Midas: Hummingbird on brink of gold success
With the Middle East in turmoil and investors shying away from risky markets, a gold explorer in Liberia may not seem the most obvious investment choice.
Digging deep: Daniel Betts raised £25mn
For most people, the country is just another war-weary African nation, wrestling with poverty, hunger and political corruption. But Daniel Betts, chief executive of Hummingbird Resources, has a rather different perspective.
Hummingbird has a licence from the Liberian government to explore and mine for gold in an area half the size of Wales. The territory is part of a rich seam of gold deposits stretching along west Africa, but in Liberia, decades of war have prevented any real exploration - until now.
Over six years, Betts and his team have worked hard to assess the potential of their Liberian assets.
They have performed countless tests, which have delivered positive results time and again. Last year, the company moved to the next stage when independent experts said that just one small stretch of Hummingbird's land could produce more than 800,000 ounces of gold. Mineral exploration is never certain but all the signs suggest there is a lot more to come.
Late last year, Hummingbird was admitted to the Alternative Investment Market and raised £25m in the process. That should provide enough money for the next two years, and the intention is to prove that at least three million ounces of gold lie beneath its land.
The target looks realistic but it will require continuous effort from Hummingbird. The land being explored is virgin territory and the climate is tropical, which can make the daily grind uncomfortable.
However, Liberia has a huge unemployment problem so Hummingbird's workers feel loyal to the company and are prepared to put in the hours. The firm is also building roads, funding community services and providing medical care.
Betts' family has run a Birmingham-based bullion trading company for more than 200 years and has amassed a string of contacts in the industry. Over the past decade it has developed a strong relationship with the post-war, anti-corruption Liberian government, which is highly supportive of its efforts.
Investors should also be reassured by the presence of Ian Cockerill as chairman. Cockerill was chief executive of renowned South African gold company Gold Fields and has more than 30 years' experience of the mining industry.
Midas verdict: Hummingbird joined Aim at 167p and today the shares are 1431/2p, hit largely by concerns about political risk. No one could describe the shares as riskfree, but the potential rewards are immense and at this price they look very tempting. The adventurous should have a punt.
›› Get more share tips every Wednesday with Midas Extra: Find out more
MIDAS UPDATE
CPP Group describes itself as an international 'life assistance' business, which boils down to card protection, with some mobile phone, legal and home emergency insurance thrown in.
The company floated last April and last week announced its first annual results as a public company.
Underlying turnover rose 12% to £326m last year and underlying pretax profits were up 33% to £47m, the fifth consecutive year of double-digit growth. There is also a maiden dividend of 7.54p.
Losing a wallet causes considerable disruption, especially where consumers have lots of cards, but customers can make a single call to CPP and it will sort everything out. Policies cost about £30 a year. In emerging markets, consumers have fewer cards but banks are much less likely to cover them for fraud so there is an incentive to take out cover.
Midas recommended CPP shortly after it floated when the shares were 256p. Today, they are 303p.
Midas verdict: Investors have done well but the price should continue to increase. The dividend may well rise too, as CPP generates plenty of cash and has no debt. Existing investors should hold on. New ones may choose to buy on weakness.
Most watched Money videos
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Mercedes has finally unveiled its new electric G-Class
- How to invest for income and growth: SAINTS' James Dow
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Mini unveil an electrified version of their popular Countryman
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Iconic Dodge Charger goes electric as company unveils its Daytona
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Blue Whale fund manager on the best of the Magnificent 7
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- How to invest to beat tax raids and make more of your money
- Pandol and Advil maker Haleon hurt by milder flu season
- Young people more likely to quit their JOB than their...
- Britain must go it alone when it comes to interest rates,...
- Muggers stole £3,900 and used my Revolut account to buy...
- Standard Chartered beats profit estimates as higher...
- Fresh blow for City as Flutter votes to move main listing...
- I'm 'very well paid', says Glaxo boss Emma Walmsley
- US Federal Reserve forced to calm fears over rate hikes
- US drugs giant Pfizer posts a drop in sales in a...
- Shell smashes profit forecasts and unveils fresh bumper...
- Premium Bonds winning numbers for May 2024 - see all the...
- Booming Next closes in on £1bn profit milestone with...
- Mulberry sales plunge as slower demand casts a shadow...
- Change stamp duty so it's easier to move home, says...
- Smith & Nephew rocked as 43% of investors rebel over fat...
- Melrose Industries enjoys strong engine sales as revenue...
- MARKET REPORT: Aston Martin shares in reverse as sales...
- The £80bn takeover feeding frenzy: Bids for UK firms soar