HGO - Hillgrove Resources

[Pallen]

Um, surprised no one has mentioned the esculation clause in the sale of the ESG parcel to Santos.

Assuming ESG is bought out in the next 18 months we can make some rudimentary sums.

Hill Grove has 390 million shares on issue.

For every 10 cents that ESG goes up above a dollar, Hill Grove gets $17,600,000 from Santos. This translates to 17,600,000/390,000,000 per share = 4.5 cents a share.


Now, given that Santos is likely to takeover ESG, were Santos to pay $2 a share, that's a ****load of cash to line the pockets of HGO.

 

[Datsun Disguise]

Um, surprised no one has mentioned the esculation clause in the sale of the ESG parcel to Santos.

Assuming ESG is bought out in the next 18 months we can make some rudimentary sums.

Hill Grove has 390 million shares on issue.

For every 10 cents that ESG goes up above a dollar, Hill Grove gets $17,600,000 from Santos. This translates to 17,600,000/390,000,000 per share = 4.5 cents a share.


Now, given that Santos is likely to takeover ESG, were Santos to pay $2 a share, that's a ****load of cash to line the pockets of HGO.

That was a nifty little clause in the contract I thought - cudos to HGO for swinging it. Then again Santos may only have agreed with the knoweledge that they have no intention of buying out ESG.......

 

[Pallen]

That was a nifty little clause in the contract I thought - cudos to HGO for swinging it. Then again Santos may only have agreed with the knoweledge that they have no intention of buying out ESG.......

Very nifty. Hopefully someone forces their hand and makes a play for ESG. If that day ever comes, personally I think it will, this sector is booming, I will be a happy man.

Bought HGO at 17, hoping to get out with a healthy profit, maybe triple :

 

[Sainter]

I really doubt HGO would have sold ESG at that price without that clause. Yes, STO may not make a takeover offer in the timeframe, if it had it's own way. But the point is ESG continues to develop the field and with each positive announcement, others will become more interested. If one of those other companies makes a play for it, then it is game on. I think an 18 month window is sufficient for that to happen (although I would have preferred a 3 year window, just to be sure!)
Cheers!

 

[DVEOUS]

YAY!!!

We have a 2 cent dividend coming, 1c in October, and then the final 1c in November.

It doesn't sound like much, but if you got in around 23-24cents like I did, 8.5%.
Not too shabby.

The news earlier this week about finding veins of gold and silver is also welcome.
Half yearly report released today says assets worth 35c/share and cash in bank alone worth 31c/share, so still trading at a discount.

I wonder what it's going to take, for mainstream investors to pick up on this one.
Bear in mind the gold safe haven has been hovering $1,000/oz, and in the news of late.
Concerns about management have been noted here before, and although I am relatively new to HGO, they do show evidence of moving forward.
Once their new processing plant (purchased last month) comes online in Kanmantoo during 2010, that should really get the attention of the skeptics.

 

[kenny]

Here's what the Australian's Criterion has to say today about HGO. It's hard to go past a small resource stock with no debt post div and little value attributed to their assets.

Cheers,

Kenny

Hillgrove Resources (HGO) $28.5c


CRITERION: Tim Boreham | September 10, 2009
Article from: The Australian

SHOULD an up-and-coming miner with a windfall gain hold on to the cash for projects, or reward investors with money in the here and now?

It's a classic dilemma and Hillgrove has tackled it by having a bet each way. The putative copper-gold producer yesterday unveiled a 2c-a-share maiden dividend, the direct result of selling its Eastern Star Gas stake for $171 million in July.

Post-div, Hillgrove is left with $120m in cash, worth 29c a share. Hillgrove's mainstay project is Kanmantoo near Adelaide, touted as a two million tonnes-a-year open-cut mine producing 17,000 tonne of copper and 8000 ounces of gold a year.

Hillgrove has spent $40m on the project so far and it needs another $100m. But Hillgrove chief David Archer expects the mine to be funded from other parties, with the cash earmarked for potential acquisitions and work on its West Papua tenements.

"We are in the process of offering joint-venture participation to a range of potential Chinese and other investors," Archer says.

Even before the global financial meltdown Hillgrove was trading at a discount to its Eastern Star stake, implying a negative worth for Hillgrove's other interests.

It sounds a tad dumb, to be honest, especially as Hillgrove has no debt. So we ascribe a speculative buy: the copper price has more than doubled since the start of the year, which gives Kanmantoo a fighting chance.

Archer says Hillgrove assumes a copper price of $US1.50 a pound for Kanmantoo to break even, with the metal now trading at $US2.80 a pound.

 

[McCoy Pauley]

Watching this one with some interest. Seems to be testing the $0.40/share level at the moment and it's been steadily going up in share price since the start of the year.

I haven't yet had a chance to dig through the company's financials in any great detail. Anyone got an opinion on HGO?

 

[wbosher]

Closed above the 40c resistance level, very low volume though. I suppose low volume is to be expected on Xmas eve.

Hopefully 40c will become support and it continues the up trend from here.

 

[tehnoob]

So HGO has done quite well oer the last few weeks, hitting a high of 0.52 on the Monday the 11th. Presumably this is due to the approval of their MARP for Kanmantoo.

Now what has me confused is why they are doing a share placement with 'sophisticated' investors when they have oodles of cash at bank???

Also, I noticed that 15 million odd options expired at an exercise price of 0.65. Am I right in thinking that is beneficial to shareholders as there is no dilution of shares?

Cheers

 

[doogie_goes_off]

The expiry of options is always good unless replaced by cheaper ones (pays to vote against generous offers made to staff/directors at AGM's). As a previously borderline copper operation the resource now looks valuable and the increase in SP is not only from the MARP approval but also the increase in in ground value. Depending on what site works are to cost a further placement could be good and maybe there are further studies to be done to get the operation going. I am pleased they are raising money now (could be arond 45c) as opposed to a few months ago (could have been more like 25c). This means whoever gets the placement shares gets a smaller slice of the pie for the same $. HGO appear to be well run and I am still bullish on their outlook.

 

[xenith69]

Wow
Not much of a following for HGO here of late!
They not doing much but waiting on drilling of Kanmantoo next year!

 

[Gladman]

Good movement here in the last couple of weeks. Solid company, cashed up nicely too at the moment after a cap raising and selling of ESG a while back. Their main mine (Kanmantoo, SA) is due to open soon, so they will be making the transition from explorer to producer. Also have some really nice first test results from a few of their Indonesian explorations. Sumba and Birds Head seem to be very promising. Hopefully they can continue on with them and use the cash from Kanmantoo to fund further exploration and production possibilities.

I've been a holder now for about 4-5 years and have been frustrated at times by the management team and some of their decisions, but I feel in the next 12-24 months some big things will happen with HGO.

In my opinion, this stock is one of the least risky (due to high cash reserves) and highest potential upside (great initial results, about to become producer) copper and gold plays out there at the moment. Well worth a look if you want some exposure to copper and gold.

 

[dandyjac]

Good movement here in the last couple of weeks. Solid company, cashed up nicely too at the moment after a cap raising and selling of ESG a while back. Their main mine (Kanmantoo, SA) is due to open soon, so they will be making the transition from explorer to producer. Also have some really nice first test results from a few of their Indonesian explorations. Sumba and Birds Head seem to be very promising. Hopefully they can continue on with them and use the cash from Kanmantoo to fund further exploration and production possibilities.

I've been a holder now for about 4-5 years and have been frustrated at times by the management team and some of their decisions, but I feel in the next 12-24 months some big things will happen with HGO.

In my opinion, this stock is one of the least risky (due to high cash reserves) and highest potential upside (great initial results, about to become producer) copper and gold plays out there at the moment. Well worth a look if you want some exposure to copper and gold.

I have to agree with you Gladman as I have also been a holder of HGO for about the same time. I feel all share holders will be rewarded over the next 12-24 months heres hoping anyway

 

[kermit345]

Somehow this passed through my value investing screener even though it isn't actively making a profit yet, I see there is quite a bit of potential here.

Contemplating an entry at the 31c level as I think if they can move into production phase successfully then there should be quite a bit of upside in next 12-18 months.

Just looking to grasp the thoughts on their company as a whole from any others that have been involved for quite some time, any price targets?

 

[doogie_goes_off]

Quick bump for HGO. I hold but am wary of movement in the Cu price. Production of copper concentrate looks to be on track. Does anyone have a fundamental valuation based on projected production figures??

 

[matty77]

It is my understanding the first shipment of Copper Cons from Kanmantoo should be completed before the end of the year, I have heard the pricing in regards to the contracts are pretty good, not all spot pricing but 50% fixed 50% spot. Dont quote me on that though. I am not a holder but have been watching for quite some time. Probably worth a punt next time the market has a heart attack.

 

[doogie_goes_off]

Well HGO has taken a dive and Cu price isn't that great with their grades but presales should make things pretty staeady with approx $10M cashflow/month from production. Would have to see how much debt is getting paid down in the half yearly data (ie what production costs are like) but looks promising. The Indonesian gold projects look typically low-moderate grade and are unlikely to become much in the short term, just a bit of a waste of cashflow if you ask me. The Cu and Mo grades from the birds head prospect are however encouraging for the long term. Any more downward pressure seems unwarranted. I got out a while ago, but not adverse to the idea of getting back in.

It is my understanding the first shipment of Copper Cons from Kanmantoo should be completed before the end of the year, I have heard the pricing in regards to the contracts are pretty good, not all spot pricing but 50% fixed 50% spot. Dont quote me on that though. I am not a holder but have been watching for quite some time. Probably worth a punt next time the market has a heart attack.

 

[burglar]

Drilling results are in:

"Strong Drilling Results from Indonesia"

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01305104

I don't hold.

 

[greggles]

Nice little share price lift for Hillgrove Resources today after the release of its Quarterly Activities Report.

At the company's Kanmantoo Copper mine in South Australia copper production is up, mining costs are down compared to CY17, and ore stockpiles are increasing enabling the company to focus on higher grade ore. Mine life is short (to mid-2019) but they have enough ore to last until Q3 2020. Looks to be plenty of cashflow out of the operation between now and then.

 

[greggles]

Some good news for Hillgrove Resources this morning:

The South Australian Government has awarded a $2m grant to Hillgrove Resources to trial new underground mining technology that is being developed in Australia by Komatsu Limited (“Komatsu”), a global manufacturer and distributor of earthmoving and mining equipment.

The Komatsu MC51 continuous mining machine utilises Komatsu’s DynaCut mechanical cutting technology which has the potential to revolutionise underground mine development by making underground operations safer, faster and more cost effective, in addition to reducing operational emissions for mine sites.

The Komatsu MC51 will be used to develop a portal and ~500m underground decline at the Kanmantoo Mine in South Australia. The trial will focus on demonstrating the commercial viability of the machine and trial new materials handling and ground support processes.

The underground decline has multiple benefits to Hillgrove, including:

➢ the development of underground drilling platforms which reduce drilling cost as Hillgrove continues to expand and infill drill the existing Kanmantoo Underground resource, and
➢ subject to Board approval for the commencement of the Underground, the decline brings forward first copper production and reduces development costs.

As grants go, $2 million is a pretty nice chunk of change to get handed to you by the government. There is obviously a lot of confidence that the money spent is going to generate a return and the good publicity that goes along with it.

Unsurprisingly, HGO is up 16.3% to 5.7c this morning and, after a decline from 8.5c to 4.5c since mid-May, it is looking like it may have finally turned the corner.