Centamin PLC Share Chat (CEY)

When you control the world to the degree the US$ and financial instos does then you call the shots. And in the US, the instos that call the shots are not that many. Oddly they have a good deal of influence on the Fed Reserve. Hard to beat ...

A really big bounce in July...who benefits?

good luck, and go gold

the gnome

The trillions isn't really going into the economy thou is it? It's mainly providing liquidity in the markets? So the real economy vs the markets, will be interesting to see how much they diverge ...

https://seekingalpha.com/news/3564510-mnuchin-sees-big-economic-rebound
You're going to see the economy really bounce back in July, August, September," Treasury Secretary Steven Mnuchin said on Fox News Sunday. "You're seeing trillions of dollars that's making its way into the economy, and I think this is going to have a significant impact," he added. "This is not the financial crisis [of 2008]." The position resembles the forecast issued Friday by the Congressional Budget Office, which expects a sharp contraction in this quarter and then growth at an annual rate of 17% in the second half of 2020.

The blowout device that failed,was made by Halleburton.
The got away only with a moderate fine.
But of course they are military contractors.
They were linked also to the manufacture of Saddams super gun.,and got away scot free.
Different laws for them.

Hi MrBond,
I hope that you are still enjoying your view!
Quite a coincidence, I am so glad that I also sold out of BP (for several reasons) and Tesco a few years ago and reinvested the funds into Centamin!

https://www.youtube.com/watch?v=qnrIE8TrgSA

Trump cuts safety regulations for oil oil producers and asks for $3 billion to support oil production during Covid -19 crisis!
“Instead of learning from this disaster, President Trump is proposing to radically expand offshore drilling while dismantling some of the few protections put in place as a result of the catastrophe.

“The key lesson was that the industry cannot be trusted to self police.

“In response to the disaster, the Obama administration enacted safeguards. Last year, President Trump drastically gutted them, rolling back the frequency and duration of testing for blowout preventers, the device that failed on Deepwater Horizon. There has also been a weakening of onshore monitoring requirements and reducing government oversight to evaluate industry safety.
https://www.independent.co.uk/environment/deepwater-horizon-oil-spill-gulf-mexico-conservation-a9473401.html

Good morning GoldAnOil,
Really great to hear that this BB and its members has helped you to achieve some considerable success with your investment in Centamin, indeed I have never come across any other BB quite like it.
But all credit to the other very decent, well informed and supportive members of this BB for helping to create a BB of such quality.!
Keep well
Tibbs

Same here Goldanoil. I agree.
I got out of Tesco completely and reduced BP a few years ago.
A good move in hindsight.

My initial investment here has just passed the 100% gain mark.
Been a rocky road without doubt, but it's one of the few shares I hold that I have never had doubts about, well apart from the hostile T/O bid.
I've taken profits, re-invested and top sliced along the way, always with an eye on the dividend and the POG. It seems that all is coming together for the company and I look forward to the future with confidence.
Well done all LTH's, It's nice to read a BB that isn't swamped with hysteria in times of volatility.

Major European stock markets were higher in premarket on Monday after yesterday's reports that Italy and the United Kingdom were planning to cut down on some of the restrictive measures put in place due to the global coronavirus pandemic. Daily coronavirus death counts continued to fall in Spain, Italy, France and the UK, sparking investors' positive sentiment.

The DAX jumped 2.59% at 7:12 am CET. London's FTSE 100 increased by 1.48% at the same time.

The euro was 0.18% higher compared to the dollar at 7:13 am CET, trading at 1.08442. The British pound gained 0.54% against the American currency, going for 1.24330 one minute later.

Breaking the News / MS

With the very much higher spot gold price than used in the PEA, the NPV7.5 is US$246 million, or two thirds of initial capital expenditure. This is at first impression not unattractive until reviewing the cumulative net free cash flow pattern. The net free cash flow is very much backloaded and the pay-back period is 12 years when using undiscounted numbers, 14 years when using discounted values. It is unlikely Gold X will find it easy to attract third party funding on this performance.

The market clearly agrees as the diluted Enterprise value is only US$79 million. If the capital expenditure and amended operating cost are accepted as realistic, Gold X constitutes good value, especially if one is of the opinion the gold price has much upside potential. However, there are big question marks behind the capital cost used in this valuation.

For anyone of the opinion the gold price has still much upside and not concerned about the muddled strategy by Gold X management, this share has upside. It is as the company proudly announces on its website “Providing Unparalleled Leverage to a Rising Gold Price”, putting a positive spin on something very marginal and risky. Very recent share performance shows the market believes this. The market may well further rerate Gold X upwards just on the perception of the leverage to the gold price without doing the sums whether the Toroparu project has merit at all. This has earned this report the title: Riding the Leverage Story.

As an aside, this valuation shows that Wheaton stands to have a return of 17.4% on its metal purchase agreement with Gold X at current spot gold prices. This is much better than shareholders can expect, again demonstrating why royalty companies are much better investments than precious metal mining companies.

As always comments, criticism and compliments are welcome.
Kees Dekker

Hi,
You may find this note 24..04.2020 from Kees Dekker (mining annalist) of interest
One of my Followers reacted to my article on Gran Colombia Gold that he had a shareholding in the company and was particularly hopeful about Gran Colombia’s exposure to Gold X. This surprised me as Gold X’s Toroparu project in Guyana sits strategically poorly. Toroparu is a large, low grade, open pittable deposit whereas Gran Colombia operates high grade underground mines.

It made me analyse Gold X and the findings are pretty negative as the attached report will demonstrate. The valuation was not easy as the SRK reports in support of economical assessments are very poorly drafted: repetitive, missing critical information, inconsistent and full of mistakes. Most importantly the latest report with the findings of a preliminary economic assessment lacks an annual processing schedule of the very complex plan. This valuation has had to draw one up based on some pointers in the PEA report. The PEA also lacks an annual cash flow model, which could have been used to check internal consistency.

The most important flaw with the business plan I found is the lack of motivation for including a flotation plant 10 years after start of production by a carbon-in-leach (“CIL”) plant. The advantage of a flotation plant is concentrating copper into a saleable product, but this valuation shows copper to contribute less than 3% to total at-mine revenue. The indicated loss of precious metal revenue from lower overall recoveries compared to the CIL plant will far exceed this. Moreover, incorporating flotation will require intricate grade control and much stockpiling over ten years. In a tropical environment the copper sulphides in stockpiled material can be expected to oxidise, resulting in much poorer metallurgical performance than when treated fresh and loss of gold to solution before treatment. There is nowhere supporting argumentation for the route and timing.

Similarly the plan to construct a hydro-electrical plant concurrent with the flotation plant to benefit from lower power cost does not make sense. Why not include the plant from the start and further increase the rate of return on investment for this plant?

One of my worst investment advices was a positive report on Guyana Goldfield’s Aurora mine in 2016 when I accepted SRK’s resource estimation, despite many misgivings expressed in the report, and their operating cost rates. Both have proven to be very wrong. SRK does not seem to learn from its mistakes. Again it uses a similar approach to resource estimation, which is risky, albeit less so than for Aurora, and cost rates even lower than recommended for Aurora in 2016. This valuation has adjusted the cost rates to bring these more in line with declared actual costs at Aurora, but accepted the capital expenditure forecast, despite many misgivings in this respect.

Hi Pipedreamer,
One of the most important points is that miners are a leveraged play on gold. The reason for this is that if it costs a miner $1000 to produce gold and gold rises from a price of $1,100 to $1,200 then the profit of the miner goes from $100 to $200. In other words gold has gone up c10% whereas the profits of the miner has doubled; the price of the share in the miner will therefore increase by significantly more than the 10%. The trouble is the leverage also works the other way. If gold falls from $1,100 to $,1000 the miner is now making no profit for just a 10% fall in gold. Clearly if gold falls to $900 then our miner is now making a loss.
With a mining company you are also exposed to all sorts of other risks and opportunities. For Centamin we currently have a court case still hanging over us, the risk of Coronavirus , a new CEO who may turn out to be a dud, a recent track record of poor forecasting... On the plus side we have a court case hanging over us which is depressing the share price somewhat and will therefore result in a rise if resolved, a new CEO, who may turn out to be brilliant, performance in Q1 which was significantly ahead of forecast, a forecast for full year of 510-550k oz which now looks like it could be exceeded, some good potential for new mines in both Egypt and overseas...
Hope this helps you better understand the advantages and disadvantages of gold vs a gold miner.
Best wishes,
Prof

Could somebody tell me the pros and cons of buying gold mining shares as opposed to owning physical gold.
I read early on when gold shares were going down with the rest of the market,that there were fears that if a lot of the workers at a mine became sick that they would have trouble getting it out of the ground.
If there was a shortage because of this wouldn't the price of physical gold go up?.
Can anyone enlighten me on here regarding this?,as I want to invest.

Please let me know as soon as you decide, Cey is feeling a little toppy now, but also I think has further to go once dethrothed, but getting the timing right on an out and in is, as you say, so hard, nearly did on thur/fri again, but very glad I didn't. Presumably as well as a retrenchment now after such a rise, it should take a few goes at getting though 190, assuming it does. Then PE will be 12 assuming no hiccups so not so cheap.
I think the overall market will fall probably quite soon, and quite a way, and certainly on next results season and again on winter Covid resurgence.
If the fall is relatively steady as she goes, down and down, I think gold could do well driven by hugely low rates, masses of money printing and where else to put your money, as currencies ultimately fall. I am hoping gold will rise fast enough to obviate the cey fall
However if the market suddenly tumbles, speculators will need to raise margins again so may sell gold and cey again. As you say difficult but only choices seem gold, miners or cash, miners are dangerous but could be best....My cey are currently 40% of my general account, 55% of ISA and 72% of Sipp, about 50% overall; I hadn't done the percentages till just now, I must be mad, though of course the percentages made more sense when CEY was half this price and other shares double. Plus I love earning 6% on half my savings, half of it tax free.

Dasut,
May I recommend a pair of golden flip flops as a worthy purchase?
I have to say that I am tempted, when CEY hits a good price, to sell a large percentage of my holdings. Being so concentrated in it is great when it rises but really hard mentally when it takes a big tumble, something we all know it does pretty regularly.
Best wishes,
Prof

Hi Sotolo,
I share your worry the market bounce we are seeing could just be the prelude to a further deep fall. While my ISAs are very heavily biased toward CEY my SIPP is only approx a quarter CEY with the rest in funds. I am very tempted to sell a significant percentage of the funds and just sit in cash until autumn. CEY is harder decision. The scenario of a major fall dragging down CEY with it, albeit less in percentage terms, is very credible. It is also possible that we don't see the major crash, or not for a while, gold continues to rise, CEY exceed Q2 prod targets and raises full year guidance to say 550-580. In that scenario CEY would obviously fly. The other point however is CEY rarely straight lines up. As such I might also sell some if it climbs much more, hope for a small retrace and buy back in. The danger with that though is exactly what you faced the other day when you bought back in pretty much immediately.
Decisions, decisions,
Prof

Most of my money from Pensions and in Property. But I hold some Centamin. I quite like meet Kevin videos on u tube. I hope this is a link to a recent meet Kevin u tube video. https://youtu.be/uc5sK_X77U0

Prof my calcs were simple invest in a shares ISA what I could afford to lose when I retired and if it got to £2 sell and pay off granddaughters uni costs.
Much has changed since that very simple decision, granddaughter didn't bother with uni and went in a different direction which worked out really well.
I am of an age where if it hits £2 maybe will sell and forget investing and splash out on something.

Prof and all, the $1.6bn question:
Between NOV 1929 and MAR 1930, following the crash, the stockmarket regained 44% of its loss
It then fell 80% and took till 1954 to regain its 1929 high
IF, as I expect, the market is going to take a very big tumble, how much does Cey fall IF gold prices remain the same, or put another way how much do gold prices need to rise for Cey to stay even?

My very rough guess is Cey falls half the market fall, at stable gold, which would be 40% if same as 1930, or if gold rises to $2000 and market tumbles we would end up even. Of course I hope I am wrong and profits don’t become worth half as much for each penny of share price, but become so rare people will pay for them. However cey has picked up now partly because of rising gold, partly good results, but a lot with 25% rise in the market. So what happens when market turns down?

Half my shares don’t fit in the isa so I pay tax on the divi and it bring me to that band between 100 and 120k income where you lose your personal allowance so pay an extra 20%. So twice a year I sell my general AC Cey shares, the day before ex div, and buy them back the morning after. As quite a sizeable chunk I often have to deal in two lots (has anyone else noticed deal size you can get getting smaller often can’t even get £20k now)) and seem to get a 2p spread and then the shares never seem to fall back as much as the divi, maybe with so many reinvesting, so lose. It seems silly there is no one who will take the shares off you for a small fee at 4.29pm and return them to you the next am. All of which is to say having failed to save with that strategy I am giving It up, just because Cey never seem to fall as much as the divi, so probably will this time.
Great week, really on a roll as you pointed out not even to be dented by falling gold, 190 here we come...

Superb close for the week and even pretty good for the day when you consider gold came off the boil a bit.

Exciting times. Let's hope that the share price does not fall back the full value of the dividend next week or if it does it catches it back up quickly. With the current tail winds we seem to be enjoying I am expecting it to play out well.

Prof

HI Dasut,

Strange the attraction to round numbers - like you I had previously £2 in mind and like you I am now questioning whether that is too mo
dest. In the current climate there is also the question of where else would you put the money if you sold up. At some point the market falls will have run their course and the next bull run will be in place however I cannot help but feel that is sometime off.
Best wishes,
Prof

The Fed can’t print gold Bank of America sees bullion price surge to $3000 as paper money crumbles

http://www.kxan36news.com/the-fed-cant-print-gold-bank-of-america-sees-bullion-price-surge-to-3000-as-paper-money-crumbles

At a time of weak economic growth and increased market volatility, analysts are getting more bullish on gold. According to Bank of America, the precious metal is headed 78 percent higher, to hit $3,000 per ounce in 18 months.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure. And investors will aim for gold,” the bank’s analysts said, adding that the US Federal Reserve has provided enough momentum to propel investment demand and prices higher.
They have warned that the Federal Reserve’s balance sheet as a percentage of GDP could rise 20 percent to 40 percent this year. They’ve also pointed out that the Fed “Can’t print gold.”
They said: “Beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale. Rates in the US and most G10 economies will likely be at or below zero for a very long period of time as central banks attempt to push inflation back above their targets.”
Gold’s recent run began back at the end of September 2018, when the precious metal was trading at $1,465.70. Since then, it has gained 15 percent to $1,689.60. The yellow metal was trading higher on Wednesday, above $1,700 an ounce.
And the gold market has further room to run, according to Bank of America. “The trigger here could be an extension of lockdown restrictions over the next few weeks,” it said.
Economists have also noted some headwinds for the gold market such as a strong US dollar and reduced demand for physical jewellery in Asia.

Prof my golden flip flops price has always been £2 but that was prior to the West African acquisitions so would feel that if and when a second/third resource was brought to a mine, should still have legs if the GP continues to remain above $1700, preferably above $1750.
I do however have a caveat due to problems with Covid and West Africa/Africa because if the disease does catch hold there will need to be a massive International support effort to prevent devastation. Problem is that the developed International nations all have their own issues not helped by Trump withdrawing payments to the WHO.
Good news is that there are additional opportunities in Egypt and considerable experience in their Egyptian employees/ management and am certain Sami knows where the best opportunities are.

It would be nice to have a period of growth with good mgmt