Centamin PLC Share Chat (CEY)

Great to hear from you Market, I would certainly be glad to buy you a Philps pastie or two!

All sounds good keep filling yer boots good times ahead

Good morning Mr Goldgnome or guday ,now.
In hindsight ,paper mills specialising in treasury quality paper must have done very well this last 12 years .
So all that worthless paper currency and paper securities ,has benefited someone in the end as long as they put their profits into, guess what.
A little tongue in cheek,this early in the morn.
But a could not sleep and got bored,sorry.

The Sukari Concession Agreement provides for 30 years of mining operations with a potential extension for a further 30 years. My good friends ( back in with a few quid ) if we have it right our kids and charities will be happy, and Tibbs can buy is mates a pasty ;; or the £2 party in cornwall for the old timers x

(and there is a bit on gold)
This brings me to the end game under this new monetary regime which will be the devaluation of the US dollar. It will be sudden and come out of nowhere, but the only way out of our mounting debt will be a devaluation. Overnight, tens of trillions of government debt will be wiped out and become worthless to those who hold this debt, be it foreign governments, pensions, companies, or individuals. History is repeating itself or rhyming as Mark Twain once said. There is a lot of rhyming in the decade ahead of us.

Investment Crossroads
We are at a key pivot point in investment history. The monetary environment is going to change the investment landscape going forward. I have found there are very few investment cycles in an investor’s lifetime. These are periods or cycles where the rules of the investment game are altered. The vast majority of investors continue to play by the old rules and end up losing out, or worse, losing money or missing opportunities.

Investors have been following the deflationary trend of the last decade. This was a period when paper assets such as stocks and bonds did well. This led to the index bubble and the proliferation of passive investment strategies. It didn’t matter if you owned stocks or bonds, both made money over the last decade. Simply invest in an index fund, sit back, and enjoy the ride.

Indexing led to extreme market valuations as the index favored large-cap stocks which drove the indexes higher and higher. The result was most of the index returns were concentrated in a handful of stocks as shown in the graph below (chart of S&P 500 sector and member weights).
Indexes are unmanaged and cannot be invested into directly. Note: Past performance does not guarantee future results.
That trend is still present today with the market’s rebound driven by a handful of large-cap stocks shown above. Most stocks within the S&P 500 are still selling at below book value.

The strategy worked until it didn’t. The investment allocation of 60/40 stocks vs. bonds did not protect investors in the fast and furious downturn of February and March 2020. Bonds and stocks lost money. There was only cash and gold.

In my humble opinion, a new trend is rising to take its place as paper money depreciates and loses its value. This will foster a trend towards natural resources, things, and hard assets. In future articles, I will lay out the fundamental shift from paper back to things. I wrote a similar article at the beginning of the 2000s called The Next Big Thing, outlining the merging bull market in commodities (see here: https://www.financialsense.com/contrinbutors/james-j-puplava/next-big-thing).
I have found throughout my long investment career that an investor needs to make very few investment decisions in their lifetime. More at ...
https://www.financialsense.com/blog/19654/end-money-paper-things
Its not just the older people who forget!
best
the Gnome

They don’t need taxes or borrowing for spending since they can print as much money as they need as they have a monopoly on issuing currency.

Translation: they can deficit spend as much as necessary. They can simply print the money to pay for it as they are now doing. Deficits no longer matter nor does debt according to this “new” economic theory.

There is a new book explaining this philosophy that just hit the bookshelves this month. It is titled The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy by Stephanie Kelton. Kelton is an economics professor at Stony Brook and was an economic advisor to the Bernie Sanders campaign. She was also the chief economist for the Democratic staff on the U.S. Senate Budget Committee. The bad news is that her arguments are very readable and will strike the reader of her book as reasoned, plausible, persuasive, and intelligent.

Her argument boils down to a few simple points. Because the government has the legal capability to print unlimited dollars there is no need to worry about spending money or the deficits they create. Thus making it possible to provide funds for any government program the people demand. The government simply prints money to pay for anything the voters or politicians want to provide. MONEY IS SIMPLY FREE. The government doesn’t have to worry about saving or earning money through taxes in the same way as ordinary businesses or households do.

Her arguments are persuasive and give the illusion that sovereign governments are different than you and me. They aren’t confined by the same constraints of money as the corporate and household sector. It is because they have a monopoly on money and the ability to print as much of it as they need.

This philosophy now permeates the country’s elites from government, Wall Street, to academia. Everyone is on board the easy money train which has now left the station. Wall Street loves the idea of free money as it inflates investment markets. Politicians of both parties endorse it as it gives them a license to spend as much money as the public demands. It is also a favorite of academics as is supports the progressive ideas of socialism.

The problem: no one is paying any attention to history and the financial disasters of the past. It is the oldest political trick in the book. Everyone from kings, dictators, prime ministers, and American presidents have tried this approach before. They have all ended in disaster. This was tried in the 70s under Nixon and Carter which led to double-digit inflation and interest rates. Back then there wasn’t the level of debt that now exists in our economy.

But then, magically, things turned around as the Fed announced a new program of intervention, whereby they would buy bonds, bond ETFs, both high quality and low quality.

hyg high yield index
Source: Bloomberg, Financial Sense Wealth Management. Note: Past performance does not guarantee future results.
The interest rates on corporate debt started to rise posing a financial risk to the markets, so the Fed expanded its mandate to support the corporate debt markets. Credit spreads, which had been widening, suddenly began to contract.

For a brief period, we were taking advantage of the higher interest rates and were able to lock in high short-term yields. That opportunity came to an end as bonds rallied thanks to massive bond purchases by the Fed, which lowered yields and raised prices.

Why did the Fed do this when in the past they stuck to Treasuries and mortgage bonds? The reason is simple. There was too much corporate debt, half of which was rated BBB. There was a risk of those BBB bonds downgrading to BB or lower, dropping them into the junk bond category. That would trigger a selling deluge by investment-grade bond and bond ETFs, which would have been forced to sell, triggering a financial crisis in the bond markets.

There is simply too much debt, so they intervened to keep the bond market from imploding, which is why they are expanding their bond-buying efforts to include corporate as well as Treasury debt. The Fed’s balance sheet will go from $4 trillion at the start of the crisis to $10 trillion by year-end and beyond.

Where is all of this leading us? As the government borrows massive amounts of money and as deficits become multi-trillion, it will be the Fed’s role to artificially suppress interest rates. This is good news if you are a debtor. Mortgage rates have never been this low and if you are a corporation you can borrow money at next to nothing. It is not good news if you are an investor, a pension fund, or a retiree. Cash yields next to nothing, money markets are at 0.0%, and even short-term treasury yields are below inflation rates. This means, as an investor, you are losing money after taxes and inflation on cash investments.

We anticipated this coming last year when we gave seminars in the fall to clients called “Zero Bound”. That is why we launched our income fund which is strategically a long-term investment account created to take advantage of the inflationary wave that is coming this decade (more about this later).

I want to discuss the rationale for what the government is doing and where we are heading in the years ahead and the remainder of this decade. The government strategy is being driven by MMT (Modern Monetary Theory). Simply stated, MMT is a macroeconomic framework that says sovereign countries like the U.S., U.K., Japan, or Canada are not operationally constrained by revenues when it comes to federal government spending.

Interesting notes ...
“Those who cannot remember the past are condemned to repeat it.” –George Santayana

This year marks my 40th year in the business. During these past four decades, I have seen fads and cycles come and go. When I began my career, the inflation of the late 60s and 70s was coming to an end along with a peak in interest rates. As shown in the graph below, interest rates peaked in August 1981, the result of Fed Chairman Paul Volker’s efforts to conquer inflation which reached as high as 14.5%.

Since the peak in 1981, interest rates have steadily fallen to where they are today. The rate of inflation has also fallen but the value of money has depreciated. The dollars you hold in your wallet buy less goods and services every year. I would like to demonstrate financial inflation in a way that impacts you personally, as an investor, as shown below. I begin with a million dollars and show what income it would produce for you each year over the past five decades if invested in 10-year US Treasury bonds.

$1,000,000 investment (annual income per year in each decade)
1980s: $140,000
1990s: $80,000
2000s: $50,000
2010s: $40,000
2020s: $7,000
While the inflation rate has steadily fallen each decade, the purchasing value of money and its return has also fallen dramatically. This is because the Fed has implemented QE and other methods—as it is doing today—to suppress the rate of interest for borrowing money. Why are they doing this? Because of the massive amount of debt held across the entire U.S. economy from government, municipal, corporate, to the consumer as shown below.
https://fred.stlouisfed.org/series/GFDEBTN, June 26, 2020.
The Fed is once again implementing a program to keep interest rates suppressed through massive interventions into the bond market to the tune of $1 trillion per month. This time they are actively intervening in the corporate bond market by financing new corporate debt ($500 B) and buying existing debt ($250 B).

Normally, in a business cycle, as the economy heads into a recession, credit spreads between Treasury debt and corporate debt start to widen as the risk of default rises on lower-quality debt. This is the result of an economic recession. Company debt on lower-quality issues can get downgraded as firms experience lower sales and profits as a result of the recession. Interest rates start to rise as the risk of default increases. Then investors start to demand higher interest rates to compensate for the increased risk of default or a debt downgrade.

This is exactly what was happening in February as the U.S. economy headed into a recession from government shutdowns. Corporate bond yields began to rise reflecting the increased risk to bondholders as a result of the recession. You can see this in the precipitous drop in the price of the popular junk bond ETF, HYG.
The bond fund lost 23% of its value in a matter of weeks.

Barrick once parceled out its African assets and we know how that ended. Perhaps if we were talking about complex conglomerate the idea would be worth pursuing but to recreate a new board and management for two or three mines in West Africa would be superfluous. Surely we have more than enough experts and management currently to handle several more mines.

Of course I entirely agree with your assessment of the lollygagging - I suspect there have been a few reasons for the delays - some of which are not so up and up - hence the revolving door of key personnel.

Bottom line there exists the potential for Centamin for become a multimillion ounce producer in far less time than any industry watcher might predict because the drilling successes have been building for years and years.

Like you say all we need is an executable plan.

goldgnome like you I agree we are long past seeing some sort of plan to convert the resource and given Martin Horgan's experience I am hoping we will hear something positive come the half year results and AGM.

I agree with you Mr Bond,
The reason the UK government had to resort to the "Save the NHS" propaganda campaign was to try and conceal just how overstretched the NHS is due to decades of under investment, privatisation,out sourcing and running on a JIT supply system.
Perhaps if our government had been spending peoples national Insurance contributions on the NHS instead of using them to pay off the UK deficit then the NHS would have been better equipped and able to deal with the Covid -19 pandemic.

I have been watching the CEY in West Africa story (great story, + 5 m ozs Ma nd I), and what has been missing is the game plan.
Given the geological/Mining opportunities in Egypt, where CEY has social liscense, operational, commerial, legal experience (etc), I would think in these times focus is needed.

West Africa acheivements so far have been impressive, but what do we do to best capture value (in our lifetime). Could I be so bold as suggest the following

1. Get a PEA done on Doropo and ABC, and lets flesh some financials out as to the ROI (etc).
2. Lets use these as a base case for establishing value for their 5 m ozs M and I Resources. The tother input would be their very impressive resource growth...which could translate into exploration discovery trajectory and VALUE ADD
3. Lets get an Inde valuation on the exploration potential of their 4,000 km2 ground holding.
4. Lets add these together to establish a fair value in the context of CEY investment so far in West Africa.
5. Lets go to some suitable Financial Types (they could do it themsleves of course), and look at how these assets with the above derived valuation would stack up as an investment proposition for a new West African old Focussed company, float on the best exchange for such a float.
If good, and hard to believe such a IPO would not be well received, then lets get key mngt and staff incentiised and make a public offering. CEY could positionitself to have x% now, and should the projects develop to acheive certain hurdles, then it gets additional performance options, and this be either for CEY or CEY holders as an in-species distribution...

It could be that CEY share holders could have shares in a new exciting IPO focussed on West African Gold which could turn out to be a lot better than Endeavour. CEY shareholders could end up owning 50% of a new $650m company?

Just an idle thought, but I would like to see some end game thinking AND ACTION, in WEST AFRICA. GREAT RESULTS SO FAR, but lets get some sharholder value NOW!

best

the gnome .........................................

Putting Egypt in perspective,it is apparent they are in a better position than both UK or USA, and many others as far as the grim figures show.

I personally agree with RBC 's analysis,especially in this new environment we find ourselves in, having looked at the news caos and add apparent breakdown of law it seems the prudent route to take but avoiding mergers or takeovers.
IMHO.

You can read the RBC analyst in yesterday’s FT alphaville, including their report on the PM mining sector overall and other miners ,such as HOC that they have reduced to sector perform from outperform, the opposite of Cey, because of lockdown. Interesting that part of the Cey upgrade is because RBC think that they are unlikely to waste much in W Africa or corporate activity just now, but concentrate on keeping Sukari right, now it just seems sorted, so rising dividend which I always recommend them for.

European stocks traded higher in the premarket on Friday led by German DAX' surge of over 150 points and signaling for another positive session after yesterday's gains.

The Eurogroup elections have been scheduled for July 9, and Eurozone's finance ministers will get to choose from three running candidates. ECB's President Christine Lagarde is set to speak on the world's economy at European Business Leaders Convention (EBLC) later today. Shortly after, the Bank of England will release its quarterly bulletin about market developments.

The DAX surged 1.26%, or 153 points at 8:00 am CET, while the FTSE 100 rose 1.06% at the same time and the CAC advanced 1.22%. Both the euro and the pound made slight gains against the dollar at 8:01 am CET to sell for $1.12213 and $1.24281, respectively.

Breaking the News / ND

Happy Friday y’al

Analysts at RBC Capital Markets upgraded gold miner Centamin to 'outperform' from 'sector perform' on Thursday, stating that a shift in management would likely lower the risk of a move into new projects in West Africa.
RBC thinks that with focus on getting the group's Sukari project back on track, there was now less near-term risk of Centamin looking to build something from its West African exploration portfolio.

https://www.google.com/amp/s/amp.theguardian.com/global-development/2020/may/21/egypt-doctors-ppe-testing-coronavirus
Egyptian doctors are increasingly at odds with their own government on the country’s coronavirus outbreak, pleading for protections and a full lockdown even as the authorities urge people to learn to “coexist” with Covid-19.

A wave of government propaganda has hailed healthcare workers as the “white army”, a reference to their white coats. But some of them told the Guardian they lacked protective equipment and were struggling to get vital tests for themselves and patients.

https://www.which.co.uk/news/2020/06/why-labels-wont-protect-uk-food-standards-from-a-us-trade-deal/?utm_source=whichcouk&utm_medium=email&utm_campaign=labelingfood250620
The UK’s world-leading food standards could be compromised under a UK-US trade deal, with consumers unable to make meaningful choices about what they eat. New research by Which? shows that consumers are against lower standard food, even if labelled. As we reported last week, a UK-US trade deal could see hormone-treated beef, pigs and chlorinated chicken – practices currently banned in the UK – be imported or produced here. The government had promised to uphold food standards but has recently begun to backtrack. Proponents of lowering food standards claim shoppers can make informed decisions.

Read more: https://www.which.co.uk/news/2020/06/why-labels-wont-protect-uk-food-standards-from-a-us-trade-deal/ - Which?

I am fortunate to have some very knowledgeable and trustworthy contacts.

Thank you for sharing Mr T. Is this the first broker with a TP of £2+? I don't know of any others yet (I may be wrong) but hoping more will be joining in soon...

Hey mrtibbles
how do you get access to the RBC highlights
Kind regards biggles

June 25, 2020
Centamin plc
Upgrade to Outperform
Our view: New CEO and board appointments will likely increase focus
on improving operations at Sukari and lower the risk of a move into
new projects in West Africa. This should mean CEY focusing on cash
generation and increasing returns across multiple metrics. We forecast
a FY dividend +27% vs. consensus. We move our Target to GBp 210 on
higher multiples and rating to Outperform from Sector Perform on CEY's
improved operational certainty and superior returns.
Key points:
New CEO increases focus on Sukari... We think both Martin Horgan's
appointment as CEO and recent board additions are a positive for CEY.
After two years of operational disappointments we think the team's
renewed focus will primarily be on delivering on operational targets.
Whilst the recent departure of a second Chief Operating Officer (COO)
could be read as concerning, we actually think a stream-lining of
management structure could be a positive. Q1 was a good start to the year
and CEY has flagged a strong H2 meaning good momentum into year end.
...and lowers M&A and project risks. With focus on getting Sukari back
on track we think there is less risk near term of CEY looking to build
something from its West African exploration portfolio. We continue to
believe the options there may struggle to stack-up vs. Sukari. Similarly we
expect M&A (acquisitions) to be on the back burner for now, no bad thing
given again we see few assets that fit with Sukari. Whilst we don't expect
Endeavour Mining to come back with another offer for CEY near term we
do think ongoing consolidation in the global gold space (such as AlacerSSR) indicates a bidder for CEY may materialise in time. Sukari is now one
of the few large gold assets outside the majors.
Returns profile differentiated. CEY has a net cash balance sheet. Our
work today (link) suggests the group is differentiated on dividends (+5%
yield) vs. global mid-cap precious peers. CEY has also returned >100%
of FCF in the past. We forecast a 2020E dividend of US14c/sh currently,
+27% ahead of consensus. ROIC and ROCE also look attractive averaging
13% and 25% respectively on a 3-year forward basis. This comes before
potential tailwinds of lower oil prices and an off-balance sheet funded
solar plant come through on costs over the next couple of years.
Valuation screens well. Today we make minor changes to our operational
outlook moving 20E EBITDA +2%. Our 20E EPS moves +20% on lower
depreciation and 20E FCF +35% on this and working capital inflows. Having
lowered our target multiples -20% at the time of our previous downgrade
we move these +15% today to 1.5x NAV (was 1.3x) and 7.0x (was 6.0x)
two-year forward EBITDA, reflecting better operational certainty and is a
premium to global mid-cap peers given the group's returns profile. CEY's
valuation at 1.67x 20E P/NAV, 4.6x 21E EV/EBITDA and 7% 21E FCF yield
compares to EMEA peers on 1.53x, 5.2x, 11% respec

Hi everyone. I am a keen follower of CEY and Kinesis. Thank you guys for your fantastic commentary. Hope you don't mind me posting this link re; Kinesis

https://uk.trustpilot.com/review/kinesis.money

An UPGRADE for Centamin this morning.

Centamin PLC CEY RBC Capital Markets Outperform 177.88 175.90 180.00 210.00 Upgrades SP Target now 210p.