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Here here, great articles ElProf! Thanks :-).
Cowichan Interesting comment 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.
Gibbs,
You are most welcome.
I hope you are keeping well.
Best wishes,
Prof
Hi Prof,
Thank you for that!
I commend the following article that came out yesterday by Adam Hamilton:
https://goldseek.com/article/gold-miners-q422-fundamentals
It is on the majors however has some really great info that is relevant to CEY as well.
There is also a link to an article from Dec 22 on the mid tiers:
https://www.zealllc.com/2022/gtq322fn.htm
This includes a really helpful table with CEY in it which compares the key indicators including cost to mine and AISC.
Both are a fairly long read but worth the time I would suggest.
Best wishes,
Prof
Agreed and understood with thanks about the development timescale Cowichan.
The main thrust of my recent posts was to emphasize that in addition to other growth and diversification CEY has three key areas to focus on, being:
1) the existing Sukhari mine,
2) the 160km2 and
3) EDX,
Also that CEY management should get a wiggle on with the last two and treat them separately so far as management actions and reporting are concerned.
For me this will be the real test of how good Martin Horgan and the Non-Executive Directors are because at the moment I have the feeling Martin Horgan and team have put in a credible performance with regard to the existing mine but more is required in terms of the 160km2 and EDX in terms of planning, focus, timeline, KPIs and communication.
Agreed and understood with thanks about the development timescale Cowichan. The main thrust of recent posts is to emphasise CEY has three key areas for Managemnt to focus on, being the exisating Sukhari mine, the 160km2 and EDX, and that CEY managementt should get a wiggle on with the last two and treat them seperatly so far as management actions and reporting are concerned. For me this will be the real test of how good Martin Horgan and the Non-Executive Directors are. At the moment I having the feeling Martin Horgan and team have put in a credible performance with regard to the existing mine but more in terms of the 160km2 and EDX in terms of planning, focus and comunication.
Good points Cowichan. CEY developing "growth and diversification" such as Dropopo on its own or with borrowed funds may be feasible (or not depending on interest rates) but clearly developing the 160km2 and EDX is a whole different ball game. Possiblly the 160km2 could be done with a cash raise from shareholders but EDX would possiblly be better on a JV basis with someone with deep pockets e.g. the Saudis? Just my musings.
Just wait until a few more of the smaller banks are required to reclassify their “hold to maturity” investments to “available for sale”. That means a mark-to-market adjustment which will result in a big hit to their bond portfolios due to the inverse interest rate/bond price relationship.
The domino effect of this combined with dodgy consumer credit finance (auto loans, credit card, bnpl, etc.) is likely to lead to some rather savage turmoil - a healthy exposure to gold is prudent in my mind :)
Gold closed 10c off today’s high at $1867.88 +2.03%
High of the day being $1867.98
It’s a long time until 8:00 am on Monday but this is as good a clove as we could have hoped for.
Since Centamin announced they were undertaking a capital review in early 2022 (aka shopping around for a credit facility) the BOE raised interest rates from .25% to 4%
Given global interest rates are expected to rise further, and Centamin has no immediate plans to use the revolving line of credit, the final rate would be expected to rise as well
the terms as of late 2022
- US$150 million RCF agreement has been entered into with a syndicate of four international banks, taking equal tranches, including BMO Capital Markets, HSBC Bank plc (Jersey), ING Bank, and Nedbank Limited
- Uncommitted accordion provision allowing the Company to request an increase, subject to the Lenders' approval, of up to US$50 million to the Facility, for a total potential RCF of US$200 million
- Four-year term
- Interest margin ranges between 3.50% and 4.50% per annum with a margin rachet mechanism based on Total Net Debt to EBITDA
------------------------------------->>>>
Notes: It would be helpful for shareholders to know if Centamin must maintain a minimum cash balance under the above agreement ( i.e. if the approx. $157 million in Centamin's bank account must stay unallocated ) as it's likely no coincidence the amount approved to borrow is the same value as Centamin's liquid assets
If so, funding Doropo (or whatever's next in the growth pipeline) may require issuance of fresh shares, more expensive bank funding , or cooperation with another gold miner - or an asset sale - and what's available to sell other than the Doropo deposit itself?
An excerpt:
"TCE (tangible common equity) is declining industrywide because of the negative effect of rising rates on the market value of bank holdings of AFS securities. The number of banks with ratios of TCE to average tangible assets of less than 5% jumped markedly in 2022, with some banks posting negative TCE. Banks in this position largely got there because of an aggressive earnings strategy based on longer-term securities holdings when interest rates were low.
Banks with very low or negative TCE may face funding challenges. Federal Home Loan Banks (FHLBs), for example, are not permitted to extend new loans (called advances) to banks with negative TCE, and existing FHLB loans may not be renewed beyond 30 days unless waivers are obtained by borrowers’ primary regulators. That could be problematic for banks facing a runoff in deposits or other liquidity concerns; in a worse-case scenario, a bank might have to sell “underwater” bonds to raise cash, thus realizing losses and reducing regulatory capital.
Read the rest of the Fed's blog post in light of Silicon Valley Bank's lightning quick failure (<3 days!)
https://www.stlouisfed.org/on-the-economy/2023/feb/rising-rates-complicate-banks-investment-portfolios
--------------------------------------------------->>>>
https://www.bloomberg.com/news/articles/2023-03-10/what-is-happening-to-svb-bank-run-fear-spreads-as-stock-tumbles
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 Bonanza zone will change production & grade forecasts to the upside? But haven't seen it appear in presentations lately...
Somnamna interesting but there will be many KPI's before the ultimate "First Gold pour" somewhere on the new concession. The new concession really is what it says new and it will take a considerable time before we see anything other than words such as promising geology, drilling results etc.
My number one KPI would be get the waste contract done and dusted months earlier than original 4 year contract.
Absolute priority is to reduce strip ratio to 6 or below then we will see realistic cost base..
Good call earlier at 97 Tony- credit where it’s due :-)
Silver currently + 2.79%
and
Gold + 1.50%
Hence the movements - BLOOMBERG just announced 34% chance of 50bps increase where I think if my memory is correct it was ~70% before the data released today…so looks like betting back to 25bps which, of course, helps gold and markets in general- fingers crossed
Paul, Open pit mining is cheaper than going underground but yes there will be a cut off point where the cost of mining outstrips profit. This then depends on the mineral being mined and the value of the mineral. So gold provides more depth and where the cut off is depends on the cost of mining. Super pit is like looking into the Grande Canyon. Centamin still has a long way to go.
Thank you Somnamna, I think the majority of share holders will agree with you!
Lol- I meant "looking a few mins ago" lol
Someone's confident, a few mins ago they just bought 150,000 shares...BTW I don't look at all trades, I just happened to be looing a few ago...
Cowichan, perhaps a JV or other means of monetising the new concession? Horgan should be thinking out of the box on this one to bring value to CEY.
Two ISA accounts active for CEY one at 97p and another ISA averaged down to 104p with 20% position now in play. Will be adding through the spring months as it is guesswork when things will eventually turn a lot higher for Centamin.
All excellent points Somnamna.
I suspect part of the trouble in diversification will be deciding how to best spend Centamin's severely limited exploration budget. Although until the EMRA finalizes the royalty rate for gold exploitation Centamin isn't likely to spend much on drilling beyond the greater Sukari tenement. And given the negotiation process has already dragged on far beyond the one year timeline perhaps the Egyptian government isn't keen to be as competitive as once believed.
I do not envy Mr Horgan in choosing a path forward - with inflation and rising interest rates finding profit will be tough
Major European stocks tumbled ahead of the last session of the week, following the course set by Wall Street yesterday as concerns over the Federal Reserve's upcoming interest rate hike continued to push negative sentiment. Friday's session will also be marked by the final inflation data from Germany and a batch of economic data from the United Kingdom.
The FTSE 100 lost 1.37%, while the DAX sank 1.24% and the CAC 40 declined 1.32% at 6:30 am CET.
Both the euro and the pound traded flat against the dollar at 7:22 am CET to sell for 1.05867 and 1.19234, respectively.
Baha Breaking News (BBN) / ND
Happy Friday y’al
Enjoy your weekend