The reason I always liked the risk/reward of HGO, in all...

The reason I always liked the risk/reward of HGO, in all markets, is the strong cash backing.

In strong markets, they benefit from high commodity prices and can confidently mine Kanmantoo profitably, whilst using their cash to explore Indonesia.

In WEAK markets, as an investor there is a good risk reversal. For one, there is a fully diluted cash backing of around 25 cents - this underwrites your investment.

Secondly, worst comes to worst, Kanmantoo can become parked and exploration can continue at K, Sumba and West Papua. (I am not saying this WILL happen, just that it is an option if markets really tank).

But the final point in HGO's favour is that in a weak market, the prey can become predator. There are so many small miners who will need to go back for the market for more cash. SWN is just one of these. If HGO decides to allocate some of their cash to acquisitions, they stand to pick up some great bargains if markets remain soft.


As you know, I have scratched my head at a number of decisions in the last 12 months. But, the risk/reward for HGO is terrific. And its huge cash backing, and tiny EV, look to stand it in good stead, whatever happens.

Y