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Transfer
of
wealth
Was there ever anything more blatant than today's take-down. - They are not even being subtle about it and the whole process is being watched from the sidelines by the Regulator - They've been handed a free-pass to rob and plunder at will. - It's hard to believe what is happening.
Nice gap above us
Took positions today between 107 and 108
Cont 2
The Long View
| Scenarios
Base Case
- LT gold and silver prices of $1,500/oz and $20.00/oz
- Improvement in UG and OP grades drive higher
production in 2021/2022
- PT Derivation: 50/50 weighting between P/NPV (1.25x)
and EV/EBITDA multiples (4.0x)
- Price Target: 175p
Upside Scenario
- Stronger gold/silver prices; peaking at $2,500/oz &
$35/oz, long-term $2,000/oz and $30/oz
- Optimisation drives cash costs lower
- Valuation discount vs peers is not fully erased until
second producing mine or geography
- PT Derivation: 50/50 weighting between P/NPV (1.25x)
and EV/EBITDA multiples (4.0x), same as base case
- Price Target: 300p
Downside Scenario
- Gold and silver prices decline to $1,250/oz and $15.00/
oz with no improvement thereafter
- Increased political concerns over Egypt lower
multiples investors are willing to pay
- Operational disruptions push cash costs higher
- PT Derivation: 50/50 weighting between P/NPV (1.0x)
and EV/EBITDA multiples (3.5x), discounts to base case
- Price Target: 60p
| Investment Thesis / Where We Differ
- Sukari is a world-class gold asset, though recent
difficult operating periods have clouded its underlying
valuation
- Clean balance sheet with no debt and cash & liquid
assets of $331m as of 1Q21
| Catalysts
- Higher metal prices
- Brownfield exploration success at Sukari further
increases reserves and resources
- High-grade discoveries through ongoing exploration in
West Africa
- Increasing shareholder returns
- Value accretive M&A
Key Takeaway
We hosted Centamin CEO Martin Horgan, CFO Ross Jerrard and Head of IR
Alex Barter-Carse for a group call with investors. Key topics of discussion were
importance of the divi, stability of the open pit and longer-term upside in the
underground. A replay of this call is available upon request. Reiterate Buy with 175p
PT.
Commitment to the Divi. With a 7% yield, the divi is a true differentiator (global peer
average: 2.3%) and hallmark of CEY's investment case. Despite the significant pickup in waste stripping in 2021 as part of a multi-year campaign, CEY has already
committed to a payout at least equal to last year. With capex decreasing and
production increasing from 2021 onwards, the FCF profile (JefE 8.3% 2022) is very
supportive for coverage of a robust yield. Even as Doropo advances (current capex
budget $275m, incl 15% contingency) there was a confident tone around the ability
to fund development capex and not impact the divi. A likely outcome discussed was
a project finance facility at the asset level for the majority of capex and cash injection
from funds already ring-fenced for development.
Stability in the Open Pit. With c90% of reserves and c75% of annual production from
the open pit, this remains the backbone of Sukari's production base. The current
20km infill drill program is focused on conversion of waste to ore within the current
pit design, predominantly for Stage 5 & 6 West and the Cleopatra zone.
Unlocking the Underground. Returning towards the 500koz per annum production
target will ultimately require a higher contribution from the underground. With mining
now in the relatively lower grade Ptah zone (vs Amun), returning to or potentially
exceeding the 500koz mark is expected to be dependent on moving deeper into
the higher grade Horus zone in several years. Mgmt is optimistic about additional
targets at depth, and we would expect the Phase 2 update (December) to focus on
the additional drilling and potential to bring in additional ounces into resources.
Cost Reductions. By year-end, CEY expects to have achieved c60% of its targeted
$100m per annum cost savings by YE23. Remaining savings will come from an expat
reduction program, processing plant optimisation and reduced power usage, among
other items.
Longer-term Ambitions. The Doropo project provides CEY with a feasible second
producing asset that would not just provide diversification but could lift conceptual
group production to 700koz by middle of the decade (recap note here). CEY is already
pushing ahead with a pre-feasibility study, expected to be completed by mid-2022,
and conceptual first production remains late 2024/early 2025.
Valuation. CEY trades on 0.6x P/NPV and 3.3x 2021 EV/EBITDA. Reiterate Buy with
PT of 175p and divi yield of 7% for TSR of 64%. We believe the key re-rating for CEY
is hitting operational targets following the adjustment of the mine plan and catch up
in waste stripping. Catalysts - 2Q21 productio
Amendment to my last post after a look at the chart, low 80's appears likely.... see 23rd and 24th April 2019.
Looking likely to be a penny share, may be short lived but a dip into high 80's appears a contender.
The question is, will it be oversold. Going to monitor, cey is a good share, even more so being dept free.
I have been watching this for a few weeks and surprised to see these levels, thinking of selling up elsewhere and dipping in here. Can anyone direct me to the the RNS where the mine reduction is discussed and possible reopening etc .
Sawiris/Altus hold the orange areas
B2Gold the red
Perhaps we can assume the 'bid round one' grey shaded area around Sukari belongs to Centamin?
But we still have to hear from Barrick...
Check out the map - its starting to get crowed in the desert!
https://twitter.com/DonLawson_/status/1405555211641397256
A slightly disappointing 106p finish, but at least I've started to buy in. I shall add more if the price is right, but the gold selling is beginning to dry up for the moment.
Mr Tibbles
Thanks for the car information. We'll have plenty to discuss on the weekend. When I bought my first car, I took it back to the dealer and threw the keys at him! No, I'm not even a redhead (apologies to redheads if you're reading). I'll explain later, but it was a very rare outburst from a normally placid self.
Yes we have a gap below from 1 April from 104.1 to 105.05. However we now have a gap above at 110.66 to 112.6 created today. With gold hourly RSI in just 12, I sense the kitchen sink has already gone in. We shall see for sure in the coming days.
RSI on spot gold is now the lowest it's been for 12 months, sits at 24, gold is seriously oversold on a technical basis, it has bounced hard from such conditions historically. I would imagine the shrewd are buying producers like CEY right now.
I'm not short but it's a good shout short to medium term. Dyor
The gap is down isn't it? Dyor
All in at 107p. We have nice gap in the chart above us between 110.6-112p area. My average is within the gap. Good enough for me.
FireAnt,
I've just checked on IG and they are not accepting any spread bets on Centamin.. which is weird ?
https://www.reuters.com/world/india/monsoon-covers-two-third-india-earlier-than-usual-accelerate-crop-sowing-2021-06-14/
Quite often monsoon and gold discount happens at the same time.
Adrian77,
What price will you be buying in at ?
I think traders are looking for between 102 to 104p. I can add more, but there are now loads of gaps above and the price I've paid is OK by me. It's long term and I'm hoping for gold above $2000 by year end. The US doesn't want a strong dollar with all it's debt, or rising interest rates, but it does want to erode the value of that debt. I wouldn't want Jerome Powell's job.
Let's see how it all plays out.
I can not recall ever seeing it that low. Very rare to dump gold $120 within a month.
Second tranche bought 107.4p. Two more to go.
Adrian77
You’re a breath of fresh air .
Not sure why you’re on the forum though?
In. Just under 107.4p :)
Due to all in sustain costs are between 1600 - 1700. Dyor