as households that have held off making moving decisions over the last 2 years return to the market,” Zoopla wrote in their report.

“Sales are up by over 10% across the UK, and more than 30% across the East Midlands and North East.”

There is an awful lot to like about Tesco’s half-year update. The company is growing revenues, winning market share and importantly, increasing operating margins.

Investors will also be delighted with the 15% increase in operating profit for the period.

UK & ROI adjusted operating margins were 4.7% compared to 4.2% for the last full year period. The increase in operating margins is interesting, given the supermarket is locked in a bitter price war with the discounters to win over cost-conscious consumers.

“We have lowered prices on thousands of lines, launched or improved over 860 products in partnership with our suppliers and growers, and our customer satisfaction scores continue to improve across a broad range of measures,” said Ken Murphy, Chief Executive.

“The combination of price, quality and innovation means we are as competitive as we have ever been, and we have been the cheapest full-line grocer for nearly two years.”

Action on pricing has resulted in Tesco growing its market share and cementing its place as the UK’s leading supermarket. Tesco’s market share hit 27.8% in the period, Tesco’s highest market share level since January 2022.

“Tesco’s excellent 2024 performance is reflected in this morning’s results as the UK’s largest supermarket reported a further increase in profits as their shares surged to an eleven-year high,” said Mark Crouch, market analyst at investment platform eToro.

“Throughout a period in which supermarkets have faced a whole host of headwinds, from a global pandemic to high inflation and a cost-of-living crisis, Tesco has not only maintained their market share but increased it to the highest point in almost three years. And despite the rise of budget supermarket chains, who have managed to wrestle away market share from other big names in the sector, Tesco has not been one of them. 

“There are several reasons for this. Food sales growth has been an area where Tesco is rarely beaten, offering a larger and wider variety of products to their customers. Price-matching and Tesco’s Club Card loyalty program, which has grown to over 22 million members and counting, have also been a resounding success.”

Tesco shares were 2% higher at the time of writing.

British Land has made a bold move to increase its exposure time UK retail parks by raising £300m to help fund the acquisition of seven sites.

The high street is dead, and it has been for some time. That said, out of town retail parks are proving to be increasingly popular.

The mix of shopping and leisure experiences in retail parks that consumers can easily drive to have stolen the footfall of UK shoppers and British Land is realigning its portfolio accordingly.

The seven sites will considerably increase British Land’s weighting towards retail and generate the Real Estate Investment Trust 6.7% in net yields initially.

British Land raised cash for the acquisitions by way of a placing at a 3.6% discount to yesterday’s closing price. 

“British Land has raised around £301mn from investors to help fund the purchase of seven retail parks for £441mn. Sites like this now make up around 32% of the entire portfolio, up from 18% just 18 months ago, and are core to British Land’s expansion strategy,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“There are two key takeaways here. The first is that the ongoing consumer shift from the high street to out-of-town retail locations is clearly a trend that companies are trying to take advantage of – we heard from Greggs earlier this week who is taking this approach for new store locations. The second is that the large-scale acquisition market for property giants is back open, after a period of low activity.”

The FTSE 100 was higher on Wednesday despite major escalations in the Middle East overnight as commodities provided a safe haven for investors.

Iran launched a barrage of missiles at Israel while Israel moved more troops into Lebanon overnight sparking concerns of all-out war in the region.

However, the dynamics of the FTSE 100 index and its leaning towards safe havens meant London’s leading found support as investors flocked to commodities companies.

“As Iran’s cruise missile attack on Israel and fresh strikes on Hezbollah in Lebanon have unnerved investors,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The uncertainty has made safe-haven assets like gold more popular, with demand for the precious metal ticking up close to record levels, as violence spills further across the Middle East, briefly climbing above $2,670 an ounce. Already sought after, amid concerns that inflationary pressures would persist, fresh geopolitical fracture has increased demand for gold.  The dollar has steadied after gaining ground and US Treasuries proved more popular, indicated by falling yields, as investors have sought out trusted shelters amid the widening conflict.

Oil prices are climbing, with Brent Crude approaching $75 a barrel, as supply concerns swirl again, sparked by heightened aggression. These worries are being mitigated by expectations that Saudi Arabia will turn on the taps more fully, and lower demand from China, but upwards pressure is likely to continue while uncertainty reigns about just how far conflict will spread.”

Rising oil prices helped lift oil majors BP and Shell on Wednesday with gains of 2.1% and 2.5% respectively.

Prudential was the top riser as optimism around China was untouched by developments in the Middle East. China has ramped up its efforts to stimulate the economy, paying particular attention to the financial sector. Prudential shares were 3% higher at the time of writing.

JD Sports was the top faller amid ongoing worries about Nike. Despite JD reaffirming guidance for the year, investors were more concerned with Nike’s ongoing uncertainty given the fact around half of JD’s sales around from Nike products.

“JD Sports has a multi-brand strategy and is continuing to roll out new stores and make acquisitions globally, yet Nike’s warning that the festive period may be littered with discounts could well have had some contagion effect,” said Adam Vettese, market analyst at investment platform eToro.

“Investors who have been in JD Sports for a while will be haunted by last year’s disappointing Christmas figures which saw shares plummet in January and will be looking to avoid a repeat performance this year.”