Sapan Ghai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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Sold a third of my holding on Wednesday. Criteria for next sell will be minimum 3 months and or 150p
I think that the report delivers an impressive set of numbers, both for underground and open pit. A lot of dirt being moved efficiently. Costs going very well, despite these unusual times. I am concerned there is no mention of Exploration..anywhere. This is the growth engine, and efficient mining needs to work with efficient resource replacement. I would like to see an exporation summary and insight into whats happening in the leases in Egypt.
Disappointing the lack of progress with the Egyptian Government. They are being well supported by Centamin, and reciprcoity is in order.
Very interested as always as to what is happening in West Africa. Given there seems ot be little to no value on these assets, any positive news will bode well for the SP
best
the gnome
Thank you Mr Tibbles.
Highlights Jefferies
22 April 2021
Key Takeaway
With the medium-term focus being a significant waste-stripping program, we see
the Q1 total open pit material moved of 22.6Mt being an all-time high as a good
indication the program has started well. Sukari remains a world-class asset and
continued execution on operational targets should drive a re-rating for an equity
trading on 3.5x EV/EBITDA and 0.7x P/NPV. Reiterate Buy.
1Q21 Beat. CEY reported solid 1Q21 beats on both production and cash costs.
Please see our first view here for more detail.
Pushing Ahead in Open Pit. 22.6Mt of material moved in the open pit was a quarterly
record and positive signal that the big push in the open pit for the next several
years has gotten off to a positive start. The 5x stripping ratio is deceiving (vs FY
target of 8x) due to continued conversion of waste to ore. The contracted wastestripping program commenced ahead of schedule and on the call CEO Martin Horgan
noted productivity improvements in their own fleet. Material moved in the open pit
is expected to gradually increase through 2021 and peak in 2022 and 2023.
Grade Surprise in Underground. The underground grade of 5.84 g/t (6.86 g/t stoping /
3.77 g/t) came in much better than expected, driven by some planned higher-grade
stopes and positive grade reconciliation. We don't expect this to repeat in quarters
to come and full-year should trend towards 4 g/t.
Solid Cost Mgmt. Cash costs of $733/oz in 1Q21 were materially below the FY21
guidance band of $800-900/oz. There was some benefit from movement in inventory
but the call clarified that this was not a major driver. Open pit conversion of waste
to ore will naturally defer some costs to later quarters as the ore is stockpiled vs
waste being run through the P&L during the quarter. Thus, cash costs in the coming
quarters are expected to be elevated vs Q1 but we think CEY is well placed to deliver
on its full-year targets. We lower our FY21 cash cost forecast to $831/oz (prior: $875/
oz, cons $859/oz, guidance $800-900/oz).
Backstopped Yield. CEY has committed to paying out a minimum of $105m in
dividends (flat YoY), implying $0.09/sh. Our FY21 forecast of $0.10/sh implies a
current 6.6% yield vs global peer average of 2.3%.
Upcoming Catalysts. Strategic update on West African portfolio (expected May),
2Q21 production results (22 July).
Valuation. Following 1Q21 production, we make minor tweaks to our 2021 (+4%) and
2022 (-2%) EBITDA forecasts, leaving us +20% and +25% ahead of cons. We continue
to derive our PT via a 50/50 weighting to EV/EBITDA (4.0x) and P/NPV (1.25x). We
nudge the PT higher to 175p (+5p). Reiterate Buy
Highlights Berenberg
Solid start to the year at Sukari: Centamin’s Q1 production was 104koz
(Berenberg: 92.7koz) with all-in sustaining cost (AISC) of USD1,091/oz
(Berenberg: USD1,264/oz). The company mined 3.7Mt from the open pit at
the Sukari operation in Egypt (Berenberg: 2.75Mt) at an average grade of
0.77g/t (Berenberg 0.7g/t). The underground mine produced 170kt of ore,
principally from the Ptah zone, at an average grade of 5.85g/t (Berenberg:
5.45g/t). The plant processed 3Mt (Berenberg: 3Mt) at an average grade of
1.16g/t (Berenberg: 1.08g/t) with average recoveries of 88.6% (Berenberg:
89%). In our view this represents a very good start to the year following the
short and medium-term mine plan that was set out in Q4 2020.
Management indicated that the waste strip programme at the site is
progressing well with 18.8Mt moved during the period, putting it ahead of
schedule. There was no material impact on production from COVID-19
during the period, although reduced contractor staffing levels at the
underground mine appear to have caused some issues.
? Guidance maintained, balance sheet remains solid: Production guidance
for 2021 has been maintained at 400koz-430koz, (Berenberg: 430koz) at an
AISC of USD1,150/oz-USD1,250/oz in 2021 (Berenberg: USD1,151/oz).
Capex guidance has also been maintained at USD225m (Berenberg:
USD225m) with USD37m spent in Q1; expenditure is guided to increase in
H2 due to spending on the solar plant and paste fill plant at Sukari. Higher
sustaining capex throughout the year should also drive up AISC as the year
progresses. Centamin finished the period with no debt and USD331m of
cash, although this should decline as the USD34.7m final dividend is paid
in May.
? Recommendation: We slightly raise our price target to GBp131 (from
GBp126) based on a blend of 1.2x NAV and 7x EV/EBITDA. We maintain
our Buy recommendation. This is a good set of results following a period of
operational challenges, and management has made a good start in terms of
delivering the new three-year mine plan at Sukari set out in Q4 2020. The
upcoming review of the West African projects should be the key catalyst
for Q2 ahead of the new long-term mine plan for Sukari that is due to be
published in Q4
Buy ratings on CENTAMIN.