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Hi 3bear,
Whenever a hedge is taken out there is never any certainty if it was a prudent decision or not, however in this instance they seem to have made a very wise move!
So hang on, at the time of the put centamin was bending to the bankers' will unnecessarily and wasting money it didn't need to. And now it turns out to be a very smart move it was all the bankers' judgement and nothing to do with good management at all?
I suppose there is a sort of consistency there... and it does maintain a record of unremitting negativity in all possible circumstances - impressive!
What century doth this ring?
Please do not mislead the misled.
It was not Mr Horgan's husbandry that fore soothsaid said gold puts -
It was the bankers to wit they signed agreements for to borrow 150 million -
Smart money, not gold diggers, make prudent managers
MoreCheese - they have an option to sell 20,000oz per month at $1900 until next July or thereabouts. This hedge cost them US6million and is to guarantee income levels at a time when they are looking at investing several hundred million bucks in solar expansion, grid connection, gravity circuit, waste stripping, eastern desert exploration and building a new goldmine from scratch close to a national park in Cote D'Ivoire.
Perhaps people can now see what an eminently sensible move this was. Even if they get back less than the 6million over the 12 month period the point is that income is guaranteed at a time when many expensive projects are either in hand, nearing completion or about to begin.
See my previous post on this issue.
Somnamna,
As we are all aware hindsight is a great thing, ex specially wjhen it turns out that you weren't given fullfacts to base investment decisions on!
Bet the directors were OK though!
Quite So Somnamna!,
Kees Dekker looked at HZM some time ago as on first impression it looked good.
They claimed that the process route (always a risk when dealing with laterite) was sorted out and the capex and opex estimated by consultancies/persons with a lot of experience in the field of Ni-laterite leaching!
It shows again that the consultants are totally biased in favour of promoting companies and do not give a stuff about how much damage they can do to investors. Until there is some sort of sanction on them this will continue.
The stock exchange regulators are also biased in favour of companies by not instituting stricter measures for reporting. After Bre-X they went to sleep.
The overriding problem is that consultants are employed by companies (one does not bite the hand that feeds you) and stock exchanges chase companies to list with them, again a one-sided relationship!
SP dropped another 15p today from 50p to 35p. Scary.
How long have they fixed the price for ?, thanks in advance
3bear
There are plenty of clowns around, best let them run their race, and in the mean time firm up your race, and I am firming mine,
Really so much PAID stupidity around and unpaid helpers, its no wonder people get confused
the gnome
It was a punt and at the moment it looks like a good one. Maybe Martin Horgan thought it was worth the punt to keep things steady? We could do with a good Q3 update and an update on the waste clearance. Without that millstone round our necks, things should start to look a lot better.
I am amazed - all the people on here who were grumbling about the $25 an ounce cost of hedging at $1900 are now on here praising the management for their foresight and prudent husbandry now the GP is 1826. Er hang on...where are those posts?
What a well-run company this is.
European stock equities were down in the premarket hours on Tuesday after data showed that manufacturing sector activity in the euro area slowed, seemingly rekindling concerns about the region's economic growth. The negative sentiment was fueled up by renewed worries that the European Central Bank could tighten its monetary policy further before the year-end.
Frankfurt's DAX fell 0.76% at 7:42 am CET. The Euro Stoxx 50 was down by 0.70%. The CAC 40 lost 0.73% and London's FTSE 100 dipped 0.35%.
The euro's decline against the dollar persisted, falling by 0.12% to trade at $1.04644 at 7:50 am CET, marking its new lowest point since December 2022. The pound lost 0.18% versus the greenback, selling at $1.20647 to hit its fresh low in six months.
Baha Breaking News (BBN) / AB
Mr Tibbs I believe it to be a case of error in project development (scope and estimated end cost) at the pre-detailed design stage. There was some mention (on the HZM board) of CEO not bringing the information out soon enough. The decline of the from 172p in Jul-23 to 125p before the 75p drop on 02-Oct-23 in hind sight certainly indicates something was known by part of the market. Me, I reacted far too slowly, and should have sold out earlier.
Certainly is , how long before they ever recover, assuming they do of course!
Is this a case of the management glossing over the true facts?
Tibbs
A salutary lesson for CEY shareholders of the risks investing in mining shares.
The share price of HZM plummeted on the news of cost overruns and delay to mine development and start up. HZM Management issued the below RNS and the share price plummeted 75p on 2-Oct-23 from 125p. Prior to this it had fallen from 172p in Jul-23 so the market may have had an idea something was amiss but not the details.
For me another expensive lesson learned.
https://www.lse.co.uk/rns/HZM/update-on-araguaia-nickel-project-construction-vq946eycq0gfz25.html
Yes this was case early days of initial jump on inflation- then fed stepped in and the the rest of world followed in raising rates… a lot - to tame inflation despite it not being a normal reason for inflation- this is where all the debate has been.
So you could say yes, it’s inflation driven as the response is to whack up interest rates to resolve, and they have higher than expected and could go further (hope not). However, what’s been odd, is inflation far stockier than expected and the US economy and U.K. and others been far more resilient so far, so rates kept going up!
Centamin PLC
25,329 followers
4h •
🎓It's a wrap! The 2023 summer internship programme at our Sukari Gold Mine has officially concluded. Over the course of 60 days, we welcomed 59 students from all corners of Egypt, offering them practical experience and education across different aspects of the industry. Each student received approximately 210 hours of training, for a combined total of 12,130 training hours.
⚒️This programme was designed to give our interns a well-rounded understanding of mining and geology. They learned about exploration, extraction, minerals processing and safety practices.
🤝Additionally, they had the opportunity to network and learn from experienced, senior mining professionals, gaining valuable insights into potential career trajectories. Programmes like these play a pivotal role in helping students make informed career choices while gaining a competitive edge in the mining industry.
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Exploration Geologist Intern
Centamin PLC · Internship
Aug 2023 · 1 mo
Australia · On-site
I'm excited that I joined this great internship in Centamin PLC. Where's the Exploration, Geology, and Mining team OP & UG team though? And Where is my photo? 😊
Thank you so much Centamin PLC for this great opportunity.
Much appreciated 🏷️
https://www.linkedin.com/posts/centamin-egypt-pharaoh-gold-mines_mining-gold-egypt-activity-7114587173445619712-uVX8
Drew, it is not inflation but almost the opposite, interest rates being so far above inflation (ie 10 yr Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed. Percent, Not Seasonally Adjusted.). Basically you can make a good real return on bonds which makes the opportunity cost of holding gold high. Conversely if inflation was high and rates fell gold should soar, but no time soo
Https://www.reuters.com/markets/us/us-manufacturing-sector-eyes-recovery-september-production-picks-up-ism-2023-10-02/
Another marker that didn't help today...
All of these keep the stickiness for a lower fast rate cut- it's a fine balance, but another indictor leading to the FED keeping the next decision in the balance.
Dollar
Those put options are beginning to look like a good plan. Gold has dropped well below 1900 in the last few days. Is it just inflation to blame?
Thanks Mr T :-)
Steve, can't speak for the rest, however that said although all miners have been affected by inflation n varying degrees Centamin has suffered the huge albeit temporary increase in CAPEX, to fund the re-sculpting of the open pit and waste clearance along with the expense of changing over from contactor to inhouse operations.
You may have possibly not noticed but I did post a confirmation in past weeks that the waste clearance was 70% complete with an expected completion early in 2024.
As you rightly point out inflation seems to be an ongoing factor, so to be fair it would be very difficult, even unwise to to give an accurate estimation at this stage as to what the AISC will be in 2014, that said it's highly likely going to reduce by a not inconsiderable amount and even better POG may rise!
PUT OPTIONS 30 June 2023 (“H1 2023”
Centamin purchased put options for 240,000 ounces of gold at a strike price of US$1,900/oz. The put options mature at a rate of 20,000 ounces of gold per month, for the twelve months from July 2023 to June 20242. This is a cash-settledprogramme, not involving physical gold delivery.
The programme provides the Company protection should the average monthly gold price fall below the US$1,900/oz strike
price, while allowing us to retain full exposure to any upside in the gold price above this level. As detailed above, this programme aligns with a period of elevated capital investment at Sukari, and gives us further financial flexibility to pursue the Company’s strategy of delivering growth and returns to shareholders.
Mr T- so why have most PMs got whacked?
There is no doubt that inflation has has a massive impact- I recall a couple of years ago Vitaly at Poly mentioned the issue on it's way and immediately he said his SP got whacked (and he was criticised for saying this) but was clearly right. If I made a product and the price I could sell the product at was lower than it was 3 years and my costs had gone up due to inflation, then why would I expect my company to worth more?
Most PMs have suffered a similar fate alas.
There are a variety of estimates on what the new level will be and less money spent when waste overspill done.
It's interesting that the "pro" CEY brigade raved about the recent presentation from Jerrard, but it didn't confirm what we need eg when will the clearance end and what till the drop in AISC be?
This is visible in the presentations, sort of, and takes some delving and approximations, but these are out of date.
Equally, how much was the hedge on gold and when does it expire? Can you help?
I can't find this info and it's missing from my self developed s/sheet on CEY.
Their website still says no gold hedge, so needs updating:
https://www.centamin.com/investors/principal-risks-and-uncertainties/
It says here no hedge...