The FTSE 100 rebounded on Friday after a blowout US Non-Farm Payrolls for October and erased early losses to trade broadly flat at the time of writing. One would expect further choppiness throughout the session.

The US economy added 254,000 jobs in September, far more than the 150,000 predicted by economists. The big question for investors is whether this good news for the economy will be good news for stocks.

Such a strong beat is undoubtedly a major positive for the US economy and will go a long way to dispelling fears about a US slowdown. However, traders had been eyeing a potential 50bps interest rate cut at their next meeting. This now looks very unlikely with US growth appearing to be in good shape.

“While focus remains squarely on the employment side of the dual mandate, Chair Powell’s recent assertion that the Committee is “not in a hurry” to cut quickly, along with today’s incredibly solid data slate, means that a return to a more normal cadence of 25bp cuts is likely at the November meeting, and at each meeting beyond that, until the fed funds rate returns to a neutral level next summer,” said Michael Brown, Senior Research Strategist at Pepperstone.

“That said, the data-dependent FOMC will respond if labour market conditions weaken, with larger 50bp cuts on the table particularly if unemployment rises north of the 4.4% median forecast for this year and next.

“For sentiment, the forceful ‘Fed put’ should see the path of least resistance continuing to lead higher for equities over the medium-run, though conviction in the short-term could well be somewhat lacking, owing to ongoing geopolitical risks in the Middle East.”

The initial reaction to the jobs report was a jump in stocks and bond yields. S&P 500 futures were firmly higher and the dollar soared. There was also a jump in the FTSE 100, which recovered losses after a soft start to trade on Friday.

In the UK, rising oil prices didn’t provide much support for BP or Shell, leaving the index vulnerable to domestic constraints. However, the initial general optimism around the jobs report lifted all boats, taking London’s leading index back to flat on the session.

“Oil prices continued their ascent, rising another 0.8% to $78.21 per barrel and putting the commodity at its highest value since August. This is good news for oil producers but bad news for millions of companies and consumers as they face higher energy and transport costs,” said Russ Mould, investment director at AJ Bell.

JD Sports was the top faller as investors continued to checkout of the stock following worrying news from Nike, it’s largest supplier of sportswear.

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.”