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Wishbone Gold PLC: DEEP DIVE

Wishbone Gold eyes trading gains with other inflection points in the offing

The gold trading outfit is looking to improve margins by expanding shipments or operations out of Africa
OVERVIEW: WSBN The Big Picture
A third party valuation of two Aussie exploration permits gave a valuation range of AU$575,000-AU$1.86mln
  • Wishbone Gold is focused on gold trading from base in Dubai

  • Looking to raise margins by expanding in Africa

  • Owns two exploration properties in Australia

  • In talks over future of Honduras production joint venture 


What Wishbone Gold does:

Wishbone Gold PLC (LON:WSBN) is an AIM and NEX-listed trader operating in the precious metals market.

The company is organised into three operating divisions: gold trading in the United Arab Emirates, gold production via a Honduras joint venture and exploration in Australia.

What Wishbone owns:

The group owns Precious Metals International Ltd and its wholly-owned subsidiary Black Sand FZE.

Based in Dubai, Black Sand FZE trades precious metals and provides capital investments to small and medium scale mines to help improve their cash flow and increase production, with another trading operation in Thailand, which will soon expand via a link-up with Hong Kong.

Wishbone also ships out of Mali and chairman and chief executive Richard Poulden told Proactive that he has been looking at expanding elsewhere in the African continent.

The group holds four large scale exploration licences in North Queensland covering over 34,000 acres in an area known for significant mineralisation. These operations include the Wishbone II, II and IV licences and the White Mountain project.

In Honduras, Wishbone has a joint venture with Sion Honduras SA for gold production, which has received a license to operate the plant and equipment on a first Honduran mining and processing site. Some shipments of gold had been made in the first quarter but Wishbone is now reviewing the JV.

In Thailand, a new entity, Asian Commerce and Commodities Trading (ACCT), has been set up as a joint venture between Wishbone and a local Thai partner with connections to the royal family. This puts the trading element in the country firmly in place. 

Inflection points:

  • CEO Poulden is looking to expand the international aspect of the gold trading business, with most gold being sourced from Honduras and the majority from Africa.
  • A third party valuation of the Wishbone II and White Mountains exploration permits in Queensland gave a valuation range of AU$575,000 to AU$1.86mln, compared to a book cost of AU$527,867 based on the historic cost of exploration expenditure.
  • This valuation was carried out to help as a “as a marketing tool” for discussions with potential joint venture partners.
  • Wishbone has grown frustrated with its Honduran partners, Sion Honduras SA, and is in discussions over whether to take full control or sell its share to Sion. In December £300,000 has been raised by the London-listed company to help accelerate production from the newly licensed gold facility.
  • Poulden is bullish on the gold price for the future, he said in June: “Throughout the year, the continued build of gold holdings by China, Russia and India continued. I believe the ongoing acquisition of gold will continue in these countries and with continued political uncertainty should extend the recent price recovery.”
  • In 2018, Wishbone's gold trading business increased revenue 30% to US$10.9mln, with gross profits of £46,271. 

Blue Sky:

With operations in Honduras up in the air for now, Wishbone aims to improve gold trading margins and sees opportunities in all areas of operations, particularly in Central America, Africa and Asia.

Poulden says by being in Dubai, the company is perfectly positioned geographically to trade out of Africa and into Asia and Europe, including Russia. 

"We're looking to expand the international aspect of the gold trading," says Poulden. "We need to build up our international position, particularly in Africa, to improve the margins. Too much of the trading at the moment is happening in Dubai, which is low margin."

Poulden told Proactive that he has been looking at Uganda, Zimbabe and Tanzania, and has held talks with companies in South Africa and Namibia.

Investors should look out for a streamlining of debt, firm cash flow, and improving sentiment.

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Wishbone Gold PLC Timeline

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