Centamin PLC Share Chat (CEY)

Not my words, but from the article with the link https://www.silverdoctors.com/gold/gold-news/gold-shorts-near-record/

Oh if only you were right
Sadly gold miners are not earning fat profits, most Sputh African mines already losing money and that was at higher gold prices, likes of Randgold Hochschild etc on high pe’s already and that was on higher gold and before oil inflation had rally taken off. At current gold prices and increased costs next profits will already have been dented.
Cey is one of the few that has been on a reasonable pe because of the court case holding back the share price, but even we will not be making great profits under triple whammy of falling gold price, rising costs, and falling production
The only way one might think the miners are earning fat profits would be if one thought any profits are fat and undeserved which is certainly a viewpoint but not one that would encourage one to invest in miners either.
However gold and miners must be due a bounce as so oversold but what then,

Sorry typo below should read -higher AISC.not to mention a profit sharing agreement and a never ending court case locked in stalemate because nobody can be asked to sort it out or go to the international court for judgement!

Oh forgot the diesel costs and the on going subsidy case!

I have asked several times now the reason for the recent AISC, as yet no reply!

or at least thy would be were it not for the complacency of directors and a failure to mitigate risk, difficult grades a knackered long hole drilling rig, higher AInot to mention a profit sharing agreement and a never ending court case locked in stalemate because nobody can be asked to sort it out or go to the international court for judgement!

Gold Miners are deeply out of favour, either despised or totally ignored. And they are wildly undervalued, trading at levels implying gold prices were radically lower than prevailing levels. The gold miners are earning fat profits even at $1225 gold, and those will really amplify gold’s gains as it rebounds out of these summer-doldrums lows.
Now is the time to get deployed into great individual gold stocks before they rebound sharply.

http://www.zealllc.com/2018/gmq118fn.htm

https://www.fool.com/investing/general/2016/05/22/can-you-guess-which-gold-miner-has-the-lowest-all.aspx

Confirmed in much of this !

https://www.bullionvault.com/gold-news/gold-prices-073020182

Ahead of this week's central bank news, latest data released Friday said that hedge funds and other 'Managed Money' traders in Comex gold futures and options held a record net bearish position overall.

In the week-ending 24 July, those leveraged speculators increased their short position, net of bullish bets, by 23% to the equivalent of 84 tonnes of metal, the heaviest net negative betting since current records started in 2006, according to US regulator the Commodities Futures Trading Commission (CFTC).

"Beyond the current weakness," says a fundamental note from investment and London bullion market-making bank Standard Chartered, "we expect prices to recover as USD strength fades and strong seasonal demand materializes in India in September given the good monsoon forecast."

"[Speculative] positioning remains heavily skewed to the short side," says a trading note from Swiss refining and finance group MKS Pamp, "with non-commercial shorts remaining close to record highs.

"There could be a possibility of a relief rally on the horizon [but] we still believe it is very much a Dollar play."

Most global stock markets started this week lower, with European shares drifting down from Friday's 6-week high.

The British Pound meantime slipped against the Euro but rose versus the Dollar on Monday morning, edging the UK gold price in Pounds per ounce down to new 2018 lows just beneath £930.

Interesting read, thanks somnamna. With record shorts leveraged up to the teeth its just a matter of time before the usual summertime slump comes to an end and some shorters begin to loose their nerve and have to close their positions, this in turn creates a snowball effect panicking the shorters into a record spree of buying back of all the gold they've borrowed. With record shorting and its magnified effects on the gold price, i think the gold price has held up prity well in my opinion.

Not sure but this may be of interest. https://www.silverdoctors.com/gold/gold-news/gold-shorts-near-record/

Hi tun-fran-cen

If guidance is trimmed again in H1 announcement, your wait will have been worth it. - There's been no RNS so I'm assuming it remains unchanged.

Media now tipping a uk rate rise

it is the trajectory of expected interest rates, and manly US interest rates that the market watches
the expected number or rises this year has gone up from 3 to 4
job figures etc seem to show a fast economy which makes rises more likely
however if it looked like the number was coming down then gold would indeed rise
because this is currently unexpected

hold on, when interest rates rises gold goes down, if Federal Reserve and BOE not rising rates this week then sp should go up

Hi somnamna - Thanks for the info and the detailed explanations. - Useful to understand such things.
You relate to the director responsible and wonder what effect it might have upon him personally, ie. bonuses etc.
Since the RNS, approximately £400 million has been wiped-off the value of the company. - I'll repeat that, £400,000,000. - so I think your question is well put.

Hi Somanamna,

Thnk you for hhe esxpalntion on penalty claues on this type of contaract,

You confirm what I suspected that any any responsibility for loss of revenue for failing to deliver the the service is most probably limited., as one of our other members explained the contractors liabilities are usually limited otherwise the cot of he contacts would be prohibitive.

Cenrtamin investor relations told me that Centamin had "De risked" the underground drilling by handing it over to a specialist contractor Barminco

So it is most probably the complete failure the management to oversee the contractor which is why they skimmed over the reasons in the emergency RNS and just mentioned that spares were unavailable!

But to be fair for all we know Barminco may have made the Centamin management aware of the risk, but were just told to carny on regardless?

I wonder what responsibility if any does the Managing Director of Sukari Gold Mining Company Youssef el-Raghy have in this?

(Reminds me of when I was in BP and the Gulf of Mexico spill occurred-The judge essentially divided blame among the three companies involved in the spill, ruling that BP bears 67% of the blame; Swiss-based drilling rig owner Transocean Ltd takes 30%; and Houston-based cement contractor Halliburton Energy Service takes 3%.).

Hi all,
It would appear that most of us are projecting a downhill . Though I am currently out, and perhaps Q3 & Year 18 may not be encouraging, certainly CEY would retrace to be a very sound performer on production & costs. I am just waiting to read the H/1/18 results and any future guidance they may pronounce. That may be a time to get in & not certainly to get out. Gold price is another matter common to all gold mines.

Hi all,
It would appear that most of us are projecting a downhill . Though I am currently out, and perhaps Q3 & Year 18 may not be encouraging, certainly CEY would retrace to be a very sound performer on production & costs. I am just waiting to read the H/1/18 results and any future guidance they may pronounce. That may be a time to get in & not certainly to get out. Gold price is another matter common to all gold mines.

Thanks for the feedback and some good reasons. Lol but to be honest my moneyis on red i.e. item J

Will there be a triple-hit? - RNS - prelims - results. - Directors won't feel a thing. A good position to be in. - Painless.

2nd August - 1/2 Year Results & Dividend declaration

Thanks for your thoughtful reply
Yes I think there are positive reasons to continue to hold (and Imstill have half my holding)

A. Timing markets is notoriously difficult. Holding good companies is best. Cey should survive a downturn if one is coming, while others don’t.
B. The balance sheet is strong,and aisc is relatively low, even if costs tend to be a bit higher than it suggests.
C. The company doesn’t poor too much down the useless exploration hole, instead returning it to us
D. An African exploration just might come good
E. Sentiment towards gold is getting worse, with some talking of a return not just to $1040 but $400. Once sentiment is truly terrible (and probably when I sell the rest of mine) the price should turn.
F. Inflation may rise further helping gold as a store of value
G. Interest rates may not rise as much as expected, currently a real pressure on gold.
H. Oil price might fall back reducing costs
I. Court case might be resolved
J. I might be even more upset if cey were to double and miss it than halve, and I lose another hunk of my old age money. Entirely irrational I know.

We are gamblers here, not investors as the metrics are unpredictable. I do not understand those who place bets thinking the casino is rigged, but for those who think ultimately the economy and politics affect the price of gold, it is fascinating to read political and business columns and try to predict
Imho

Sotolo I value your views, they are informative, good to see and present logical reasoned opinion. Not necessarily views and the hard truths that emotional investors (myself included) want to see but valid and eyeopeners nonetheless.
I too wish I had not bought in again after offloading in the recent plunge. I sold just shy of 50% at 138 on the recent plunge but then bought in again at 130. C'est la vie.
Right now, I am in quandary, wish for the best but fear another fall. Reasons a) perception of the gold price, b) AISC rising (reduced production and rising costs), c) uncertainty if production will meet full year guidance.
Lol are there any positive reasons why I should continue to hold?

Casparoni, like you I bought in single figures, like you my nerves have been shredded particularly every Monday, I took advantage of the 120’s to halve my holding to feel more comfortable which means a chunk of nest egg I had been building has gone. I wish I had been braver and sold the lot. I still have 30% of my portfolio in PM miners.
I quite agree that reading this board has become depressing; great posters like Prof and Uncertain post little about the share’s direction, or not at all, to be replaced by the irrational.
Cey has been hit by the huge 4 month fall in gold, already $150, in fact it has held up surprisingly well compared to its peers, and is a relatively low cost well managed producer. When I say this current posters accuse me of being a stooge of the company, but sadly that is part of the worldwide trend to ignore fact and also here to slam the fourth estate that holds government to accounts - journalists, the BBC etc are continually attacked here, despite their efforts to hold governments to account which is their job.
So I am depressed by the fall of gold, by the charts looking vile, but also by attacks here when I said gold shares would fall, which forced me off for a while. I am at least pleased that there is at least more realism about the direction of the price, if not the reasons for it.
The price of our product has fallen over 10%, costs of all miners are soaring especially with oil. These toofully account for our current share price which has held up surprisingly well compared to other miners, It is not marginal changes in production, or a temporary machine breakdown that are the big worry. Iff gold falls another $150 it will be back where I bought cey at 55p
The only Ray of hope is that now much of the rest of the board has joined me in pessimism, and the stronger the gloom becomes, the nearer we will be to a turn

All just imho, my strong sympathies are with you

Good morning Mr Tibbs.
Hope this explanation and insight may help to provide background as a partial answer to the question ".. what penalty clauses were in the contract with Barminco or failure to deliver the specified service!..".
The amount of any penalty if there is one will likely fall far short of the Client's (CEY) actual loss because penalty clauses are usually limited to a maximum of 5% or 10% of the subcontract value or other appropriate benchmark.
Likewise, no chance of suing Barminco because consequential damages are also usually excluded from the liability of the subcontractor to the Client. Consequential damages / loss being a defined term in subcontracts and includes loss of use, loss of production etc.
The reason for this approach is commercial efficacy so the subcontractor does not price in inordinate amounts of risk in the subcontract and make the subcontract price to high.
On the flip side it is up to the Client (yes our beloved CEY Management) to identify the risks and to specify the scope of the subcontract properly.
I have not worked in mining but in large-scale single producer power, oil and gas projects (single producer situation) for critical equipment which if failed would stop production it is normal practice for the Client to identify and manage the risks of the project (project risk analysis) to avoid such a catastrophe that occurred. Also normal procurement practice to have built a requirement into the subcontract for Barminco to have capital and or insurance spares available.
I am shocked that CEY management did not do so and await with interest the Q2 Reports to see an explanation of how such a situation came to be, the actual impact on production and what CEY Management are doing to resolve production shortfall. Also what action has been taken against the responsible Director i.e. loss of bonus etc.
From the facts so far disclosed it is my belief that CEY Management were at best asleep at the wheel or as is more likely the case negligent and duplicit.
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Insurance Spare Definition. An insurance spare is a spare part that you hold as a part of your spare parts inventory, that you would not typically expect to use in the normal life of the plant and equipment but if not available when needed it would result in significant losses.
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Capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take a long time to get a replacement for them.

The SP was in single figures when I first bought (met a stockbroker at a party who said there was lots of gold there but they couldn't get it out of the country) so I suppose I shouldn't complain. Its just that now I'm old and retired I thought I had a bit of a nest egg and might not have to sell my house! I think I'll see how it goes Monday to Wednesday and jump if I have to. I don't suppose anyone wants to propose a substitute? By the way I do realise that shares can go up - or down!

Perhaps a day trip to Jersey should be on the agenda for us.

Quite so Rebess!
You will recall all along I have stated just how important the underground production was!
Indeed it was confirmed to me that the LHDR cost a months production!
It illustrates just how much glossing over was going on regarding the poor overground surface ore grades !
Hence my questions regarding what penalty clauses were in the contract with Barminco or failure to deliver the specified service!
If there weren't any penalty clauses why not?
Perhaps more importantly what on earth was Managing Director of Sukari Gold Mining Company Youssef el-Raghy doing by not mitigating such risk, that is after all pert of his role I should have though?
He appears to be not worth his corn!
Racing pigeons that aren't worth their corn get their corn get their necks wrung!
I understand that the Centamin management don't want to run a bank, but from recent event's they don't appear to be able to run a gold mine properly either!
Before anyone jumps to defend the management, there is no defence!
They knew about poor overground ore grades in 2015 or even before that!
Centamin managed to put a gloss on their results for another 18 months or so, mostly by mining less waste than planned and high-grading the open pit.
Another major issue is outside management control: they are now having to share the net free cash flow with EMRA a 55/45 basis.
The Sukari management is consistently falling short of waste stripping against plan and their promised higher open pit feed grade never materialises thus far!
They appear overestimate reserve grade/underestimate dilution?
The complete failure of the underground LHDR was avoidable, but the management failed to mange risk properly!
In my view the responsible Centamin managers should go to the job centre ,do not pass go ,do not receive free bonus shares!
The Centamin directors have been doing very nicely by questionable practice and it is the share holders who have taken all the risk for scarps off the top table, but it is the share holders who now suffer the pain of the managements failings!