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hi Candid,
the situation with the share price is direst result of the spoofing by Andrew Pardey and Youssef El Raghy both promoted way above their mine management capabilities, complacency to the long term erm folly of their behaviour sheer arrogance in many respects towards share holders and the advice of more experienced mining professionals
Although they were both aware in 2015 of "The writing on the wall"but chose to deny it and carried on glossing over the true facts for another five years until the writing (Or crack could be denied no more)
From 2015 Kees Dekker
Management has put a gloss over this in their latest 5-year production plan, artificially holding down the strip ratio and assuming continuation of underground mining at a very high level, without having the mineral reserves to sustain this.
Should this 5-year plan be implemented, the life of the operation will be curtailed to only these five years, unless there is a major increase in the gold price.
The table below illustrates that open-pit ore is uneconomical at current mined grade at the required strip ratio and a price of US$1,200/oz. The current good financial performance of Sukari can almost fully be attributed to underground mining.
https://seekingalpha.com/article/3695246-centamin-get-out-while-going-is-good
Updated 2018 The financial performance of Centamin is highly leveraged to the gold price
with NPV5 changing by 5.5% for every percentage point change in the gold price.
https://seekingalpha.com/article/4229201-kees-dekker-reviews-centamin-plc-analysis
https://seekingalpha.com/author/kees-dekker#regular_articles
Martin Horgan certainly has his work cut at Sukari and if he can get that back on an even course I think he will have achieved a far more than any of his predecessors and proven himself to be a safe pair of hands for the long term future.
We don't need any more baloney or pie in the sky,, just good honest stable and reliable production at Sukari for the time being, the rest can wait for now.
Yes. .well if the statistics are true that 80 % of the world's gold deposits has already been mined and that only 20 % is left , then there will be more companies searching for less and less gold.
What usually happens in this scenario is that industry participants will make their way through the whole spectrum of corporate structures .. starting with alliances , leading to partnerships and joint ventures , then on to mergers and then outright acquisitions , until full market consolidation has taken place
The end result will be far fewer but larger gold mining entities . This transition will take place over several years , it won't happen overnight , although transactions are already beginning to emerge.
Regards
The MandA growth machine is starting up, and the gold industry is up for it, as usual. Exploration results not good enough to drive the SP of the miners...
Apollo consolidated just been brought for $160m oz, has a RESOURCE of 1.1 m ozs (mostly indicated category), no plant and equipment, not even a preliminary economic study. Begs the question of the value of CEY with 10m ozs RESERVES, plant, equipment, operating etc etc?
https://www.rameliusresources.com.au/wp-content/uploads/bsk-pdf-manager/2021/10/Corporate-Presentation-Tokyo-Acquisition-Final.pdf
Other smallish mergers
Sept 2021 AngloGold Ashanti Signs Definitive Agreement to Acquire Corvus and Consolidate the Beatty District of Nevada
SEPTEMBER 7, 2021
Aquila Resources to Be Acquired by Gold Resource Corporation to Form Diversified North American Precious and Base Metals Producer
Previous larger mergers
C$33b Kirkland Lake Gold merger with Agnico Eagle Mines
A$16b merger Saracen and Northern Star Resources announced the plan in October 2020
Even the Royalty companies are doing it!
Gold Royalty, Abitibi Royalties & Golden Valley to Combine to Create a Leading Growth and Americas-Focused Precious Metals Royalty Company
Interesting to watch, perhaps coming to your screen soon?
best
the gnome
Yes, Thanks CI
One of the remarkable figures (and there are a few there!) is the premium for Rio. Blowing up sacred caves, blowing out the project in Mongolia, no resolution at Resolution...and so on
remarkable stuff
best
the gnome
Cheers Dagger we all have to start somewhere. ??
Here are the 5 tests I make on a share before I decide on whether or not to invest ...They are aligned to my overall strategy of buying the share to the sound of the sirens and selling it to the fanfare of the trumpets ...it has proved successful in the past ..but not always , which is why I developed the 5 tests .. No doubt , you will have your own criteria. A share first comes into my line of vision when it is trading at or close to its 12 month low. Cey came to my attention when it was trading at £1.03 (ex div).
These are the 5 tests I performed before making the investment .
1. Is the share being shorted ...takes 2 minutes to find this out. .go to short tracker.co UK and check it out. I did , no shorts were in place. This is a key consideration..companies like World Quant, JP Morgan and Citadel etc don't short unless they believe they have the odds heavily stacked in their favour of making money , because if they get it wrong they can lose more than they invested
2. Is the company financially sound ..lots of tests here ..strong balance sheet , high ROI , peer comparison market premium on current share price , cash v debt , balance between dividends and future growth , and their impact on market premium . Cey is very profitable but 30% of its assets are in cash , which carry no market premium . Although the good thing is that they now plan to use it .
3. Why is the share at a 12 month low , are the reasons structural , market related , management competence , or exceptional such as Covid ..or a mixture
4. Conduct third party research. .(this includes joining chat boards like LSE and advfn, where people post lots of links to very pertinent topics ) What topics are being discussed that could be relevant ..do they provide any insights...this board certainly has !
5. Future prospects ...conduct tried and tested SWOT exercise as far as information held within the public domain allows.. Assess the potential for value adding activities like mergers, alliances , acquisition opportunities etc
Can I obtain longer term (10 year plans) I fielded questions on this to the Centamin Board at the retail investor event. .they went unanswered
My overall aim is to test the company and current share price almost to destruction , to identify all genuine concerns . My starting point is always why the hell do I want to invest in this share
With Cey , I didn't like the balance between dividends returned to shareholders v reinvested in the business .I think that returning $ 105 million to shareholders is too high ..although from an investor viewpoint , dividends once given can't be taken back , whereas falls in share price can.
I also think Cey lacks ambition ..I don't think it realises just how well positioned it is .(.It is literally sitting on a gold mine ! ).I do believe that the current CEO is a safe pair of hands, which they need right now, but I don't think he is the right man to take them to the next level
Ok I am do
Thanks Candid and Gold for a really informative and helpful thread. Helps a relative novice like me.
I sit up and take notice when you guys post.
DaggerMal
Goldgnome ...in terms of whether Cey is being "undervalued by a lot". ..there is a key measure that I use which suggests that Cey is currently trading at " fire sale" prices ..
That is by looking at a peer review of how much premium the market is placing ( by its respective share price ) on the net book value of their assets . This allows us to compare Centamin with its peers in the mining sector on a like for like basis
We can also ignore intangible assets because like Centamin , all other mining companies in the review have negligible inangibles .
Here are the results in descending order.
1. Polymetal book value £2.3bn..Market Value £6.4 bn. Market premium 178% It's one year high was a 300% market premium
2. BHP.....market premium 150%.. 12 month high 212 %
3. Fresnillo...market premium 136 %... High of 270 %
4. Rio Tinto ..market premium 94 %.. high of 162 %.
5.. Ferrexpo ...market premium 41 % .. high of 124 %
6. Hoschild ...market premium 23 %...high of 138 %
So where does Centamin fit in this chart ?
7... Centamin.. 15 % !!!! premium .. 12 month high 90 %
.. just 15 months ago at a share price of £2.20 ish the market premium was 153 %
So to answer your question is Cey undervalued by a lot?
By my reckoning it is . and passes one of the 5 tests I make on a company before I decide on whether or not I invest.
I will share my other 4 tests in another post .
At least Sotolo won't feel so bad for not following you by selling his Centamin stock when you did, who knows it may even cheer him up!
Most important thing for me is the guidance for Q4 2021 and beyond. These numbers will be most informative especially if the gold price stays above USD 1750 per ounce. The Company should have some idea of this with September and half of October under their belts.
You are spot on Gnome .
Intangible assets are non monetary assets, that cannot be seen , touched or physically measured . The main examples being brand values , IPR and the excess acquisition price paid for a company , above that company's net asset value (which often includes intangible assets too, also known as goodwill ) so you can see how the pyramid of intangible asset values grow
The main industry which utilises their values on their balance sheets are giant IT companies , although many other industries do too ( exclude mining companies in that sweeping generalisation )
It probably won't surprise you to know who the top 2 companies are , who are battling it out to reign supreme.
Here are the top 4.
1. Microsoft ... $ 1.90 trillion
2. Apple .. . $ 1.87 trillion
3. Saudi Aramco ..$ 1.64 trillion ..
4... Amazon. $ 1.47 trillion
The surprise I got was with the brand name Coca Cola... Its brand value and other intangibles are just $ 30 billion ...yes quite high , but low in comparison considering how long the company has been around .
I see intangible assets as being like an elastic band ..in that you can stretch their values so far , but then the elastic band either springs right back and beyond where they started from , or it snaps !!
I don't like intangible assets ... I prefer assets I can see and kick !
I made a wrong move last week selling CEY and buying some IAG, however I bought back into a small amount of CEY and got out of IAG quickly so it wasn't too bad.
BUT I did buy also into THG, which had dropped 60% after a poor investor call, but has since rebounded 24% today following an RNS. Just highlighting on this board in case people want to look into this stock. I also bought a TINY amount of BOO which is up 9% today. and DEC which is up 6% today. All have had significant recent drops and seem to be recovering.
Just highlighting some low radar stocks people may be interested in as I've done quite well on them today.
GLA Cheers
In the interests of full disclosure, I should add that my career prior to the NFP sector was all in the private sector and included a 5 year stint with Raytheon , where, as part of a 4 man team I conducted business plan audits of all of their overseas subsidiaries ..in Europe , Asia Australia and Africa . Raytheon are not just defence ..they covered everything from
large manufacturing companies to computer software and also included large seismic survey operations, usually in Australia and Africa
My role was simply to expose financial weaknesses or hidden reserves and formulate opinions on whether
I thought their 10 year business plans were ambitious enough or whether senior management were just 'sufficing' a question I have posed about Centamin
In those days I could read a Balance Sheet at 50 paces, now I have to read it and write it down !!
I have come to wonder, under the tutillage of one of my sons, why I bother to follow, consider and invest in companies that do things rather than, just speculate, amass intangibles, and otherwise have a good time using freelancer and a couple of wild ideas (bouncing over a few hurdles). Mining companies do the mining, but can they sell, when they want, at the price they want, and so cometh the commodity traders, royalty companies and a streaming affair. Lots of optionalities have evolved.
Mining companies do need to get a lot smarter than they are, and have been. Perhaps CEY will get there. The restructure of the Uranium market is an intersting event. Thanks Sprott, glad I was there.
best
the gnome.
The merger is an option to watch
The inputs to decision making.
1. P/E ratio. The guys with low P/E's (CEY) are taken ovre byt he guys with high P/E's as a rule of thumb. CEY P/E = approx 10. Companies with greater P/E's are ... DYOR
2. So the other factors that impact, are earnings growth, resource growth, management, exploration s$x appeal and ..performance!, sustainability... etc
So the above hints at the game in play, and when the whistle blows, who knows, but the shareholders do count...
best
the gnome
Hats off to you Cowichan ..your career out trumps mine by a mile .
I share your passion for the not for profit sector ..I left First Group after I was ordered to take 30 buses out of service because the costs of providing the services was greater than the penalties incurred by not providing the service.
I remained in the npf sector until I was forced to retire at Crohn's after contracting epilepsy. Now I frequently have to go back to my earlier posts to remind myself of what I wrote earlier .
Making occasional contributions on boards similar to this is what I do now ...to enlighten my own investment decisions.
Lets hope MH puts a rocket under Merger (as not on my agenda) and this is a medium to long term mmm
Thanks Mr T..
Actually, I am not surprised by that. Many of his posts contained links to Don Lawson's articles. .
Now I know who you are Cowichan , so I have returned the compliment
Regards
Not unusual for a Monday morning pull back (Gap down))to knock CFD holders through their stop's as it as it encourages them to jump back in again hoping to catch the rebound which creates some commission for brokers and the market.
This is why so many cfd holders close out on a Friday afternoon because they never know what will be announced over the weekend and which way the levers will be pulled by the fat controller!
Stop losses are such a con!
In a recent analysis...
Between 1995 and 2015, the share of intangible asset market value increased from 68% to 84%. In July, Ocean Tomo updated the IAMV Study to investigate the economic effects of the novel coronavirus. We find that COVID-19 has accelerated the trend of increasing IAMV share, with intangible assets now commanding over 90% of the S&P500 market value.
Translating onto the Oz ASX market, total asset value of $1.6 trillion, so the intangible asset share is $1.4 trillion. Ever seen what happens to a house of cards? Well its not all that bad. But it certainly is not all that good.
https://www.oceantomo.com/intangible-asset-market-value-study/
And the value of CEY. There are endless posts which calculate using tangible assets? But this is only the POTENTIAL tip of the ice berg! Are they undervaluingCEY by...a lot?
Suggest the value driven investor pay more attention to real assets, because when the SH@t hits the fan, you know what will get devalued.
best
the gnome
Holding onto last week's gains even though gold has pulled back considerably .
Let's hope some good news tomorrow guys
I see FRES doing very nicely as well
Hi Candid,
Cowichan is the forum handle of Don Lawson whom along with Rebess and Cooperman I can vouch for for as being a very decent good intentioned chap and long time holder of Centamin.
Shares on the major stock market indexes in Europe traded flat to lower in the premarket on Monday, as the investors awaited more corporate earnings reports.
The Dutch technology company, Philips, revealed that its sales slid 7.6% in the year's third fiscal quarter.
The CAC 40 was flat at 7:02 am CET, while the DAX lost 0.09% at 7:20 am CET. At the same time, the FTSE 100 was little changed. The euro dropped 0.16% compared to the dollar, selling for 1.15797 at 7:23 am CET, with the pound down by 0.17% versus the greenback, changing hands at 1.37277 at the same time.
Breaking the News / BU
Happy Monday y’al
I don’t know Dom Lawson from Adam, but being in CEY for 10 yrs now , I know for certain cowichen is 100 % committed to CEY and anything he writes is honest and open.