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It can' be denied that who bought shares in the early days of Centamin and the directors who amassed huge amounts of free or bonus share have all done exceptionally well , unfortunately though the way this wealth was achieved was by cutting corners and using inappropriate mining methods which consisted of high grading with insufficient waste clearance which created pit walls of too steep inclination and ultimately unsafe!
The previous management were aware of the inherent grade problems at Sukari, but from 2015 denied the problem and instead of investing funds to improve the flexibility of the Sukari operation glossed over the investable potential pit wall collapse it by continued high grading!
Even though I am critical of the communications between the new management and the shareholders and don't agree with the decisions to hedge future gold production, I do agree that Martin Horgan had no choice but to almost start again by re sculpting the Sukari open pit operations and improve access and egress to the essential underground operations , something that Pardey and co should have done over eight years ago!
The annoying thing for the majority of newer share holders from 2014 on s that they were persuaded to investinto a known flawed mine plan and it is they who are now paying a heavy price, one might argue almost a subsidy of the the profits and good fortune of the very early investors!
Tibbs
Once again you seek to avoid answering direct questions regarding your opinions and deflect attention to others.
Kees Dekker is an analyst whose motivations are not necessarily aligned with those of shareholders, to try and hold out any opinion he may express as irrefutable fact is both foolish and disingenuous.
Explain your opinions in light of the factual circumstances I have drawn your attention to or withdraw your clearly incorrect statements!
I suggest anyone who wishes to contacts Kees Dekker I am sure he will be delighted to answer any doubts about his professional integrity
Most of you will be aware of my posting the articles by Kees Dekker pf 2015 and agin in 2018 which flagged up serious concerns about the way Sukari was being operated by the previous management, although in 2015 Andrew Pardey claimed Kees had used incorrect data , however when asked for the correct data by Kees all dialogue ceased and then Andrew Pardey tried get the article pulled, the article was published and even then previous management carried on in the same foolhardy manner, in 2018 a further article flagged up similar concerns, this was also ignored by Pardey and co, however inevitably their deliberate failings for short term gain where exposed https://www.sharesmagazine.co.uk/news/shares/centamin-plunges-as-production-hit-by-mine-trouble
https://seekingalpha.com/article/4229201-kees-dekker-reviews-centamin-plc-analysis
https://seekingalpha.com/author/kees-dekker
Interview With: Kees Dekker, Freelance Mining Analyst
https://tinyurl.com/2jc4n53n
Last line is can not.
Thinking faster than typing.
This year has to be audited still, but it was running at $210M. Last year it was $170M at H1 and the year before just over $150M Back in 2021 it was 5.35 cents H1 last year it was 7.35 cents. Whatever happens the cash depletion at Centamin has stopped and cash is now be added back to the enterprise value end of H2 despite a lower possible gold price.
If gold does pull back to the 200 SMA and it could well happen we could be 1800-1830 range for 8 weeks and it might get lower. 40,000 protected $85 by the put is $3.4M. If gold rallies and then falls back next spring another 40,000 ounces may cover again. It may not improve that much over the $6M spend which expires July 2024 but gives predictability on earnings. Of course any spell of month on 1700 gold and the put spend is recovered in one shot and any further or future pull backs offer cost recovered protection.
Regarding the waste removal it works out between $3.55 to $3.75 per tonne. Any shovel and truck operation to move overburden to another site starts at $2.50 a tonne when contracted out. There is additional cost on working in a functional mine that is necessary to ensure staff safety especially if any dynamite was being used. Finally if a wall is moving additional care had to be taken early on and this would have resulted in the costing being more front loaded. If Centamin overpaid per tonne it would not have been as much as some make out. The overburden could not be removed by a conveyor belt system and can be compared to their low costs as it is not relevant.
The link below is to information released by the World Gold Council.
Read the discussion of non-sustaining capex at point 5.
Then consider whether the explanations you have provided with such certainty, essentially presenting them as statements of fact, can indeed carry any validity.
www.gold.org/about-gold/gold-supply/responsible-gold/all-in-costs
If your analysis of the situation were correct Tibbs, the current waste stripping program would largely be moving material which should have already been moved as part of mining ore already processed.
If the above were correct the directors would not be able to classify the expenditures as non-sustaining capex and the auditors would not allow it.
Unless you are suggesting that the directors and auditors are colluding to commit accounting fraud, the explanation that you & supposedly Kees Dekker provide is clearly & demonstrably false!
I have posted my views before. I've been here about 11 or 12 years, first buying in a few at around 35p and buying other as high as 220 or 230, when Sotolo was saying that they were on their way to £3. I've also bought on the way down at 160, 130 and as low as low 80's. My average is around 107 now.
The previous high share price, when the £3 was forecast, was based on the amount of gold coming out of the ground and some of the dividends payed. I'm sure the high dividends brought people in and boosted the share price. The previous management benefited by the dividends and then the high price when they sold out because they knew what was coming. Pardon the pun, but was it a pyramid scheme?
From Boosted share price to Busted share price in a couple of years. :-(
I don't know much about mining gold at all but it seems some do on here. The same with shares. Some people are lucky and some are unlucky. Having read this board for years, I've seen people who seem to be "Oracles" with their predictions until it all goes wrong. I would say that generally the strike rate was less than the chimp with the dartboard .
So while it is interesting at times to read the board, I would say that it doesn't matter whether you bang on about data points, charts, waves, stages of the moon or tea leaves in a cup, sometimes you will be right and sometimes you will be wrong---------And it is unlikely to have any effect on the share price.
Some people have access to the actual internal goings on and the MM do their bits of manipulation. I guess most of us just hope that Horgan is doing the right thing and that the gold is there at Sukari and can be got out at a price that will boost the share price in a genuine way and also give decent dividends.
So I'm crossing my fingers for Sotolo's £3 a share and hopefully Mr T's £5 .
I'm hoping in the shortish term this share price rises a decent amount so all the name calling, boasting, bullying and handbags at dawn that has crept in on this board recently, stops.
"Peace and long life".
sotolo,
i'm not disputing the profits made by the pervious management , unfortunately though it is their desire for as much profit with minimal investment that has brought about the huge increase ciapex now.
mr gnome offered his opinion in feb 2023
as a general rule, shallow mining has higher margins than deeper (esp. for open pits) mining, irrespective of the stupidity of the ceo or mine manager. simply the strip ratio increases, which means you move more waste to mine than ore, and travel distance you have to drive your trucks increases with vertical depth. so unless grade increases you will have to pay more to get the same return.
if you are not vigilant on pit walls, there is a problem as you go deeper, as you have more vertical meters of walls. the tendency for the greedy and incompetent mine managers and ceos is to try and increase the angle of the pit walls (move less dirt). problem is that when you have not done proper geotech, and looked for subvertical structures properly, [rather relied on sub vertical holes to define subvertical fault planes]...then you are exposed... and your profound greed and stupidity is about to be exposed...., and when the wall decides to fall in, it falls in and nothing will stop it. greed and stupidity exposed, as is suggested by recent history.
then when the ceo (andrew pardey )who managed this sukari fiasco has to be replaced (some survive !!!), the new ceo has not only to remove the excess that has fallen in from the last ceo, but has to cope with the high strip ratio, and has probably realised the incompetent idiot (before him just made everything too steep for stability and sustainability!
so rather than maintain the unsustainable pit angle, he has to "stand back", which means more dirt has again to be moved because of the greed of the last ceo, and hence margins further impacted.
just basic science and engineering, and a good spreadsheet to do the calcs!
i think martin horgan is doing a solid job, under promising (which always gets the wind bag analysts ****ed off, who get paid on % of selling/buying of shares) and delivering firm but good results!
horgan is positioning the mine in a good operational space, and has a lot of optionality being built into the operation, which is boring to the analysts, but very good management!
centamin doing well
comments from kees dekker mining analyst feb 2023
this is exactly correct and the issue identified by me in 2015. it was evident then that the strip ratio was far below planned ratio and the company was painting itself in a corner. hence the title of my report,
get out while the going is good!
Hi Don,
Thank you for the iink , and for asking the questions!
Tibbs
I still hold 50k of what I consider legacy shares.
Originally I held 400k and I put my mum & dad into 150k.
We bought these as options for A$0.03 & exercised at A$0.20 so a total cost of A$0.23, these purchases were made in the 2000 financial year so we held them for a long time.
In the 2020 financial year I sold 350k & mum & dad sold 150k at GBP 2 which net of fees got us about A$3.58 per share a profit of $3.35 per share or just shy of $1.7M which is the reason why I am defensive of previous management, they did a lot for me & my own.
I added 75k to my legacy holding at an average cost of US $1.25 (using CELTF) I dumped those at US $1.40 so got out at a small profit but nowhere near what I had anticipated due to the ineptitude of current management.
I will always maintain the 50k legacy holding as I figure they owe me nothing & also due to their age are certificated and accordingly hard to negotiate especially when I live in Australia & they have delisted here.
I still retain hope in the quality of the Sukari deposit which is why I will retain my 50k legacy holding, but I & my family have profited so handsomely from our investment in this company that I have a soft spot which I openly admit.
Accordingly do not follow my investment choices in this company as they are motivated by by previous profits taken rather than my usual beancounter based investment motives :)
Https://www.linkedin.com/posts/don-lawson-98619370_centamin-activity-7100966024270807041-aZjb
Spoonington, how much do you invest here because you think profitability will rise again at this gold price, and how much in the hope or expectation that it is fairly or underpriced at this gold price, ao a play on gold rising?
From Cowichan (Don),
According to page 23 of the last site visit presentation, here:
https://www.centamin.com/media/2873/cey_sukari-site-visit_presentation_011122_final.pdf
Centamin's LOM strip ratio (historical + future) is 8:1
Additionally the graph on page 23 for 2022 and onward doesn't show lower ratio's for the open pit (which is where the vast volume comes from) so I would think 6:1 is impossible
Indeed it looks more like a strip ratio of 8:1 to 10:1 is in Sukari's future judging by the chart
Furthermore the graph on page 23 shows the average grade for 2023 will be significantly LOWER than 2022 both in the underground and open pit - so then how is the expectation of higher production in 2023? Will this expectation see a revision?
Maybe the Underground Bonanza zone will change production & grade forecasts to the upside? But haven't seen it appear in presentations lately?
Hi Don,
Your Interesting comments regarding strip ratio suggest you remove the waste removal impact in 22,23 and 24 and the strip ratio definitely reduces.
So if average is 8:1 then as I say remove the first 3 years and logic says strip ratio will (should or GOT TO if Horgan wants to stay in a job) reduce.
Excellent news also is the higher grades years 25 through 29 in the open pit (hopefully justifying the waste contract).
Grades lower than 22 for 23 and 24 but increased ore both above and below ground hence forecast of marginal improvement in ounces!
Dasut
I asked Kees Dekker respected mining analyst for his thoughts on this, see below
Re Without the underground the open pit would be unprofitable!
About higher production in 2023 despite higher grade, some of the open pit mine production is stockpiled with higher grade sent to the mill.
In other words, the mill will treat only slightly lower grade as is shown in the graph for processing plant production.
From the graph provided it isn't possible determine the exact strip ratios in each year, but it is clear that this is substantially higher in years 2022-2024.
So yes, until 2025 the outlook is for lower cash flow from open pit production.
I always considered the underground mine production as the greatest contributor to net free cash flow. In this respect the drop in grade until 2025 will be a brake on cash flow!
The management seem to want to compensate this through higher output and cost reduction.
#1 On page 43 of the 2022 Annual Report https://www.centamin.com/media/2940/centamin-ar22.pdf it states:
Burkina Faso - Batie West Project Disposal
"In Q4 2022, Centamin fully completed the required procedure under article 110 of the 2015 Mining Code for the relinquishment of the Konkera Batie West license. All Centamin employees and representatives were withdrawn from the Batie West site and the Company has handed the license area back to the government."
#2 On page 12 of the 2023 H1 Half Year Report https://www.centamin.com/media/2980/cey-rns_1h23-interims_final_250723_website.pdf it states:
"H1 2023 total exploration expenditure of the Group - Burkina Faso $775,000 USD"
with a note stating: "The spend in Burkina Faso is mainly on key services and other regulatory obligations required as the process to formally exit the project is currently underway."
#3 As if stating explicitly in 2022's Annual Report that the exit process was already "fully complete" - Mr Horgan goes ahead and spends an additional $750,000 USD in H1 2023 (who got that money and for what?) and says the process is still ongoing. Well is it or isn't it?
Furthermore, the filing Centamin made on July 18th 2023 directly to the UK Gov't via Companies House (see page 16 of Full Accounts) here: https://find-and-update.company-information.service.gov.uk/company/08816954/filing-history DIFFERS from the information it provided to shareholders regarding the attempted sale of its Batie West assets. It states:
"In December 2021 management received a letter from the Burkinabe government stating that as no development of a mine had commenced the license had reached the end of its renewable period. The Company disputes the date from which this is applicable believing it to be March 2023 and formally wrote a letter to the Burkinabe government expressing its views."
In light of this hitherto unknown letter, why (and how) did Centamin then approve & remit the 2022 $2,000,000 license renewal as well as an additional $928,000 for a total spend in Burkina of $ 2,928,000 USD?
Burkina Faso would not send you a bill in 2022 for a project it told you in writing in 2021 was non-renewable. Besides, even if you magically did get a bill in 2022, you certainly wouldn't pay it after receiving a warning letter in December 2021. So who got the nearly $3 million USD??
IMO this is just another f*ckup in a growing list of questionable transactions Mr Horgan has overseen. Make no mistake, Horgan specifically appointed his former West Africa / Toro colleague in 2021 to manage CENTAMIN WEST AFRICA HOLDINGS LIMITED company number 08816954 and then added him to four other Centamin controlled entities (see my last new director post for links)
Who knows - perhaps Mr Horgan got/is getting some slush $$ for himself thru these inter company loans and payments. Lying about details and ghost payments IS NOT normal corporate behaviour - but it certainly fits Mr Horgan's other actions.
Absolutely and much appreciated.
Your last paragraph is the key my friend, once the waste has been removed?
We have no guidance whatsoever as to the ore body that will be opened from what is for all intents and purposes a pre-strip. You do not pre-strip unless you will get rewarded, gold mining 101, if you are doing a pre-strip in the middle of an ongoing operation it normally means a departure from the long term mine plan, explanation for this departure is considered mandatory, lack of explanation is considered worrying, thus our share price.
Hi Newtothissite,
I'm glad that you have found the forum generally informative,helpful and hopefully enjoyable .
As you may be aware there are members from all walks of life including former and existing mining related professionals, some of whom have personal experience of the Sukari operation.
Kind Regards
Tibbs
First of all a huge thanks to all the contributers to this chat. From your efforts I have learnt a massive amount concerning mining and the CEY problems and allthough I understand that some of this is potentialy just opinion and possibly speculation quite a lot is from drilling down into company information and other factors so it is very helpful for making an assessment as to what is happening and of course how and why the sp is being so effected. Please keep up the good work and I appeal as an interested but regular viewer on the sidelines for everybody to keep this civil, as after all it is in all our interests for "team CEY chat" to work together.
Update on Paper Vs Physical
Including FED boxed in and Jackson Hole 2023 and FOMC
https://tinyurl.com/kddmyy9v
My vitriol was aimed solely at you Tibbs, your attempt to deflect this to others is quite typical of ideologues, when faced with unanswerable questions simply move the attention to an unrelated area - I have dealt with your sort all too often in my career!
If you wish to enter into a discourse answer the questions posed to you, I will offer you the same courtesy. If you wish to engage in a more invective exchange I am more than happy to oblige but I caution you that I will “remove the gloves” and give you a real dressing down :)
Spoonington
Possibly oversight due to the severity of your outburst of vitriol you forget to include "Putin" & "Trump" .
Hi Casparoni, strangely enough my experience is similar, more years ago than I care too remember I took a tip on Centamin from a stockbroker acquaintance in the pub!
Hi Dasut,
This re sculpting of the open pit walls has certainly needed a lot of capex although “Earnings” were not affected there has been a very considerable hit to cash flow.
So hopefully unless anything untoward happens or there is a change in corporate policy that capex will continue to go down from now onwards with at least a corresponding increase in net free cash flow until it contract completion middle of 2024.
i wonder then as the contact completion gets closer if the share price will increase be on a corresponding gradual basis or will there be sudden surge on an particular RNS update?
Opened a hedged short against on-going long position just under 90p. Keeping a lot for divi and whatever comes next when Powell crashes the economy.