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Hi Shakhtar, I have had this discussion with people a few times over the years that I have held CEY (from 2013 to spring 2018). The company's operating currency is the dollar, as you say, with some costs (although not many) denominated in Egyptian pounds. The points you make about changes in the exchange rates of the Egyptian pound and the Egyptian inflation rate are of course correct, since this is the producing country, and that will have an effect on about (from memory) 10% of the cost base. Changes in these figures will have a small effect on profitability, and it is true that I have not allowed for this, partly because I am a bit lazy and haven't unearthed the data (I don't really think it would have a significant effect if I did.
My argument about the pound and the dollar stands however, as I think I have persuaded fellow board members in the past. Neither currency is the currency of the producing country. Proftability expressed in one currency can be directly converted to profitability in the other currency by using the exchange rate.
Of course some of the revenues (gold) and cost (oil) are denominated in dollars traditionally. The actual price of these commodities are determined by worldwide supply and demand, plus expectations about the future (and also the shennanigans Tibbs often talks about). If the dollar rises against other currencies, the price of them in dollars comes down, as has happened in gold, copper and oil recently.
You are right to say that the market (lazily in my view) responds to changes in the dollar price of gold without thinking if it is the dollar rising or the commodity falling. I agree that happens in the short run and said so. I think this gets corrected by the market in the medium run.
As for the reliance on TA, this is one of my main arguments against it. Analysis done in the dollar pog will give different results from analysis done in the £pog or the EUpog. The analysis of the $pog at present will in my view be saying more about the movement of the dollar than the movement about gold. Mixed signals.
Your arithmetical example about the effect on the CEY sp is one that I would agree with (the result that is), but like you I agree that that wouldn't happen straight away. I am arguing from fundamentals and my argument about the fundamentals are largely correct I believe. Sometimes with arguments about fundamentals, the market takes a little time to come round to what the fundamentals because they get snared up with all that TA stuff
Sotolo, you ask a very valid question, and it would be interesting to hear a discussion of this.
I think that we are indeed in a long term down trend and I can see POG going to $950 at least, possibly much lower ($700-750). I know it would mean many gold miners operating at a loss (forget about investing in exploration or development), but this has happened before and I don't see anything out there supporting POG from the fundamental standpoint. Quite the contrary, dollar can be expected to strengthen over the next few years, crypto is out there as an alternative asset class (albeit a rubbish one, imho), what is there to support gold demand? Could anyone out there convince me I am wrong?
Uncertain, re your post from Monday 21:24 where you talk about £ vs $ POG, what you were saying there was, essentially, that CEY shares are quoted in sterling whilst the company's operating currency is the us dollar (well, at least all revenues and probably half of the operating cost and capex are, with the other half being in local Egyptian pound). This is true for all mining companies listed in London. There is no need to think of it in £ POG terms.
In other words, if you think $ POG stays where it is now, but £ moves from 1.30 today to 1.43, then what you are saying is that today's CEY share price will drop from current 86p to 78p (= 86 * 1.3 / 1.43). It's not quite correct to link this logic to 2016 as you have ignored how Sterling and Dollar and Egyptial pound relationship looked like back then, not to mention inflation in all three between then and now etc. etc.
In summary, I don't quite agree with your logic. Whilst I don't disagree that £/$ movement has an influence on share price, it is not always evident or present. And aside from the whole host of influences I mentioned, the relationship is aslo influenced by such things as technical analysis - all that wonderful support / resistence stuff which is done by reference to the currency shares are quoted in. A lot of investors (traders) rely on TA and this would undoubtedly have influence, further breaking this $/£ logic.
And one must not forget that £/$ moved from 1.43 in May to 1.3 now - this movement has also contributed to share price performance in that period, which should reverse if fx moves back to those levels...
I haven't added since £1.21, I have funds but have too many of these and would like to see a good RNS or news before adding more. I may use my Divi on the 28th however, seems sensible.
Perhaps because the shipments were so wildly out from our estimations in the last quarter they think it may have unduly affected the SP, and removed news of them. Im glad we have Siko back.
I think the posters on this board are of the highest calibre. Never seen it so negative which is why I’ve bought again , won’t be selling this time as the upside is a better bet at this level, it’s oversold and is following other miners. Could easily diverge on better news.,Q3 I think Will be on track. That will be enough to allay fears.
Thank you for your thoughts I appreciate that you mean well.
Centamin could do well by having a "Dummies guide" rather like the Apple Mac guide for some retail investors to explain some of the processes in layman's terms , for instance high grading, why is this employed and how long can it be done for, etc., etc.,
This type of PR approach may help clear up lot's of misconceptions and misunderstandings, however silence or professional arrogance are never good options,.
Also thank you for your experienced appraisal of the present situation.
Hi Tibbs - Yes, the silence thing. - Strange isn't it? - All of a sudden, silence. - No shipment details anymore, I wonder why. - It seems to be a deliberate act. Whatever the reason, let's hope it proves golden.
Snap again, thanks DJ Ryan and Rebess, the only question is how far this knife will fall dependent a lot on gold price and a bit on results, I keep putting off going back in- so far many of us have done so down from 128 or so and seen steep losses, even 10% since last week. It must be due a bounce but then which way.
Slide 8 from 4th Sept Presentation
Sukari underground updated reserve and resource statement
Doropo Project PEA, update resource and maiden reserve
ABC Project maiden resource
Significant exploration target generation across the portfolio
Looks very much like this is going blue within the hour
Rebess I concur ..... if the numbers are on track then you might see a 10-20% bounce. The opposite and it’s a 5% fall. Good risk reward , I point to a large gain because it’s oversold on fear , my experience of this share is production is weighted to Q3 and Q4. Mr tibbles this is mining get over yourself things go wrong. While your research is invaluable you have done this point to death and now like many have an agenda , if your all not careful you will get sidelined and no doubt buy higher. If your comfortable with preferring to see a few blue days then I don’t blame you but don’t let past performance cloud your judgement when for many years the management over delievered ....how quickly you forget the Stella performance and under promise over deliever mantra. I’m certain they will get on track soon as they move through the low grade to the high grade .... also think about it , I’d rather hold off on the higher grade and mine the lower grade until prices rise so we get a better price. How do you know that they aren’t just using this as a chance to have the pain now all at once and push on.
There's one thing that will give the sp a boost and that is a good Q3 result. - It will help restore confidence not only in the production outlook going forward but also in the management. - Credibility took a big knock after the shenanigans of the Q2 report and the about-face within 3 weeks. - We have new assurances from them re H2 production and production guidance. - If they can deliver on this I'm confident of a boost. - If they don't, we're in trouble. - Time will tell. - Only a few weeks to go before Q3 prelims. - This will be a key event. - IMO
Centamin share price and holders are continuing to take a a kicking which I blame in the main on the manegment for not being entirely open about the lower grades in the overground pit until they were forced by the untimely failure of the LHDR. which exposed considerable incompetence or complacency, or both on the part of those responsible for production.
The market and many share holders have lost faith in the Centamin board who have displayed arrogance when questioned as to what and why things went wrong at Sukari and have now adopted a policy of silence to the share holders.
After recent events there is little reason reason to trust the board ,have things really changed at Sukari, who knows?
Only 3 weeks to go before end of Q3. - In the light of what they've stated it has to be a big improvement otherwise how will they square what they've promised?
Also Ive a gut feeling this could finish blue by a couple of %. Feel today is the day they hit the reverse button in everything, think gold will go back over 1200 and cey and the rest will shift gear.
Snap Uncertain, exactly my thinking, and that is assuming dollar gold doesn’t fall further. We still have the question we have occasionally discussed for 2 years, which way gold is going and if it 7 years into a long bear. Why do I ignore myself and continue to hold half my shares? Too pig headed and close to a loss...if cey was to bounce back above a pound I would probably be out. Lucky half went in the 120’s
All irrelevant watching Uncertain with a smile thinking how much money you’ve saved. Totally understand targets and discipline on price targets but seen as though 80-100 million for Our other mining assets and 300 million in the bank. Not forgetting generating profit and no debt. Do you buy that the sukuri mine is worth half a billion odd ? Surely the most sensible approach is to buy at this level as a reversal can happen in literally an hour nowadays , I for one have not turned down the opportunity ! I don’t buy the doom and gloom story here. I to saw pressure higher up and sold , but at this level it’s pretty safe for me.
Not greedy djr, just careful! If it returns to the 60s, I will also throw the kitchen sink at it. The drop appears to be continuing this morning. I will continue to watch and wait .GLALTH
Being paid for nothing.
Management not interested in share price, because the asset is still there, just panic from traders and pensioner investors.
Of which I am one.
Good point made about management making further investments.
Who unlike others sold just at the right time.
Is he psychic .?
We are a lot further on than we were years ago , I think a return to the 60’s would see me throwing the kitchen sink at this. In all likelyhood a big reversal will happen in the SP from this level , lots of bargain hunters loading up , I’ve decided to buy more tomorrow. It is due a good bounce. Once people see a blue day in gold and CEY they will send this back to 100 area in the blink of an eye. Sellers re-buying. And it will all happen when they want it to. That’s why I’m taking no chances and buying now and into any more weekness , uncertain you are been a tad greedy and I think you’ll miss the rise.
This topic may not seem like a very probable outcome, but negotiations often look unpromising until the eleventh hour. Let us suppose that the outcome of Brexit is judged successful in the markets, maybe some time in November. What would the effect on the £ be? Let us suppose it goes up 10% which would move us back up to $1.43, a rate we managed not so long ago.
What would that mean for the £pog? Well this evening it is £917.50/oz so provided the $pog remains the same, it would fall to £825.75/oz. Since CEY is priced in £, it is the £pog that matters for the sp. This is a price that last obtained in February 2016, before the referendum. At the same time the CEY sp was about the 80 mark, having just risen from the 60s in the previous month.
That price was in the context of a rising £pog, without profit share, and without the current production worries. It is this kind of thinking which is stopping me from buying just at the minute. It is my observation CEY follows the $pog in the short run, but the £pog in the medium term. A successful Brexit could see CEY back in the 60s in 2019 following this kind of logic.
Thought it was about time I backed up my negativity with a bit of analysis. Don't worry about it too much, the chances of a no deal still look fairly good!
and now on my list to invest even more! Way undervalued. Hope it goes lower to get even better value before return to the £1.60 mark.
Good informative posts today , as usual timed my buy a little wrong but I’m not worried as expect reality to kick in soon and a few good blue days ,we are due a bounce at these levels and as soon as we have a blue day it will be a big one.
I remember it was the same gloom as now. The COT data at the time signalled the Commercials (banks)and the large Speculators (hedge funds) positions became square by end Dec after the first Fed rate hike. And then gold took off like a scolded cat +$200 in 6 months and Centamin from 60p to a high of 184p.
The past is no guide is no prelude but... the COT data released on Friday evening shows that the Commercials are now net long Comex paper contracts for the first time since 2002. And 2002 was the start of the gold bull first leg to $850 by 2008, before the second leg from end 2008 to 2011 high $1923.
If there is a lagging effect for the gold miner sell-off it is worth bearing in mind that gold's recent low $1161 was almost a month ago as was the dollar index high. The September Fed rate hike is arguably priced in.
China is not defenceless in the tariff war and the US economy is certainly not immune to blowback from ill-advised policy by the US government.
Centamin and other miners are at their cheapest bargain prices for at least a year. But at some point I expect them to mean revert especially as gold our ultimate value determinant is signalling consolidation. The miners are overdue to take notice.