Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
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Look at the June "jobs" breakdown - horrific.
Depression/stagflation at best:
https://twitter.com/bonker_99/status/1410979487378984963?s=20
Yup - bottom line right now is they've gotta break $1,780 - if they can't then it's going up, period.
In this week’s Live from the Vault, Andrew Maguire breaks down the gold and silver markets in the wake of the Basel III June 28th implementation date.
The precious metals expert addresses differing opinions on Basel III, explains his bullish outlook for the historic ruling and makes the case for a gold price re evaluation.
Andrew Maguire is also joined by proud Wall Street Silver member and sound money advocate, Jim Forsy the, to talk all things silver and discuss the latest initiatives of his non-profit organisation, Citizens for Sound Money (C4SM).
https://www.youtube.com/watch?v=yYUdqE0t9-c
Sorry typo title should read "Writing on the wall"
Indeed it would but we must remember there is so much un-allocated paper out there the investment banks have to try and cover.
On the other hand it may cause some panic buying of physical AU, to try and cover.
A web of deception.
GLA.
It would be nice to see Gold burst through $1800 early on this uptrend. That would leave $1800 as strong support for any little pullback.
Teachers +269k lol
https://seekingalpha.com/article/3695246-centamin-get-going-good
1. Introduction
Here is another interesting analysis by my fellow countryman Kees Dekker, and it is about Centamin Plc, the Egyptian gold producer. Notwithstanding the omnipresent jurisdiction risk (in my view Kees has been generous with a NPV discount of 5%, which is acceptable for running operations in top 20 Fraser Survey jurisdictions, however Egypt doesn't belong there, it doesn't even have a rating), Kees shows why Centamin might be facing challenges regarding grade and production (this might even be a case of ongoing grade variance when looking at mined grades vs reserve grades), and might be severely overvalued. It is quite a long read as usual, but it gives a good impression of the actions and communications of management, and of Centamin as an investment in my view.
All presented charts are provided by Kees Dekker, unless stated otherwise.
All pictures are company material, unless stated otherwise.
2. Executive Summary
This is an update of a report published on Seeking Alpha (“SA”) that went out under the title “Get Out While the Going is Good and earned the classification of Top Idea from SA. This valuation report, completed in November 2015, concluded that the best times were past for Centamin, with the company facing, among others, higher operating expenses associated with an increase in strip ratio and having to share the net free cash flow equally with its Egyptian parastatal partner.
The conclusion proved to be wrong in the short term with the share price appreciating in line with an improving gold price and the market not giving cognisance to the cash flow sharing that would start within two years.
https://criticalinvestor.eu/analysis/gold/kees-dekker-reviews-centamin-plc-analysis
Thank you for your explanation, the previous Centamin management regime are undeserving of your loyalty, although, having said that I understand your point about trying to keep the share holders happy with output.
I'm sure this wasn’t your intention, but this statement seems to imply that we shares holders were in some way informed of risk, or given options of condoning the sacrificing of fit for purpose, appropriate and safe mining methods at Sukuri in preference for increased output.
I was certainly unaware of Pardey and Co ever making share holder’s aware of the risks being taken on their behalf to inflate production and share price.
I feel confident that had share holders ever been informed of a choice of running the open pit in a safe manner using the appropriate mining methods, or throwing caution to the wind and "Winging it" in favour of short time gain with the inevitable risk of catastrophic events involved, then theywould have been horrified and most likely wondered just what bunch of chancer's were running Sukari, but certainly chosen for the former option of how Sukari should be operated!
There is no excuse; the previous management were guilty of putting their own self interests first by "Glossing over the facts" and completely disregarding their professional responsibilities to the company and its share holders!
One analyst who was honest enough to flag up some serious concerns and question what was taking place at Sukari was disregarded and discredited by Pardey, and bysome others who claimed he didn’t understand about mining issues!
I am also guilty, stupidly in hindsight of choosing to believe that surely Pardey knows what he is doing, as it turns out he certainly did, and Kees Dekker was proven to be right in just about every respect!
So I have to agree with the paragraphs from part of Cowichans Martin Horgan interview below.
However, the company's bumpy performance since 2018 - when it suffered three production guidance misses due to operational issues - means some are yet to be convinced!
"I just can't trust those guys - they don't do what they say they're going to do" was the verdict of one London-based analyst who wished to remain anonymous!”
As far as I am concerned during the previous managements tenure they purposely deceived share holders on so many occasions, yet after every deception became apparent Pardey pledged lessons had been learned things were going to be different, communications with share holders would be improved, it never happened and instead they yet again betrayed the share holders trust and yet again Kees Dekker’s concerns were proven right!
So as I already stated Martin Horgan and his team have a lot on their plate in Egypt, but they deserve the chance to prove themselves as really being the new order to share holders, so I wait optimistically once again!
For those who are interested see the Kees Dekker reports I have posted from 2015 & 2018
Et voila
Quite so as a long term holder it certainly seems that Martin Horgan brings qualities that were were severely lacking,even devoid in the past such as integrity ,truthfulness ,professionalism, methodology and a determination to do things properly!
Yup - 10 minutes until the casino kicks off again.
Just one point on the NFP though: Bad jobs = more bbbbrrrrrr, good jobs = more inflation.
This is how we get PM bull cycles.
I have no knowledge of mining / geology.
Having just read the interview posts below, I get the impression of a man who believes in ‘slow and steady wins the race.’ Sensible and logical decision making.
Given the current position of the share price, the POG and the global financial situation, I am happy to have my money invested with a company featuring that kind of management.
His words provide a tactful condemnation of previous management-practices. - Practices that were condemned by many of us at the time, but equally, supported by posters/experts with mining experience as I recall.
Gold movement sometimes at 13:30- 700k est. A miss it generally goes up, and vice versa.
Shares on the major European stock traded higher in the premarket on Friday, as the investors awaited June's nonfarm payroll report from the United States.
Apart from one of the key economic indicators, the traders will monitor the second day of OPEC+ talks, as well as the remarks of European Central Bank President Christine Lagarde.
The DAX rose 0.15% at 8:00 am CET, while the FTSE 100 went up by 0.26% at the same time. Concurrently, the CAC 40 increased by 0.22%. The euro and the pound were flat versus the dollar, selling for 1.18408 and 1.37636 at 8:00 am CET.
Breaking the News / BU
For what it’s worth I maintain total faith in Martin Horgan
Happy Friday y’al
Off topic, but on topic for some on this forum. The aging (developed) world and what does it mean.
Well-known geopolitical strategist and author Peter Zeihan joins FS Insider to build on the topic of rapidly slowing population growth and why this is a pretty big deal. Peter says one of the major problems is that economic models and the financial system as a whole is predicated on constant growth. So what happens when populations start to see a sudden decline in the ratio of young to old?
https://www.financialsense.com/podcast/19990/peter-zeihan-why-world-about-radically-change
Will do. Thanks for this information. Recapping, Martin Horgan is employed by the shareholders of the company. Its good business sense to listen to the owners of the business, a minor detail which is missed by many in the mining industry. Some of the CEO's tend to operate under the assunmtion that they have been appointed by a "higher power".
best
the gnome
For anyone wishing to comment on the interview why not send an email to
alexandra.carse@centamin.je
or reply to Mining Journal's tweet (make sure to tag @CentaminPlc)
https://twitter.com/DonLawson_/status/1410735674660036612
It's apparent from the interview that Mr Horgan does indeed consider feedback from investors concerned about the dividend being in danger — great, but what of the other issues raised by investors? Are we not worthy of a response?
HORGAN COULD NOT CONSIDER M AND A USING SCRIPT WHEN THE SHARE PRICE OF CEY IS BELOW WHAT IS FAIR AND REASONABLE VALUE FOR A TIER ONE ASSET PLUS DEVELOPMENT DIVERSIFICATION OPTIONALITIES.
TASK 1 FOR HORGAN IS TO GET THE CEY SP UP (STAGE 1 OF SP GROWTH), AND THEN THE WORLD MIGHT BE HIS OYSTER (STAGE 2 ETC)?
BEST
THE GNOME
At the point of construction [of Doropo], I'm not touching the cash flows from Sukari; I'm using the balance sheet that we've built up to basically deliver the construction phase. And I'm putting some asset level financing into the asset to build it and at that point, Sukari keeps paying the dividend, said Horgan.
The CEO has made no secret of his wish to diversify beyond Doropo, but suggests potential M&A is contingent on a period of consistent delivery at Sukari.
We need to spend 6, 12 or even 18 months showing that we're on top of our game, and I think then at some point on that continuum, we can then start to look at how we build out from there as well he said.
If I can get to Christmas this year, deliver guidance, with the asset set for the next 12,15 years with some upside; exploration upside in West Africa, and then the key is to be able to go out and do things.
Egyptian Upside
Before then, Horgan plans to make significant headway with the company's Egyptian exploration programme.
An unappetising mining code based around the profit-sharing style of oil and gas contracts had previously ruled out Egypt as a destination for major miners, but a recently promulgated new exploration code triggered a flurry of interest, with Barrick and B2Gold among a group of companies - including Centamin - to secure blocks as part of a bid round launched in November.
Though the new code is clearly positive, Horgan said Centamin had requested clarification around a number of terms and conditions, both on the economic and regulatory side.
We're just working through that with the Egyptian mineral resource authority. And if we can get those clarifications in place, we're ready to go. So if we could get that signed up through July, get a bit of prep through August, I think we'd be busy from September onwards, we'd been moving pretty quickly said Horgan.
The absence of exploration in Egypt to date presents huge opportunities, suggested Horgan.
You've got this huge prospective package of rocks, and it's just never been explored using modern techniques.
lt's kind of the geologists dream, they're itching to get involved. Because there can't just be Sukari, right? I think it'll be pretty interesting to see what comes out.
This lack of trust coupled with a recent dip in the gold price means Centamin is now trading close to its post-pandemic low at just over 102p
Horgan is unsurprised and unphased. You look back at the recent history of the asset and it couldn't deliver a bloody pizza over the last two or three years. And I recognize that, and that credibility gap - that trust - is the biggest thing that we've got to build back, he said.
We need a period of sustained delivery into stated goals in order for people say: okay, they're on top of it, now they're starting to deliver said Horgan.
I'd love guidance this year to be like a long-haul flight: we took off on time, we watched a movie, we landed on time.
Another solid set of quarterly numbers - to be published on July 22 - should help matters, and while Horgan couldn't comment on where the company stands currently in relation to its Q2 production target, he said he was not overly concerned.
We're nearly through June and the finishing line's in sight, said Horgan.
If turning Sukari into a consistent performer meant drawing on experience at BDI, Horgan's work at Toro in West Africa has proven critical to another key objective: diversification.
Centamin has been developing two projects as part of its West African exploration portfolio, and late May published preliminary economic assessments for Doropo in Cote D'Ivoire and Batie West in Burkina Faso.
The former was promising, with the PEA showing a post-tax NPV 5% of US$234 million with an IRR of 21% at a US$1,450 gold price.
Total capex to develop the 13-year, 150,000oz per year operation, was estimated at $275 million, with an average all-in sustaining cost of $904/oz
We like what we see there it's a pretty vanilla project of pretty reasonable scale and robustness.
We can push the pedal hard now. We've put the band back together...the Mako/Toro team and template and roadmap; I don't have to micromanage that - the guys are just running with it.
Horgan said a PFS would follow in a year, with a DFS about nine months later. A construction phase of around 16-20 months will put first production towards the end of 2023 or early 2024.
The economics for Batie West were less compelling, with the PEA showing an NPV 5% of just $63 million with an IRR of 11% against capex of $265 million. Centamin is now looking to divest the asset.
Horgan puts the lack of positive market response to the PEAs down to a fear among certain quarters that developing Doropo would potentially compromise Centamin's dividend.
They thought: oh my god, they're going to blow US$ million bucks on this thing? Does that mean the dividend not going to be paid? And it's not either, or; it's both, quite frankly, said Horgan.
Centamin is in a strong financial position: ungeared and unhedged, with US$330 million on the balance sheet.
We talk about putting a world-class mine around the world-class ore body; we've got the ore body, now let's put the mine around that;
Horgan said the company was addressing the under-stripping in the pit, which had led to limited working areas, leaving minimal operational flexibility which meant any slight hiccups that happened from time to time hit your guidance
On both the openpit and the underground, Horgan said he wanted to get ahead of the curve, such that we've got an operation where we've got embedded flexibility
While Horgan believes the company has already made significant strides over the past 15 months, the CEO has identified a number of areas for potential efficiencies in a bid to shave costs.
We've got this target of US$100 million of savings in the opex annualised repeatable, and we've delivered about $60-65 million. And then of the balance, we've got two or three things that we've identified as well.
You're unlikely to walk in and find a 20% saving straightaway; it's 2-3% here, or 3-4% there and when you amalgamate the number of these individual initiatives, all of a sudden, bam: you're taking 10 15% out of the cost base said Horgan.
Restoring Faith
Bearing in mind Centamin's struggles over the autumn, analyst response to Horgan's time in charge has been largely positive.
An April note from US investment bank Jefferies entitled Steps in the Right Direction noted the fact Centamin moved a record 22.6Mt of material in the March quarter suggested its waste-stripping program had started well.
In May, Canadian bank RBC upgraded the stock to outperform, pointing to the company's strong performance in Q1 as a sign new management was ironing out issues at Sukari. Peel Hunt also weighed in with positive note, calling the company's Q1 a strong start to the year and the first signs of Sukari becoming a more consistent mining operation on a quarter-to-quarter basis.
However, the company's bumpy performance since 2018 - when it suffered three production guidance misses due to operational issues - means some are yet to be convinced
"I just can't trust those guys - they don't do what they say they're going to do" was the verdict of one London-based analyst who wished to remain anonymous.
IT Security Administrator
Full Time
Sukari Gold Mines
- Hurghada, Red Sea
https://wuzzuf.net/jobs/p/Bx1RAKwmhkG2-IT-Security-Administrator-Sukari-Gold-Mines-Red-Sea-Egypt?l=cpp&t=cpj&a=Sukari%20Gold%20Mines&o=1
Appointed in April 2020 following aborted takeover talks with now fellow London-listed gold player Endeavour Mining, Horgan oversaw a strong share price run last summer before pit stability issues at Sukari west wall forced the company to lower guidance. Centamin stock plummeted by nearly a quarter overnight.'
'Having reworked the mine plan, the first phase of a life of asset review at the beginning of December offered a chance for Horgan to lay bare past failings at Sukari.'
'I think the company got itself into this tailspin whereby it was working year to year. Somebody somewhere said tier one assets have to have 10 years of 500,000 ounces. And that became dogma, without thinking about what right for the asset.'
'That how the company got itself under-stripped in the open pit, underdeveloped in the underground, under-explored in geology...we were too busy thinking just about replacement.'
'You can't run a 10-15 year asset on a year to year basis' you've got to basically have a life of mine plan, or at least 10-year plan, that drives your five-year plan, and that drives your 12 month budget, he said.'
'The CEO said the fact Sukari had at least another 12-13 years to run meant it was a case of stripping it back to the chassis.'
'There sufficient runway ahead of us that it worth doing that and basically breaking it down to its constituent parts, and then putting it back together, he said.'
'Rather than using different mining techniques, Horgan said the key to improving Sukari performance was a simple combination of people and processes.'
'You can take the best ore body in the world and put a bunch of amateurs in charge and they wouldn't make a penny' you can take a marginal ore body with some pretty sharp people and you can make a pound note, said Horgan.'
'When I came in, I just felt we were light in two or three really key areas, or to be blunt the people in the place weren't of the requisite quality. So it was about plugging some headcount into some key areas, said Horgan.'
'Horgan previous experience as CEO of private West Africa-focused gold explorer Toro Gold - which sold the Mako gold mine in Senegal to Resolute Mining in 2019 - meant he didn't have to look far for likely candidates.'
'Howard Bills, Horgan Toro co-founder, came on board as group exploration manager in June 2020, with another former Toro alumnus Paul Cannon joining as environmental and social manager in September.'
'How you turn the culture around is that obviously you lead by example' you try to inspire, you talk, you put rules in place, systems etc. But another good way to do it is you just inject that successful DNA into the business. And if you can bring people across who have been successful with you, who know how you work, and inject that enthusiasm, energy, respect, professionalism into the business' it helps to just it accelerates that process, said Horgan.'
https://www.mining-journal.com/gold-and-silver-news/news/1413033/centamins-