I rang the company to ask a few questions about the Sensitivity Tornado in the Expert's report. Although there are no figures quoted it looks like the variations are based on +/- 10%.
However directors and management cannot understand the low share price level compared to the cash flow figures provided. Nor can I but it's good to see a bit of upward movement.
It is a very confusing report but I believe the most appropriate figures for a shareholder looking at cash flow available (after debt/ creditor repayment) are 2017 $6.3m, 2018 $50.9m, 2019 $51.1m, 2020 $9.3m. This provides a discounted total of $102.4m to which should be added (10% lift in copper price: $21.4m) and (5% reduction in forex rate:$6m) for a total of $129.8m (22.8 cents per share).
In layman's terms that means if you bought HGO shares today at 23 cents you should expect a nominal rate of return of 9.6% per annum. That looks like a buy to me! It also excludes any value from underground resources (which could be in a mining phase within 12 months) and exploration prospects.
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