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"The strip ratio in the first five years of operation (2009 to 2014) was less than the LOM average. Strip ratio is forecast to increase to the LOM average (5.9:1), and in some future periods is likely to peak higher than the LOM average when waste pre-stripping is undertaken for the final three pit stages."
That's an excerpt from the year 2015 document 43-101
https://www.centamin.com/media/2317/cey_sukari_43-101-technical-report-231015_final.pdf
More recent open pit data; "The strip ratio for the quarter was 9.1:1 (waste:ore)"
That's an excerpt from Q1 2023 report https://www.centamin.com/media/2959/cey-rns_-1q23-quarterly_final_200323_website.pdf
Centamin's stock price will only recover if and when the AISC declines - and the biggest contributor is a high strip ratio. The Capital waste stripping program could never achieve this result - i.e. lower the strip ratio - therefore it simply made a lower AISC all the more impossible.
For those who mistakenly believe rushing a huge expense through would magically cause the average LOM strip ration to fall - sorry, but you're ignoring basic logic. It was just a higher cost realized earlier than originally scheduled.
In fact, nothing Centamin has published indicated to shareholders the Capital waste moving project would lower the LOM strip ratio & AISC - how could it?
Accounting for the end of mine drop off in costs the LOM ratio is currently forecast as 8:1 (see page 40) which itself is a significant upward revision than the mine plan of 2015
https://www.centamin.com/media/2877/cey-investor-presentation_141122_final.pdf
Worryingly, year 2024 looks to be the same as year 2023 around 9:1 whereas 2025 through 2029 look to be around 11:1 before improving back towards current levels - good luck making a profit the next several years! And forget about a dividend during the 11:1 period
This calls into question the whole purpose of utilizing Capital Drilling to expediate the process. The only counterargument that could be made is if a new ore body that was outside the LOM plan was the objective behind the Capital Drilling project - but that isn't the case.
Bottom Line: Unless a grand new discovery is found outside Sukari that can add ounces to the existing mill cheaply, or higher grades than forecast from the open pit or underground start to average the feed grade up, even the current share price is at risk.
Thank you again Dasut,
I agree with you, certainly regarding the "Ostrich syndrome" it seems Andrew Pardey suffered acutely with with that from 2015 onwards, although he was certainly aware that the open pit grade problems were inherent at Sukari and that the viability of the mine was far more dependant upon the underground production than anyone at the company was preprepared to admit!
To be fair Kees respects Martin Horgan and is of the opinion that there really is no better alternative to what is taking place at present to put Sukari right.
That said in view of present AISC anyone who is hoping for a meteoric rise in the CEY SP is going to be disappointed, that is of course barring a meteoric rise in the POG!
So here are again!
Tibbs
Tibbs yes and no it will depend upon questions asked because a day on a mine site for people with experience will throw up pertinent questions for those that the analyst's are representing, also I would hope many will arrive with in depth questions.
Am I frustrated again yes and no because I have never been on a mine that doesn't go through growing pains, it just feels as though previous management had the Ostrich syndrome and rather than do what Horgan and his guys are now having to do, they buried their heads and ploughed on digging themselves into a corner.
AISC is abnormally high because so much investment is having to be made so fingers crossed this time next year we will see the benefits of the abnormal expenditure.
The cash reduction is as I see it delayed expenditure that should have been spent in years past, could however say the old guard were making provisions for a rainy day.
Thank goodness they did have cash in the bank just imagine how disastrous it would have been if they had to declare insolvency so as I say yes and no, because you would think it would be difficult to go bankrupt having gold in the ground but I have seen it happen.
However definitely a yes because I hate waste and excuse the pun but Centamin have wasted considerable "time" trying and yet to achieve the production and profit consistency.
Easy to criticise what Horgan and his team are doing because they are spending considerable funds and as I say yet to achieve the consistency. Problem I have is I don't have any alternatives to make constructive criticism and feel Kees Dekker is in the same boat and will say proof will be best judged frustratingly this time next year.
China continues to put the world on notice that it intends to challenge the U.S. dollar's role as a reserve currency after the nation's central bank bought more gold in July, pushing its current shopping spree to nine consecutive months.
Krishan Gopaul, senior analyst at the World Gold Council, reported on social media that the People's Bank of China bought 23 tonnes of gold last month. Gopaul noted that so far this year, China has purchased 126 tonnes of gold, increasing its official reserves to 2,136 tonnes.
China's ongoing gold purchases have put renewed focus on the growing de-dollarization trend as nations around the world reduce their exposure to the U.S. dollar. Although China has become a leading buyer in the precious metal market, some analysts say that the central bank is just getting started.
"When you buy gold, it's a direct vote against the U.S. dollar," said Willem Middelkoop, creator of the Commodity Discovery Fund. "China is sending a message to the White House that they don't support the global financial system backed by the U.S. dollar."
Thorsten Polleit, chief economist at Degussa, said he also sees China's sustained gold purchases as a vote of no-confidence in the greenback.
"China is sending an unmistakable signal to the world for all eyes to see: It reduces its US-dollar holdings and, at the same time, increases its gold reserve stock," he said. "Like many other non-western countries, China wishes to reduce its dependence on the greenback, and physical gold is the greenback's natural substitute."
https://www.kitco.com/news/2023-08-08/China-buys-23-tonnes-of-gold-in-July-analysts-say-PBOC-is-just-getting-started.html
Hi Dasut,
As always thank you for giving everyone the benefit of you professional insight.
Considering your past professional involvement with the Sukari operation I realise that you must feel possibly even more disappointed, or frustrated to put it mildly by past events which have brought about a 4 year setback and necessitated the huge increase in AISC to rectify things at Sukari.
To be fair to the analysts who visited the site Kees did explain to me in the past just how little can be apparent to even the most experienced eye in a days visit to the mine and confirmed most of the points you raised in your post.
It seems then that the analysts on these guided tours are really only shown what the company wants them to see and their conclusions and subsequent ratings are really not to be relied upon.
Best
Tibbs
Positive or negative effect?
After selling on Interim result day. Had the feeling this won't go up in a straight line
Sorry should read 1 gramme not 1%.
So difficult to paint a picture of waste v ore because unless you are a geologist it can all look the same. All mines have waste there is no such thing as a wall of minerals. The ore also has waste when delivered to the plant hence the 1% grade per tonne of ore.
I am always fascinated at the complexities involved and the skills involved particularly at the start of working in a given area. Try to imagine a large expanse of an open area and the drill and blast team placing explosives in the ground lifting the ground under a controlled blast so that it can be dug by equipment. This is to remove waste to access ore? Or is it to free up ore to enable diggers to access the ore? You need to ask the question. So you won't see a waste mountain because it is below your feet.
So even the likes of Kees Dekker will only see the operation as it is not the whole picture of what it should or could be.
The analysts will be given presentations, they will look at the pit's and processing plant doubtful they will go underground due to health and safety and little will be seen because equipment will be at the face not accessible by a group of visitors.
Doubt they will see areas such as waste dumps which aren't overly exciting albeit this can be an area that exposes inefficiencies or hopefully professionalism.
These analysts I doubt will turn up with stop watches and fully understand the details of the mining operation to understand how well the operation is performing as this will take weeks and studying multiple cycles of the operation and involve experts in earth moving and processing experience.
Maybe Cowichan who as advised by Tibbs is a Geologist can explain the differences and complexities.
Daz, Not just copy ans paste bur the reality of the situation of why the share price is where it languishes at present, it is the parasitic effect of the waste clearance that erodes what might be decent profits to mediocre!
True if the POG were to maintain a respectable rise then that would certainly help, but with the Comex manipulation there is little chance of that !
After three years sales talk and slick presentations no longer cuts the mustard, but If Martin Horgan and other directors demonstrated their belief in their strategy with some decent buys that would certainly help.
So why don't they?
Nice...me too.
Although I am currently in Eindhoven working this week.
Yep!
Are you NI based?
Major European markets traded higher in Wednesday's premarket session as investors process earnings reports and news of Italy's adoption of a 40% tax on bank profits.
On the earnings front, E.ON said earlier that its sales in the second quarter of 2023 totaled €18.8 billion, falling by 19% year over year.
At 7:50 am CET, the DAX gained 0.66%, while the CAC 40 added 0.80%, and the FTSE 100 rose 0.48%. The pan-European Euro Stoxx 50 inched up 0.88%.
The euro and the British pound were up by 0.18% and by 0.11% against the dollar at 7:55 am CET, selling for $1.09762 and $1.27619 at the same time.
Baha Breaking News (BBN) / JG
Happy hump y’al
G’Best airport, off to London Town
Tibbs, your copy/paste negative PR machine is on repeat. Do you get paid per post?
The market makers traders and indeed many mining compares don't really care a jot about carbon reduction, although some increase in AISC is usually to be expected as a matter of course this share is well and truly hobbled and it aint going anywhere until the huge cost of waste clearance is very considerably reduced !
If Martin Horgan and the other directors don't have enough faith in their strategy to make some meaningful share purchases then why on earth believe in this share!
Upbeat presentation and brokers notes are pointless , it's reduced AISC, decent sustained production and some directors skin in the game that's need until then this share is in the 'Spittoon" of the The Chance Saloon!".
If usa cpi and surrounding data is lower than expected this thurs, gold and cey will rise (and the reverse of course is higher) Fed has simply followed and acted in the same info- the data leads, not the fed as the fed just follow the data and their lives are predicted. Sometimes, however, the fed commentary provides more nuance and this moves things when they speak, especially Powell
Inflation has pushed up the aisc. Inflation CPI is the key as the FED simply follow it and they stated as much
I thought we would get a rally this month as FED had no meeting. Clearly it has gone wrong on my prediction. At some point the reality has to square up in the market. I have enjoyed a good run in getting the trends right since last October. Hopefully Centamin will catch a decent rally again later in the year. It is undervalued at the current gold price imop. Gold companies are not getting any credit for coping with inflation with cost reductions and increased production and recovering mined out reserves. No credit for carbon reduction on the gold ounces delivered either.
I have noticed however that bonds today have got a lower bid on the USA Treasuries and yet gold has gone down.
Japanese USA Treasury holders are currently selling now that the Japanese central bank is allowing yen bond yields to rise which is pulling in the Japanese public to buy its bonds. China may also be dumping some USA Treasuries which suggest the bond yields may go higher. With QT on top it looks as if a mess is building up in the USA stock markets. Biden in the meantime needs more USA treasuries sold to deliver all his Inflation Act programmes. At the current time this looks bad for gold if USA Treasuries offer higher and higher attractive long term rates. However, this amplifies over valuation of USA equity markets that may well have a waterfall hard landing. The subsequent recessionary hit is likely to leave gold the cleanest shirt around ( take on Yellen comments) as all the others will be in shreds. Having gold in the core of investment therefore makes a lot of sense.
Interesting that insurance statistics reveal a lot of individuals were made ill by the Covid-19 vaccine programme in USA and this has led to both significant number of deaths in 2021 and 2022 along with significant numbers of disabilities and is contributing to numbers out of the workforce and unlikely to come back in USA. It is likely to be a factor in keeping inflation high in certain areas such as healthcare.
Exactly Razor's, I am puzzled that if Martin Horgan has such confidence in the present company strategy then why doesn't he purchase 3 million or so shares , this action alone would boost market convenience and the share price tremendously!
We have had over 3 years of really enthusiastic sales talk, but now its time to walk the walk and deliver!
Surely this is'nt too much for shareholders to ask?
Tibbs
The FT lists 290.17M shares held by various institutions declared in July 2023.
The following additional holders to the above are:
Statens Pension Fund 32.3M
Vanguard Total International 15M
Franklin Gold Fund 13.2M
Premier Miton 12.1M
Halifax UK Growth 11.1M
Ninety One GSF Global 11M
Ninety One GG Fund 8M
Man GLG income 8.7M
DFA UK 8.1M
Hartford International 8M
Global Value Fund 7.9M
Shroeder 7.3M
Ishare Core 7.1M
Nuveen 4.5M (3.34M declared purchase being in Q2)
The above is another 154M shares.
In addition ETF weightings have also increased for Centamin that involve many millions of shares outside of the list above.
Centamin has a huge diversification of holders. I have not included nominee accounts such as Hargreaves and Lansdowne and many others.
Hi Paul,
I feel your statement expressed very well the feeling of a number of us, a couple of years ago I actually suggested to Marin Horgan that the company could be getting a return of around 0.5% -1% on the company spend and at that time a return of 5%- 7% or so on some of its cash, (with increased rates more now} by linking up with Kinesis so the money banked would be bullion backed in the Swiss vault , the cash deposits would be available instantly and the bullion available within 24hrs .
He explained the people he had to deal with(I suspect investment funds and institutions} expected at least a 30% return?
Here we are two or so years on and the cash is less than half of what it once was and the company is now hedged, there is certainly no sign of any 30% return as far as I am aware?
Possibly this many help you to understand why I still have some doubts?
Best
Tibbs
I'm not defending anyone, but i would expect it would be very difficult by eye to spot an angle a few degrees either side of 45.
I share Mr T's and others frustration at what has gone on and we cannot change the past. It looks like Martin Horgan has decided to clear the waste and open up new areas.
IF things picked up for us/ we get a decent set of figures/ waste clearance coming to an end, then I suppose we would all say that Horgan did the right thing. However I think even with a good dividend, some of us would still have lurking suspicions because of what has gone on in the past. That is human nature.
I'd really like to to see things on track and a decent dividend. As I said the other week. If they have the money in the bank, they could get a better rate of interest than they are paying on the dividend, so it wouldn't be costing them anything.
I'm hoping that the dividend will increase a lot after this one----but that will mean about May next year. That is a long time to wait.