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Dasut,
A superb summing up of the mine for those non-miners like myself. Thank you so much for putting it in such a clear manner.
Best wishes,
Prof
Tibbs I agree with your analysis of analysts however those who visit the mine are those that would interest me albeit I don't have the opportunity to read what they have to say as they will primarily be representing the major investment companies.
From what I can gather Kees came to his conclusions based on reports provided by Centamin and yes the reports weren't as detailed as maybe they could have been at that time, hence the opportunity for the likes of Kees to put together a critical paper. However a little bit of knowledge can and often is dangerous as was the initial paper because had I or other investors taken his advice we would have lost out on the considerable increase in SP over the following 12 months.
It was and always has been known to me that the open pit grades & strip ratio are to be managed very closely especially considering it is a low grade mine (open pit). This is why I was so surprised last year when management was being so bullish. It really isn't a mine to be too bullish about it is a mine to be quietly conservative about and take the wins when they come along but don't promise that the wins will continue. The joy of Sukari is that they have the underground potential where there is a major opportunity to get into smaller volumes but much higher grades.
The broker who gave you initial advice I thoroughly agree with regarding the court case and I am amazed that it hasn't been thrown out as no case to be heard as it definitely has a negative effect on investment from other mining houses.
Before someone points it out, yes these are from 2014 , however in view of the events of 2018 and our present situation they are relevant ans some m
2014 RE: June 16 (Reuters) - A legal dispute that has jeopardised Egypt-focused gold miner Centamin Plc (Toronto: CEE.TO - news) 's only producing mine is likely to be resolved before the end of this year, Chairman Josef El-Raghy said.
Centamin organised this interview – you will probably note that Centamin is now becoming more on the front foot than reactive, and this is a trend which will gather momentum throughout 2014. It is also beginning to get some response through the share price as well.
Very important for Centamin to maintain its position vis a vis the court case – it is a distraction, and yet it is the single biggest issue undermining the share price.
2014/2015
CEY have made it clear that the current phase of high-grading is purely temporary in order to make up the ground lost during the commissioning of the new plant. There is no suggestion that they will attempt to produce at this higher rate once they have caught up. The key paragraph in the 9th October 2014 RNS is: "The ramp-up in productivity from the process plant continued during the quarter, and achieved the expanded 10Mtpa nameplate capacity in September with a record 882,443 tonnes milled, in line with our expectation. Underground mining rates remain strong and ore grades have returned to expected levels. With scope for further increases in plant throughput during the coming quarters, and with average grades set to further increase in Q4, we maintain our full year production guidance and continue to look forward to delivering Sukari's long-term target of 450,000-500,000 ounces per annum from 2015 onwards." Note the use of the phrase "long-term target of 450,000-500,000 ounces per annum from 2015 onwards". That ties in with the last reported head grade of 1.37 g/t (0.048 oz/t) in Q2 which at 10 Mt milled would give 480,000 oz of gold into the plant yielding around 420,000 oz allowing for their 88% plant recovery rate. This figure should improve given the reported recovery in grade.
Hi Dasut, firstly I hope that you are well!
Really great to hear from you, your thoughts regarding the Sukari production situation are I have no doubt greatly valued by many of us on here because you have gained your in depth knowledge from actual experience at the "Pit Face" as it were within the gold mining industry.
Far too many market valuations and recommendations of many stocks (gold mining included) are to a great extent dependant on the opinions of analysts many of whom have no real life experience of the particular industry or process they are evaluating, instead they arrive at their conclusions via virtual means using sometimes unreliable or biased gathered data and the latest media/PR spin.
To be fair Kees Dekker has always stated that unless he actually visits a mine that his reports in the main are based on the information available to him at the time, this is why I thought it may be good PR to include him on one of the Sukari analysts mine visits
Also very fair comment regarding (the deemed mining and geology when Sukari was mapped.)
{My wife a freelance feature writer is of the opinion that all too often the journalist or writer is required to angle the article in such a way that it will please the publications client's or sponsors.)
I already admitted like many other investors my knowledge of the gold mining process and industry is limited and certainly from afar!
This is why the Centamin PR engagement with share holders still needs improvement, it may help to avoid so much misunderstanding which lead to bad feeling.
Yesterday I saw my old broker friend who originally recommended me to invest in Centamin more years ago than I care to remember and he believes that many brokers still regard the court case as he put it (a bit of a brick) 15%-20% on the tail of Centamin.
He said if a broker was acting in an advisory capacity to a client then they had an obligation to point out to the client that there was an unresolved outstanding court case and as with all court cases it would be wrong to assume or take for granted what the outcome would be.
Also the financial regulations and the constitutional rules of many institutional funds prevent them from investing in Centamin whilst the court case is unresolved.
Pushme I actually bought in even lower and am therefore still OK with current situation not super happy but OK as could have been somewhat better had the market not over reacted to last years blip and management taking their eye off the ball. Believe me could have been a lot worse as I have witnessed when a high wall collapses and there are machines buried or dam burst and mine floods, Generation Plant fails and nothing works.
I still don't think based on the last lot of figures that we are totally out of the woods. I like that there has been a 12% increase in material moved in the open pit. Don't like that there is a reduction of 42% ore mined because ore produces the gold the rest goes to the waste dump and only produces a cost. So the increase in grade of 41% negated by the reduced ore mined. So to my mind the only good thing as far as production is concerned is that there is an ability to move more material. So in a nutshell still needs to be an improvement in ratio ore to waste so as not to negatively impact improved grades.
Last year was said to be bad news BUT shows how fickle the market is when this first half we are only 17,000 ounces better off but last year we had the ability to mine significantly more ore.
However just imagine if this year we had moved same amount of ore as last year with the grades of this year. Tibbs would be sooo! happy however as someone says nature doesn't always play the game.
Also Tibbs it isn't all about what Kees dreams up from afar and it isn't about high grading whatever this means in the context of Kees report it is also how the grades are diluted by the amount of waste that you have to move to get to the ore plus many other factors. As gnome says can only economically drill so many holes to a depth and in a given area before it is deemed mining and geology whilst a science that is getting more and more accurate with improved technology it isn't by any means perfect and was less so when Sukari was mapped.
So I am not expecting 31st July to show up anything significantly wonderful and suggest any numbers for next 2 to 3 years will be conservative and achievable. Achievable gives a chance of an improved SP and as we saw last year overly optimistic euphoria gets us into a bloody mess (Boris heed my words).
I take into account the profit and the PE, I don’t think the market notices the court case or the price would be lower. I think that the reason the price is 2/3rds of its peak is that profits are still considerably lower as costs rose a lot and production down a bit. Why should the price be higher with such reduced profits? However if gold stays up, production recovers and costs thus fall, then we might get profits and so the share price back where they were. Finally if like me you bought originally around 50p, or for you probably considerably lower, you could always take profit and shift to what you think is a better miner, I prefer Centamin and have for years. Good luck whatever
Not strange when considering how long I have been invested in the company (far longer then many)and considering that like many other investors that I had faith what the company stated.
Why panic sell at the bottom if what they are now stating is true, actual output yet to be proven.
I agree IF the laws were changed and become more advantageous then that that would encourage more investment, big IF lets see IF it actually happens this time!
However if any changes are seen by some to give foreign companies and advantage they may well be challenged (Law 32 still in limbo) not mention the ongoing court case!
True mines do have "Hiccups " but losing 50% off the market cap because of low grade problems known about over three years ago and failing to have appropriate spares available for essential equipment is not a hiccup, it is being complacent and not being entirely open with the share holders.
True there was once a good dividend,but that has been greatly reduced and yet to be restored depending on results!
Pushme your valuation is way off as others have told you because you fail to take into account the very negative effects of the court case and also the loss of the markets confidence in the management.
i agree it may be possible to increase gold production by how ever many times but that depends on IF the laws are actually changed and then not challenged in court!
Let's see!
Yes it is strange to own a share, yet consider the company useless, why not in that case sell the share and buy in a miner that one thinks better managed? I continue to hold as Cey doesn’t waste too much on useless aggrandising exploration, but returns most of the cash to shareholders. Mines do have hiccups, gold eventually runs out, but cey is debt free, seems fair value, and pays a good dividend which should rise if gold does, as should the share price which is a geared play on gold for me.
Mr T: In the article I don’t think he said Sukari output could increase 20 times, but that if the laws were changed and became more advantageous, then Centamin could scale up and take on 20 times more production developing and exploring other mines in Egypt.
When I see some firm evidence of an improvement in guidance I will be delighted.
Youssef el-Raghy, chairman of Centamin?
He is the general manager of Sukari, unless of course he has replaced Josef because he has moved onto other things,
Youssef claims that Centamin is capable of increase production 20 fold?.
Although he failed to deliver the promised 560.000oz in 2018 by some considerable amount, so what is the likelihood of Youssef's latest prediction coming to fruition?
Centamin has already stared the it won't be committing any more investment in Egypt so are we to assume then that Youssefs stated 20 fold increase in output will be from other locations in Wets Africa, although Centamin claim that the results from their West African geological survey's have shown excellent potential they have yet to actually produce any-gold ore from these locations.
These new draft amendments may have been passed by cabinet which is all well and good, but then Law 32 was also passed some time e ago, but he commissioners are sill sitting on it, so will these new amendments actually come into force anytime soon or will they too get put on hold for some reason?
Buchanon PR have already stated that these new mining law amendment will not affect the Sukari concession in any way, neither will they have any bearing on the court case, It's Law 32 or a court ruling thats needed to bring the court case to a conclusion.
Mr Tibbles,
Although I appreciate your views, they are only your views.
Others see different.
Your negative views,as in the past over optimistic are just your view,overall this company ,their philosophy is not far of the mark.
New mines ,self sustaining.
Good whats wrong with that.
You have a budget perform.Or pull the plug.
That is strong management.
You do not see that often.
Life is learn from previous mistakes,.
We all have made them.
Yes Joseph is culpable ,for much.
But he is now just being tolerated ,with much lower esteem.
He is not important.
The future prospects are important.
So I wish you and Rebess well.
In your investment with Kinesis.
I agree mother nature is a fickle partner all the more reason then to mitigate production risk by ensuring that the contactors have fit for purpose contingency plans in place!
Output increased X 20?
Some claim, especially considering the ongoing grade problems in the underground excavations?
Seems a quite ridiculous statement especially when considering the events of 2018!
Cowichan, I agree with your sentiments ,too many negative sentiments by far on this BB recently.
I understand why but mining is not like mass production because mother nature is a fickle partner.
Quality, error-free journalism has never been Egypt's strong point...
Cowichan Yousef is mine manager not chairman,and often misleading and vocal with the press ,like December 2018 gaff.
Many get mixed up as his name is so similar . Raghy not Raghby.
(reactions to the mining law amendments are sure to be mixed - some even saying the reforms could have gone further - which would be a totally new attitude towards foreign investment in Egypt ! )
Tue, Jul. 16, 2019 Cairo
Although little is known about the draft amendments, which were passed by the cabinet and will soon be out, the announced new clauses attracted different reactions by experts and officials...
According to local media outlets, clauses introduced to the law seek to control the mining process, prevent random drilling and protect the country’s resources from stealing.
Geologist and mining expert Abdel Aal Attiya criticizes one of the amended clauses that allows EMRA to issue licenses for mining materials, navigators, research and exploitation, while stipulating a ratification from the minister or governor or the new Urban Communities Authority. “The draft law should have assigned to a sole authority concerned with regulating the mineral resources, instead of several bodies having the final say on licensing mines, which would hinder investments,” Attiya tells Business Today Egypt...
Minister of Petroleum and Mineral Resources Tarek el-Molla explained to the media that the amendments aim to attract reliable investments, as they seek the separation of exploration process from the utilization stage in a way that promotes the guarantee of state’s rights, and stimulates investment in the mining sector...
Youssef el-Raghy, chairman of Centamin, tells Business Today Egypt. Centamin’s Sukari is the only operating gold mine in Egypt, with its exports representing 2% of Egypt’s total ex- ports. Although Centamin claims it is capable of pumping projects 20 times the size of Sukari mine...
https://www.egypttoday.com/Article/3/72865/Sitting-On-A-Gold-Mine
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( And finally it's refreshing to see some positive chatter about Centamin's role in facilitating the purchases of Egypt's record high gold reserves...)
The country’s reserves and exports of the yellow metal recorded an increase during the first quarters of the current fiscal year. According to Trade Economics, Egypt’s reserves of gold reached an all time high in the second quarter of 2019, hitting 78.60 Tonnes from 78.40 Tonnes in the first quarter of the year. Gold Reserves in Egypt averaged 75.81 Tonnes from 2000 until 2019.