Hycroft Mining Holding Corp (HYMC)

[Phatlander]

From Seeking Alpha:

Summary

Allied Nevada produces 12% more gold and 106% more silver in 2014 compared to 2013 which is okayish.
No surprises here, and even the jump in silver production was expected as the company installed a Merrill Crowe plant.
The investment thesis remains ‘avoid’.
Allied Nevada Gold (NYSEMKT:ANV) has announced its production results for 2014 and even though there was a substantial production increase, the company's financial situation remains shaky. The production rate was good with a gold output of just over 214,000 ounces with an additional 1.82 million ounces of silver being produced (don't mix up the metals sales with the metals production like another author did here at Seeking Alpha) which is an increase of 12% and 106% compared to 2013 (and thus less outspoken than the increase in 'sales').

The main reason for the jump in the silver production was the fact that Allied Nevada installed a Merrill Crowe plant which obviously increased the recovery of the silver. Whilst I would otherwise be jubilant about this production increase, I'm still extremely concerned about the future of Allied Nevada Gold as the company's financial situation will still be weak at best.



Source: Financial statements

As you might remember, even though the company's working capital position was approximately $180M as of at the end of September, only $5M of that amount (!) was held in cash, so I wasn't really surprised when Allied Nevada announced a private placement in December, raising more cash. At the current gold price, Allied Nevada should actually be free cash flow positive, but the amount of cash flow most definitely won't be sufficient to cover the cost of the expansion plans at the mill so (a lot of) additional external financing will be needed to bring this to a good end.

Allied Nevada's Hycroft mine is actually a good project, but the company got caught by the recent downturn in the market. The recent placement will give the company some more breathing room, but the battle to keep the company afloat will continue. I'm still avoiding Allied Nevada but at $1300 gold its prospects are looking a bit better than just 2 months ago. Investing in Allied Nevada remains highly speculative, until the company can prove it is able to generate a substantial amount of free cash flow. Only then it will be able to secure its expansion financing as well.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.



As you might remember, even though the company's working capital position was approximately $180M as of at the end of September, only $5M of that amount (!) was held in cash, so I wasn't really surprised when Allied Nevada announced a private placement in December, raising more cash. At the current gold price, Allied Nevada should actually be free cash flow positive, but the amount of cash flow most definitely won't be sufficient to cover the cost of the expansion plans at the mill so (a lot of) additional external financing will be needed to bring this to a good end.

Allied Nevada's Hycroft mine is actually a good project, but the company got caught by the recent downturn in the market. The recent placement will give the company some more breathing room, but the battle to keep the company afloat will continue. I'm still avoiding Allied Nevada but at $1300 gold its prospects are looking a bit better than just 2 months ago. Investing in Allied Nevada remains highly speculative, until the company can prove it is able to generate a substantial amount of free cash flow. Only then it will be able to secure its expansion financing as well.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

http://m.seekingalpha.com/article/2839136-update-allied-nevada-produces-12-percent-gold-but-the-situation-remains-dire?source=email_investing_ideas_lon_ide_14_20&ifp=0