George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
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Its about time these Casino antics with essential commodities were stopped!
Basel 3 for gold so they are turning to other commodities to gamble with!
Our politician's should legislate or ban this type of futures trading!
Wednesday, 10/06/2021 15:13
GOLD PRICES were little moved inside a tight trading range versus most major currencies on Wednesday as rising bond yields and interest rates were offset by fresh record highs in energy prices, spurring fresh fears of long-term inflation as European stock markets fell hard.
Western government bond prices fell again, led by a sell-off in UK debt, as the wholesale cost of UK electricity leapt 40% this morning alone on what one commentator suggested was stop-loss and short-covering moves by formerly bearish traders.
European gas prices also jumped yet again amid accusations that Russia is deliberately capping supplies.
Gold priced in US Dollars bounced $6 back to unchanged for the week so far at $1760 per ounce
https://twitter.com/notayesmansecon/status/1445680474718814210
Hi DASUT,
I have to admit I know precious little of the technical in regards to ore processing. I compiled the stockpile figures from quarterly reports.
The following is from the last annual report (I'm not sure I understand it completely!)
-------------------->>>>
Cost of mining stockpiles include costs incurred up to the point of stockpiling, such as mining and grade control costs, but exclude future costs of production.
Ore extracted is allocated to stockpiles based on estimated grade, with grades below defined cut-off levels treated as waste and expensed.
While held in physically separate stockpiles, the Group blends the ore from each stockpile when feeding the processing plant to achieve the resultant gold content. In such circumstances, lower and higher-grade ore stockpiles each represent a raw material, used in conjunction with each other, to deliver overall gold production, as supported by the relevant feed plan.
The processing of ore in stockpiles occurs in accordance with the LOM processing plan and is currently being optimized based on the known Mineral Reserves, current plant capacity and mine design.
Ore tonnes contained in the stockpiles which exceed the annual tonnes to be milled as per the mine plan in the following year are classified as non-current in the statement of financial position.
Currently at Sukari, low grade low (0.4 to 0.5g/t) open pit stockpile material above the cut-off grade of 0.4g/t has been reclassified to non-current assets as these ore tonnes are not planned to be processed within the next twelve months.
The net realisable value of mining stockpiles is determined with reference to estimated contained gold and market gold prices applicable.
Mining stockpiles which are blended together with future ore mined when fed to the plant are assessed as an input to the gold production process to ensure the combined stockpiles are carried at the lower of cost and net realisable value.
Mining stockpiles which are not blended in production are assessed separately to ensure they are carried at the lower of cost and net realisable value, although no such stockpiles are currently held.
from page 196 here:
https://www.centamin.com/media/2384/centamin-plc-annual-report-2020-web-ready-secured.pdf
--------------------------------->>>
other grade related details include:
- a cut-off grade of .3 g/t is used for reporting the open pit mineral reserve estimate (whereas the underground reserve estimate cut-off grade is 1 g/t )
- open pit and stockpiles cut off grade for reporting is .4 g/t
- open pit mineral reserve estimate includes 7.5Mt at .4 g/t for .1Moz gold using a .2 g/t cut off for the dump leach
- underground cut-off grade for reporting is .4 g/t
Good point Rebess,
Centamin offers advice on this on their website.
Hi Candid, yes there was a time in past years when AISC was around $700, although the POG was lower, but a good comparison with the cost of buying/running a car, future residual value/depreciation etc,very relevant and all too often forgotten or ignored.
Ross Jerrard Centamin has explained the policy & importance of smoothing out capital costs over a period of time in several of the quarterly presentations over past year's.
Thank you for the confirmation and your explanation though, especially as it may help Sotolo refrain from publishing his slit your wrist/ jump over board analysis and help him realise that all is far from lost!
You can of course arrange for dividend to be paid as a 'Stock dividend' where shares are issued to the value. - Wise old bird that Sotolo is, I'm sure he knows this already. - I only mention it as it could be used as a counter argument.
Hi Sotolo,
Then put your case for compensation in writing to Barclays making clear your grievances and losses and make it clear that if they don't come up with a satisfactory solution/offer then you intend to refer the case to the FCA regulator.
Note Before you can open a case with the FCA you need Barclays final response in writing!
Whilst we are happy to help its no good just moaning about Barclay's on here if you want the situation to change.
Quite so Rebess!
I should have been more careful as I remember some time ago the same issue came up while we were all talking production figures.
Serves me right for just punching numbers into google search.
No Sotolo .. it doesn't work like that. .Capital expenditure, which includes exploration expenditure isn't treated as a cost in the same year as it is spent..it is gradually released into AISC over several.years , depending on how long the benefits of that expenditure accrue .
If the item of sustainable expenditure is just to put something right or enable production for that current year only, then ALL of it will be be part of AISC in that year .
The waste stripping programme has been deemed as non sustaining expenditure , because the work will provide a material benefit to the mine for several years to come.
It's just a way of smoothing out capital costs over their beneficial lives. If you didn't do that , and wrote all of it off against AISC in the year it was incurred , then you could have years where AISC was say $3000 per ounce , followed by several years of AISC being maybe $700 per ounce. .
Incidentally for Centamin there was other non -sustaining capital expenditure incurred on TSF2, camp upgrades and work commencing on the solar plant , which will likewise only be recognised gradually over several years to come.
Ho
The $240 million capital costs will be depreciated over a min of 10 years so only $24 would weigh against the 415k oz
Let's wait until Cowichan advises where he accessed the numbers so that we can understand ROM and stockpiles.
It is important to understand that in gold mining terms anything less than 0.5 grams per tonne is low grade. Without trolling through Centamin's presentations I don't know the cut off feed grade through the plant.
Normally low grade ore would either be stockpiled ready to blend with higher grade ores or placed on a leach pad that is treated with a weak cyanide solution that attacks the ore and over time leaches the gold.
Basically processing low grade ore below cut off grade through the plant isn't cost effective the processing cost plus cost of sale will likely provide a loss rather than a profit.
Candid the break even cost might be rather higher than you imagine. From the last report: “2021 gold production and cost guidance maintained: 400,000 to 430,000 oz at AISC of US$1,150- 1,250/oz sold… Unchanged 2021 capex guidance of US$225 million and exploration expenditure of US$17 million”. So if the extraordinary capex, a lot from the wall collapse, is not in aisc, the new total cost per ounce is $1150-1250 + $240m spread over 415k oz which is a stunning extra $578 an ounce taking costs to around $1800 an ounce, so I hope I have this completely wrong as would mean we are making a loss on every ounce now? Anyone?? On another note Tharisa that I couldn’t buy yesterday, as my dividend still hadn’t been paid by Barclays, is now up 20% since yesterday! Barclays has cost me even more than usual this year.
The problem with Hummingbird is that it's very small cap at £60 million and share liquidity low , making it difficult to take larger positions in it
One thing I forgot to add , was the critical figure for AISC which is when the gold price falls below that (in approximate terms) , due to specific accounting judgements in any given situation
For Centamin , if the average gold price had been below c $1186 it would have made a loss . The gold price though averaged nearly $1800 , during the first half year so a large profit was made .
Mr T. The $ 900 AISC you refer to was the figure for Centamin last year ..however that was on higher production .the AISC for the current half year was $1,1186 per ounce due largely to the reduced level of production
The cash cost went up from $ 650 to.$800.
I ignore the cash costs though, because that is just the visible direct cost of extracting and producing the gold
As an example of the irrelevance of cash costs , just think about your car ..people will tell you their car is cheap to run. . but they are only taking into account the visible cost of petrol and their mpg. ..The AISC equivalent would be to add in the cost of tax , insurance, MOT and maintenance , as well.as the depreciation of the car , so the full cost of the car per mile is much higher than the cash cost . Obviously the full cost per mile decreases as mileage increases Likewise a mine, and most other things when you think about it.
Hi All, my analysis is that the US inflation rate will be sharply higher around March2022. This is based on the $M2 figures and assumes that the velocity will be close to (or even higher than) 1.6. Yes, the USA economy will expand as will assets prices.. However the exceptional pressure from the QE will force hard the inflation rate. Close to this time there will be many warning signs and the POG will start to respond. Probably the CEY share price will anticipate this and considerable upward movement will occur. How much this will be?, and how long?, I have no idea. It should be noted that the velocity is very hard to predict (though someone did post some very helpful graphs on this) so this might confound my analysis above. Bitcoin is a house of cards and in my opinion heading for an almighty crash, when?, and how big?, I have no opinion. Blomberg seems to be predicting a gold spike soon. If so?, and if it is big enough?, I might be selling CEY and returning early in 2022. Otherwise I am staying till around March 2022. Helpful and constructive remarks please!, anyone spot mistakes?.
Good point Rebess, It's easy to forget that!
Hi Dasut,
Thank you for your opinion on this, it also proves the immeasurable value of your on site professional experience and knowledge gained at Sukari.
In my view those that are critical of the length or detail covered on any such important facts either aren't really serious investors ,or share holders.possibly just day traders too lazy to do research themselves, or even just spoofers without any sharers at all!
Thank you also to Cowichan for all the research and to Candid, Bob. Rebess, Mr Gnome and others who have contributed so much detail and thought provoking onions and analysis on this.
what is interesting is Candid's AISC evaluation, somewhere in the past I can recall $900 being regarded as rather an important benchmark although even at that Cey & EMRA were still sharing a profit.
The chart looks to be in Position A at 90p.
Take a look at HUM @ 15p if you haven't already.
Dasut..could the answer be that the plant capacity can't be expanded on a marginal basis but that it needs another plant once a certain productive capacity has been reached , and to do this would incur substantial extra costs , which could remain idle depending on the prevailing gold price. Goes back to your point about optimising rate of return
Or doesn't it work like that ?
What the accounts do tell us is that the value of inventory at $200 million means that there are currently approx 200,000 equivalent ounces of gold currently in the cycle of production ( based on approx AISC per ounce of $1,000 )
I think you will find that this level of gold within the production c to cycle remains fairly constant as gold sold is replaced by gold entering the cycle. I have made this assumption on the basis that the values of gold inventory remain very similar at the half year and end of year for the past few years that I can see.
Since there is no physical constraint on the supply of fiat currency, this sort of fragile monetary system is based on TRUST. Most of the trust rests on the shoulders of Congress that they will restrict their deficit spending to a reasonable degree such that inflation is gradual and pervasive rather than spectacular and acutely disruptive. It is historically around wars and the conclusions of long-term debt cycles that this trust gets broken.
As cracks appear in the financial system, showing users how arbitrary it is, it could erode confidence in the system and the institutions that support it. In the meantime, any individual loophole, like a temporary $1 trillion platinum coin exploit or an invocation of the 14th Amendment, is unlikely to be immediately inflationary in its own right. It’s more about the build-up of cracks and the increasing perception that the existing monetary system is rather arbitrary and that the checks and balances are gradually losing power.
Overall, my base case remains that the 2020s decade will continue to be one of real asset outperformance, meaning commodities and other scarce assets are the things to have exposure to. This won’t be linear, and there will be periods of time where having some currency allows you to buy dips and rebalance, but overall, the key is to have strong legal claims on real productive assets at appropriate valuations, and/or exposure to other truly scarce things.
Cowichan grateful if you can tell me where you accessed your figures as not sure I interpret ROM as stockpiles.
ROM stockpiles agree as this is material used for blending to get best rate of return through process plant. My question would be if they are carrying over 18 months of stock is why hasn't the plant already had an expansion to cope with such demand or why isn't it sitting on a leach pad?
Correction:
31.10768gsm per troy ounce. :-) :-) :-)
Hi Cowichan
Ordinarily I would never question your arithmetic. However, gold is measured in 'Troy ounces' not 'Imperial' and there are
31.10467 gsm in a Troy ounce. - Just saying - Hope you don't mind. :-)
Simply calc will work it out.
Morning, just passing through and wondered what divi yield the company has at current valuation? Thanks