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In the case of the Sukari waste clearance start time was a critical factor so it made sense to use a known contactor who already had the expertise and importantly a large proportion of the specialist plant easily available.
However see below the advice from a highly experienced mining analyst and consultant on the subject-
In general using contractors for mining is almost always a bad idea!
Only when there is a short term mining project such as the pushback at the open pit there, you could argue to use contractors. It is not worthwhile and efficient to equip and staff up for such a project.
When you have a longer term mining project you should use an owner miner approach for the following reasons:
Mining is the core activity of any mining business.
If you outsource this activity you never build up an in-house expertise.
It would be similar for an information business to outsource design of information system and programming activities.
Also It is more expensive as the contractor will build-in a profit margin.
Should they miscalculate and go under, you will have to take over at short notice, which results in a shamble, loss of revenue, appointing another contractor which knows it has you by the balls, or you have to equip and staff up quickly, which in practice is impossible!
There is a loss of control in directing mining activities having to work through another party.
… ill informed.. I mean
No one on TV is forum has all the inside info to make the judgement, no matter what they think.
Of course, it’s good to debate though- no matter how I’ll informed due to guesswork
If you think the management team are incompetent- what makes you think doing in house wouldn’t have been a disaster? Surely if the amount of work needing doing was exceptional, why would anyone do this in house and be limbered with all the on going costs of decommissioning much of the equipment post this? Also, if rented, what if took longer? Could have cost way more not to mention the disaster if they mucked it up…
Fair comments Cowichan,
This seems to confirm yet again that using contractors rather than keeping operations (In House) more often than not more costly .
The new management acknowledged three years ago that a contributing factor of the present Centamin woes were due to failing to have sufficient oversight of the contractors in the underground operations which were considerably more costly than if kept inhouse.
So to a shareholder it surprising and of some concern if as first impression suggest from these disclosures that the new Centamin BOD and on-site management may have been over complacent even "Sloppy" in their oversight and auditing of the Sukari waste clearance contactor.
From the information available if true it seems that the alleged contract and operational and auditing inefficiencies have been to the financial detriment of the Centamin shareholders whilst offering some very considerable financial benefit to Capital share holders .
Many civil engineering contracts include penalty clauses which require the contactor to payback or compensate the client for failure to abide by certain contractual obligations and so I wonder if such a clause is in place and Centamin will be able to invoke such a clause?
if not then how are shareholders to be compensated for this alleged overcharging by Capital?
Government Reform / State Exit
The Egyptian government – in particular its military – is heavily involved in different sectors of the economy. Does the IMF agreement require any reforms relating to that?
Yes, an important IMF requirement is for the Egyptian state to reduce its footprint in the economy by isolating the most strategic sectors and selling down its assets in the rest of the economy.
According to the IMF, public sector companies, excluding the military-owned ones, amounted to around 16% of the economy in 2018. This figure is likely higher now.
There is less information about the exact size of the military involvement in the economy, but another 10-15% of the economy seems like a fair estimate. Anecdotally, military-owned enterprises are involved in almost everything under the sun: bottled water manufacturing, retail fuel stations, cement production and holiday resort properties.
While there are many other economies where the state accounts for a large share, I think the military's dominance in the private sector is quite unique to Egypt. Not surprisingly, these enterprises are not very efficient and rely heavily on subsidies, tax breaks, procurement advantages and, in the case of the military, free labour by conscripts.
There is also a lack of transparency and accountability of public enterprises. Egypt's government statistics, in general, is actually of quite poor quality - much of it incomplete and significantly lagging. But when it comes to public enterprises, there is very little information at all. IMF also understands this problem, and improving transparency and accountability of public enterprises is, in fact, one other objective of the program.
In the near-term, selling state assets and cutting tax breaks for public enterprises would raise the necessary revenue to service government debts. In the medium-term, retrenchment of the state from the private sector and a level playing field for private enterprises will lead to greater efficiency, higher productivity and higher long-run growth. Egypt has very high potential growth due to a lower starting base and great demographics, i.e. very young population and strong population growth. But to realize this potential, the country needs to be able to create jobs that will absorb the new labour force entrants. A dynamic private sector is a key element of this.
https://tinyurl.com/2n6ypn3p
September 15, 2023
An overvalued Egyptian pound increases the risk of default - Capital Economics
Authorities mut act soon on the exchange rate to ease the economic crisis the London-based think tank said in a report
rumours that Egyptian authorities would not embark on any devaluation of the pound until the presidential elections are concluded. The actual date of the poll has not been announced yet; however, media reports suggest that it might take place in December.
The London-based think tank contends that Egyptian government is “playing a dangerous game” by delaying another devaluation of the local currency. As the pound is losing more of its value on the back market, policy makers should act soon in order to secure the second tranche of the IMF loan and encourage the Gulf to pump investments in Egypt
Yet the currency is believed to be significantly overvalued. Officially, it trades at 30.9/$; however, it reached 40/$ on the black market.
Earlier this year, the Egyptian government unveiled a plan to privatize dozens of state-owned enterprises, inviting foreign, mainly Gulf-based, investors to join in. The dualism in the exchange rate has been seen as the main reason why the program has failed to attract significant investments from Arab Gulf countries.
https://www.zawya.com/markets/currencies/an-overvalued-egyptian-pound-increases-the-risk-of-default-capital-economics-vwmrlyd5
Https://www.gold-eagle.com/article/soft-landing-narrative-myth
This sums up what is going down and the evidence is not just in this one article. USA is heading into deep trouble.
My highly biased opinion to the thread:
"This looks good to me - they are right on top of operational detail..."
Sure, except we are 3 years into a 4 year contract. Perhaps looking to discover inefficiencies/errors in reporting could have been done sooner? At least that is how a Centamin shareholder might look at the situation. But , yes - as a Capital shareholder, anything that might extend the contract beyond 4 years would be welcome. And let's not forget inflated figures would cost Centamin and benefit Capital with bonuses.
"Luckily Centamin aren't letting them get away with it"
Again, is this a case of closing the barn door after the horses get out? Also, it's more likely Capital initiated this trial - as it only involves Capital equipment, contract drivers, managers and so forth - so if they aren't delivering, in the end one would think it could reflect badly on Capital.
Then again it's possible EMRA is becoming more interested in how monies are spent - they have equal right to question and demand proof of such an expensive project's a) necessity b) delivery c) reimbursement (or denial)
Perhaps wise to steer clear of Capital (CAPD). They’ll soon be out of business if they’re showing this level of incompetence. Luckily Centamin aren’t letting those shirkers get away with it. Well done Centamin.
This looks good to me, they've identified inefficiencies in their operation and are looking to streamline and improve. Excellent to know they are right on top of the operational detail, spotting these problems and dealing with them. Think I'll buy some more shares as soon as the market opens on Monday.
Thank you Cowichan,
This seems to demonstrate that despite the progress made in certain areas that the waste clearance contract isn't being run as efficiently as it might be and so costing more than it might do.
I would be interested to hear any opinion's that Dasut may have before writing to the relevant parties .
Interesting stats in the trial results link below (i.e. distances to haul waste , etc.) but a few standouts
25th August 2023
1) "The data also demonstrated several areas for improvement – first the mine was underequipped with trucks, meaning the plan was set up to fail. Night shifts consistently delivered more loads than day shifts. Examination of this variation revealed that night shift operators were travelling to the shortest/nearest dump location rather than following the plan."
2) "From a challenge standpoint, the physical technology infrastructure required was limited by availability of tablets and challenges associated with importing additional units."
https://im-mining.com/2023/08/25/groundhog-open-pit-fms-helps-capital-ltd-increase-load-and-haul-efficiency-at-sukari/
#1 The article talks about the old practice of manually recording dump & haul data being consistently wrong, thus historical waste moving stats may not be 'as advertised' in previous quarterly updates/years. The addition of semi autonomous record keeping is intended to resolve this. But that raises some important questions;
- Will Centamin need to update the overall progress and waste moving completion date?
- Has Centamin been getting what it's been paying for if the manual data recorded was fraught with errors?
- Has Centamin been awarding Capital bonuses for moving more waste than planned based on erroneous inputs? (the awarding of outperformance bonuses is part of the agreement)
#2 'challenges with importing'
Since the course gold oriented 'gravity circuit' that was being tested on site back in Q3 2022 has apparently not even been approved/ordered as of Q3 2023 (see Q3 release) - is this a result of faulty testing processes or a difficulty in importing various equipment into Egypt to run the tests?
It's been well over 3 years since we first heard of the 'nuggetty gold' bonanza zone and it being 'a very close' source of additional ounces. If the gravity circuit infrastructure is still at least another year away from acquisition - that puts it nearer 5 years from the original statement of 'near term additional ounces close to existing underground infrastructure' to possibly delivering the first ounce.
And still Centamin management awards themselves yearly bonuses for a job well done. Yes, well done for their inner circle of profiteers.
Sep 15, 2023 3:16 PM $1.51 qty 100
Sep 15, 2023 2:58 PM $1.51 qty 100
Sep 15, 2023 11:52 AM $1.51 qty 100
Sep 15, 2023 9:39 AM $1.50 qty 800
4 Trades In Total
Total Volume sold 1,100 shares
Sold Value $ 1,653
Volume Bought 1,100 shares
Bought Value $1,653
https://money.tmx.com/en/quote/CEE/trade-history
Given the limited interest in the company, maybe delisting from the TSX would be wise.
Management could save $$ in unnecessary exchange fees & regulatory requirements would be less onerous for a single LSE listing.
Strange , even tiny juniors have consistently more trading than Centamin in Toronto - let alone Centamin's peers. More than an oddity to say the least.
Vol. Sold 1,896,056
Sold Value £1.69m
Vol. Bought 6,717,157
Bought Value £6.04m
15 September, 2023
Separate findings this month by both the IMF and Bloomberg economists have identified Egypt, Tunisia, Jordan and Bahrain as critically vulnerable countries that could default on their sovereign debt obligations, with potentially catastrophic implications for their economies and populations.
A Bloomberg update this month on regular rankings of 60 emerging markets by sovereign debt vulnerability placed four Middle Eastern countries in the top quarter: Egypt (2nd), Tunisia (4th), Bahrain (11th) and Jordan (13th). Egypt’s vulnerability assessment was found to be second only to war-torn Ukraine.
https://www.newarab.com/news/debt-storm-mena-are-egypt-and-tunisia-next-lebanon
Further reading :
"Egypt’s vast black hole of a kleptocracy, wherein billions of vital public funds are syphoned off into the pockets of regime supremos, while the military owns and operates vast sections of the economy."
https://www.newarab.com/opinion/save-egypts-economy-kleptocratic-regime-must-end
------------------------------>>>>
What do shareholders think could happen to interrupt Sukari production if a government default occurred? Short term pain? No effect?
The Q3 results in October will be the good news that sends us north again.
The Fed’s lacklustre approach to economic policy and how their inaction could lead to another global financial crisis.
The Fed’s flippant attitude towards gold!
https://rb.gy/ec3fj
1. Short covering rally.
2. Shorts taken out at higher price. Wash
3. FED reports. price drops a bit. Rinse
4. Gold grinds lower for the next few days. Dry
5. Short covering low reached. Repeat.
Centamin higher low between 86 to 87p before any news. We have very hard resistance to break at 90.5p and have been stopped 3 times in a row. Need good news to get over it.
It's all about next week, as ever.
You know the drill, and markers- GLA and happy weekend.
https://www.marketwatch.com/economy-politics/calendar
Gold is hovering around $1930.
What a day.
Tony unless they dream up some more news today, next weeks US Banks meeting,will be the next downer.
But notice the recovery in Gold SP is getting quicker each time the Comex Gold is sold off, after news that affect gold to the downside.
Could be the reason why gold and miners up today. The big banks in USA getting sold off.
93% majority of my CEY position is long. Have a small short above 89p just in case they play games either today or next week. So far the volatility is in our favour today.
What Is Quad Witching?
Quadruple witching is an event in financial markets when four different sets of futures and options expire on the same day.
Futures and options are derivatives, linked to underlying stock prices. When derivatives expire, traders must close or adjust positions. That can trigger significant volume and order flow. The four types of derivatives expiring on quadruple witching are:
Stock index futures contracts
Single-stock options
Options on stock-index futures
Stock index options
Note: Some lists include single-stock futures on the list of quad-witching expirations. However these are relatively small products with minimal impact on the market.
Quadruple witching days are the third Fridays of March, June, September and December. That way, they occur near the end of each quarter in the year. In 2023 they’re on:
March 17
June 16
September 15
December 15