Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
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Profit margin vs. return on investment (ROI)
When trying to determine how much profit you stand to make on the sale of a listing, there are two main methods for calculating profit: Profit Margin and Return on Investment (or ROI).
https://help.informed.co/en/articles/1651384-profit-margin-vs-return-on-investment-roi
Return on investment and profit margin sounds like they are the same thing. Is this the case or are they different? I know that ROI deals with the investment value of a product, but is this not the same as when you calculate your profit margin?
https://beprofit.co/a/community/business-metrics/are-roi-and-profit-margin-the-same-thing
Mr Bond I am not buying to rent just using it as an example to understand Capital's waste contract who is said to be earning 30% ROI at Sukari for their waste contract and a figure of $100 plus million earning that Capital are making on a $2 per tonne waste contract which doesn't compute in my calculations.
So if Capital has a contract at $240 million and they have a ROI of 30% then they are achieving approx $72 million divided by 4 as it is a 4 year contract so an annual return of $18 million before costs.
And also take into account inflation.
Gets complex, so best a sypathetic accountnt,many are not.
Yes you would need to adjust your apparent earnings by reducing it by all your maintainance costs.
Capitol gains tax if you sell your property after 20 years is similar so its important to keep a full record of every improvement or other expenses over the years.
That reduces your liability,
Mr Bond take a look at Capital Mining's (Capdrill.com) Financial's for 2021 and 2022 on their web site because if they are bringing in abnormally high profits I can't see them in fact 2022 is way down on 2021 albeit not bad numbers.
As I read ROI if I buy a house for £200,000 and rent it out for £1,000 per month my ROI for the year is £12,000 or 6% per annum and over 4 years 24%. This doesn't however cover the costs of maintenance, cost of finance and tax or any other costs, so nice that there is a ROI but this isn't profit.
ROI is return on investment, from original cost, so if you inveated 10000 and finished at 100000 including in this case less any costs to your investment / ROI would be 90% higher.
This could be over several years ,wheras profit is annually.
So it is slightly different in that respect.
Its many years since I was in accountancy.To many to mention.
Tibbs I am not sure Cowichan will agree but feel it is important to be constructive with criticism but believe me I am livid that the necessary evil is hurting Centamin's bottom line and SP, after all I am a long term investor.
I certainly welcome anyone constructively questioning my summary and other contributions without saying that the contributor's are stupid or hypocrites.
If someone genuinely feels there is a better alternative then we should all listen and discuss and respond.
I also feel it would be helpful for one of the accountants on the board to explain the difference between ROI and profit as an accountant I am sure will be better placed to explain than me.
Our AGM is returning to London this year!
We hope you can join us next Tues 23 May @ Dukes Hotel, 35 St James's Place, London SW1A 1NY. The meeting will start at 10am with hot drinks available before and after.
Thank you Gnome, certainly applies to our UK politicians and their fiscal policies!
Getting large mining machines into most markets takes time as the manufacturers don't have equipment sitting in stock so all important that the dealers provide accurate sales forecasts.
This is why I feel that plans were in place to carry out a major cut back prior to the issues with the west wall.
Well, Peter Schiff is being intervewed by Jordan P
https://www.youtube.com/watch?v=Bbi-_nn4zaw
and some more
https://www.youtube.com/watch?v=r44D4pddEq0
good luck to us all, looks very stormy ahead, especially for those with debt on their books
the Gnome
Thanks Dasut
The other fun thing to do is to try and get equipment into Egypt. The delays are extrordinary...and of course withthe delays come the costs...
regards
The Gnome
Equities in Europe traded lower in the premarket on Tuesday ahead of the newest reports on the Eurozone and the European Union's gross domestic product (GDP), unemployment rate, trade balance, and economic sentiment. The United Kingdom will also post an update on its unemployment figures.
The DAX lost 0.07% at 7:14 am CET. At the same time, the FTSE 100 declined by 0.09%. The CAC 40 dropped by 0.09%. The Eurostoxx 50 decreased by 0.08%.
Both the euro and the pound sterling stood flat against the dollar at 7:21 am CET, selling for $1.08795 and $1.25219, respectively.
Baha Breaking News (BBN) / JR
Hi Dasut,
Thank you for an excellent explanation, also agree with your last paragraph !
Rebess, Difference from finance and leasing in the UK is cross border leasing is extremely difficult.
Equipment manufactured in USA, operating in Egypt so risk is Egyptian and likely a US dollar transaction and difficult for other than a US based leasing company due to currency risk coupled to political and commercial risk, likely involving EXIM Bank.
Not saying it is impossible but it is an expensive complicated long drawn out exercise.
I have since ascertained that Capital has purchased the equipment fleet so leasing is a red herring.
Cowichan, I would also like to pick up on misinformation as you claim a loss of $100 plus million due to excessive profits. Given the contract awarded to Capital in January 2021 was for Both Waste Removal and a 15 month extension to the Drill and Blast contract valued at between US dollars 235 and 260 million, I am confused as to how the profit equates to $100 million.
The contract is to remove 120 million tonnes of waste over 4 years and therefore we are looking at about $2 per tonne, I say about because I don't know the split between waste and drill and blast contract values.
Is $2 per tonne expensive in the grand scheme of things too right it is but Is it 30% more expensive compared to doing it yourself well doesn't appear to be when you look at Centamin mining costs over the years.
You also say Capital enjoying for over nearly 3 years when contract was awarded January 2021 and then needed to mobilise.
When I was looking at costs per tonne and I am going back over 10 years a rule of thumb was about $1.50 to $1.80 so we are now talking just over 30% increase on the lower figure so is this now about right, don't know but would certainly add that doesn't sound like anyone is tearing the a..e out of the deal?
Spoonington the good and bad question how good would the previous guys have looked if they had moved the 120 million tonnes of waste when they were producing record ounces I would suggest about $200 million less good.
Merger and acquisition fever returned to the local sharemarket on Monday as Newcrest Mining’s board said it plans to accept Newmont Mining’s $26.2 billion takeover bid, with junior gold miner Genesis Mining also sweetening its bid for St Barbara’s Gwalia mine in Western Australia. Lets just say it is a tough mining and processing for profit gig at Newcrest and I am sure they have done a great deal for shareholders. But of course the bet is on the gold price longer term .... ?
The gold price fetched US$2018 an ounce at the closing bell as broker Macquarie said it expects the precious metal to top a record high of $US2075 this year, as investors, including central banks, buy the safe-haven asset as a hedge against macroeconomic and political uncertainty.
“We’ve got a pretty hot gold price, more recently it’s been trading inversely with the US dollar, so as that fell, and gold in US dollar terms is more attractive,” said Mr McMillan.
“Those local miners have faced inflation headwinds in terms of labour inflation and capital costs into their businesses, so for some the higher gold price has actually hidden some of those operational issues.”
Well, well?
Falling bond yields, fear over the US debt ceiling and an end to the US Federal Reserve’s interest rate tightening cycle have created a “near enough perfect backdrop” for the gold price to forge a record high, according to analysts at Macquarie.
Gold’s melt-up in 2023, which saw the price jump around 10 per cent, was also stoked by the US regional banking crisis that prompted Macquarie to argue the case for the safe-haven asset to test $US2075 an ounce. That was reached at the peak of the pandemic in August 2020 when central banks printed money to fund emergency spending programs.
It does look like the Central Banks will continue to print money, for any cause that is needed ... business as usual !?
Stocks in Oz? Macquarie’s preferred stock picks among the local gold miners are Northern Star Resources and Regis Resources thanks to the duo’s organic growth opportunities, which offer potential to lift total production.
Organic growth, good grief, whats that all about? It means some one is doing exploration AND making discoveries, THAT BECOME COMMERCIAL... long long time between drinks, and that is why MandA is a recurrent theme if not necessity to fuel growth...but its not neceassirly growth of SP or shareholders ROI
best
the Gnome (in passing)
Hi Miz - When I worked in the City - I was engaged in a lot of leasing finance. - The rules then were that at the end of the primary-lease period, the 'Lesse', in this case Capital , were allowed to either walk away or carry on with what was known as a 'Peppercorn' rent, a much smaller premium than that paid during the primary-period, pennies in the pound in fact.l. - Effectively the capital-cost of the equipment leased had been paid for. - They, the 'Lesse', weren't allowed to purchase the equipment for ownership to pass into their hands. It had something to do with tax-laws I believe. However, the equipment could be sold to a third party, which is the situation you describe with Centamin. - The situation may have changed now, that was then almost sixty years ago.
Spoonington, Not praising or criticizing anyone just asking the questions behind the criticism hopefully using logic and common sense to discuss an issue.
OK I am not sure where you get the information that the contract wasn't tendered other than by Capital.
Are you aware given that you have the information that I don't have what the cost per tonne or cubic metre was for the total contract period?
Rebess where do you get the information that the equipment was leased because I very much doubt this to be the case given the cross border nature of such a transaction?
Yes Centamin know how to move waste material and I haven't said that Capital or any other contractor know better or that Centamin don't know how to move waste.
What I am saying is that Centamin don't have enough equipment to move what is an abnormal amount of waste over a relatively short period of time (although feels like an eternity) and maintain production and the normal mining waste that comes with mining in an open pit.
I have already said that I am not happy with the SP being halved BUT even though I have many years experience having visited and discussed material movement with senior managers in large and small mining concerns, also discussed the predicament at Sukari with current mining and equipment professionals, can't come up with an alternative solution other than a major cut back/waste material blitz.
So given the waste needs to be removed the question is do it yourself or get someone else to do it.
Horgan has already answered that question and basically it is doing it themselves wasn't cost effective as at the end of the 4 years the equipment would be owned by EMRA not Centamin/Pharoah Gold. I don't know the detail of the EMRA/Pharoah Gold contract but if we accept that Centamin doing it themselves over 4 years then writing down machines over 4 years becomes way more expensive than the depreciation that would normally apply to such equipment.
So it isn't that Centamin doesn't know how to move waste of course they know how to move waste but in this instance they can't use the existing valuable resource of equipment and people to move the abnormal waste AND maintain mining.
So Cowichan rather than calling us names for raising questions for debate which is what this forum is extremely good at, please tell me given that you are far better informed than others on this board what do you say should have been the alternative to using a contractor to remove the abnormal waste?
At no time have I said that Capital know better or can manage equipment better than Centamin what I said was to achieve 30% ROI they must be very efficient and have minimal downtime over the period reported but suggest the next reporting period might not be so rosy and when the contract ends they could well take a hit to the bottom line when the demobilisation costs are accounted for.
It is simple Cowichan, it has been established that the previous management were incompetent, evil & fraudulent (despite their accomplishments) therefore the new management must be beyond reproach & unquestionable.
It is similar logic to the heavily supported orange man was bad therefore a senile puppet who is pushed to remember his own name is a good president argument.
Some people simply choose to blind themselves from common sense, the Kool Aid is just too tasty 😋
Strange if that is so.
As the Cey agreement gives an option to purchase the fleet at the end of Capitals contract. Out right.
As I understand it, if the fleet that Capital is using is leased, there is no capital outlay involved. - There will be monthly/quarterly lease payments, which will be/should be well covered by the payments they are receiving from Centamin. - Cowichan makes an important point, they could have entered into a similar arrangement and left Capital out of it altogether. - As he says, operating heavy earth-moving equipment is part of their DNA, with all of the skills and experience in doing so.