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AIM-listed gold trading play Wishbone (WSBN) has announced the signing of a joint venture deal SION Honduras which will provide funding and expertise to existing small gold mines in Honduras so as to assist with the increase in production. The good news for Wishbone is that the deal involves all the output from those mines being supplied to Wishbone – at preferential prices – in a deal which runs for 30 years.
The aim is for funding to be recovered from each investment within 12 months and thereafter the margin is split equally between the JV partners.
In its last trading statement, which was received with some disappointment by the market, Wishbone reported that it had hit budgeted levels of trading but had missed the target it had set for itself – later clarified as being down to the failure of one supplier to ship on time.
Clearly a wider diversity of suppliers is going to aid Wishbone and this news from Honduras is undoubtedly good news on that score. It follows a previous promise that:
The Company also expects that the ongoing developments in early stage projects it has been working on since 2015 in Honduras and Ghana should move forward significantly this year.
Well, that looks like Honduras is in the bag. Meanwhile, with regard to Ghana we were told:
In February representatives of the Company will be visiting Ghana at the invitation of the new government to review existing gold projects and new opportunities offered to the Company.
We’ve not had anything on that yet but combined with:
In December 2016, CEO of Wishbone Gold plc's subsidiary, Black Sand FZE, Barrett Kosh visited Peru and Chile as part of a UAE Trade Delegation, which provided a number of new opportunities for theCompany and further announcements will be made as appropriate.
It does look as though the company is working on quite a pipeline of potential deals in which we might now have a little more confidence regarding fruition. Given that it was supply which was constricting trade, this looks to be good news and should help get the company past the "washing its face" mark in due course.
What we are not given this morning is the financials: how much cash will be invested, what sort of magnitude of production we are talking about or the magnitude of the discount involved with the preferential terms on offer. But the fact that this is a thirty-year deal reads well.
But as Tom Winnifrith observed in his Bearcasts HERE and HERE, whilst things have been slower to get going than we might have hoped it really isn’t a trade which can be finessed. Either the company delivers or it does not but we can’t guess the timing.
With today’s news giving an indication of progress being made on the supply side of things, you pays yer money…..
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