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Do not have 50. 50 , profit share.
In case some have forgotten.
Just a reminder of the existing Sukari agreement-
Centamin Profit Share with Egyptian Government Explanation from Centamin I.R.
First Posted 15.07.2014
Then Reposted 29/06/2016
The profit share will be what the profit share will be – the joint venture partner, ie the government, sits in the 50% owned subsidiary Sukari Gold Mines.
The management board of this subsidiary has representatives of the government and an equal number from Centamin.
All of the investment into the Sukari mine is audited, with Sukari Gold Mines very much being a part of this process.
Similarly, all gold sales go through Sukari Gold Mines, where the operating surplus will be divided 50/50 between the government and Centamin, once the original capital has been repaid back to Centamin and its shareholders.
The 3% royalty has been paid to the Egyptian Treasury ever since production started (this also goes through SGM).
With the above in mind, there is no issue with regards to the money that has been ploughed into Sukari, particularly the costs of Stage 4 (c.$350m) – this needs to be recouped before any of this operating surplus can be shared.
This is not due to kick in until later this year, or possibly in Q1/Q2 next year. It is all a function of the ramp up in production and the gold price.
There is no dispute between Centamin, the Egyptian government and/or EMRA, nor the 50/50 Sukari Gold Mines subsidiary.
What you are getting is probably a series of people mouthing off that they want profit share now.
This is a political game more than anything, as the deal is the deal (in fact Centamin have advanced the country a few million dollars as a demonstration of their faith in this deal – this will also be recouped out of future operating surpluses due to the government).
What is wonderful is that very few people seem to understand what this 50/50 deal is – it is effectively a 50% tax on free cash flow.
In fact the 50% will not kick in until 2016, as in 2015 this will be 45%.
To counter this there is no VAT, no corporation tax, no other taxes to pay all beyond the above and the royalty, which on a blended rate compares reasonably well with other 1st world mining jurisdictions (like the US, Australia, Northern Europe etc).
People here make so much fuss about us losing half our profit to Emra but miners in countries from Chile to Peru pay near 50% tax, and these are rising so not much different and no threats of rises for us. Be pleased with the half we do make, and pleased with the fantastic dividends till more recently, if disappointed that under Horgan profits lower, though hoping he has front loaded this as many new CEO’s do. Also his policy is to pay less profit as dividend and with this lower we will no longer be a high dividend company unless our share price falls or gold rises. Personally one of the great attractions of Cey under the previous management is they didn’t plough lots of profit back into the ground but gave it to us even if the collapse may have been a bit of a result, we were getting the entire cost of the shares back in under a decade. With the dangers of mining this gives a comfort
I sort of agree with the last bit ---------but I hope we do start to get bigger dividends again fairly soon. Without dividends then shares are just a pyramid scheme arent they? I've said before that i bought some shares near the peak and even with the divis am well out of pocket with those. Overall my average is around £1.10 --£1.12.
I wouldnt be bothered for a couple of years if the price stayed around that mark if we got decent divis-------which i would re invest. However at some point I would like to start taking cash from the divis.
So ---I guess I would like the price of gold to go up and costs to come down. Then we need one of those bonanza grades to get things going.
So when do you think we will hit the £3 a share you once predicted? (just teasing)
Sotolo- CEY is a great trading stock. For me, there are lower risk, better performing stocks available for dividend strategies and mining stocks too risky for dividend reliance for me, but each to their own. Dividends can be axed anytime, and then you're stuck with a low capital pot in this case. The mining stocks have a big risk of negative high impact news (those holding have had quite a few nasty "07:00 RNS wake up calls" over the years.). 50% profit loss is way more than any benefits gleaned back eg corporation tax, and remains a a great deal for Egypt. Comparing other miners depends on which ones you pick. As a trading stock, however, it's highly volatile and no stamp duty, and has core drivers, gold and stock markets which in turn are driven by economic factors moved on daily data so good. If you bought in 10 years ago for example you would have been OK (although poor compared to the s and p 500, property, many others stocks and other lower risk investments). If you cherry pick other timeframes for example… 13 years ago bad, 2.5 years dire... so depends which timeframe you pick- as this share is so volatile. Also, as a UK tax payer, I get whacked with tax on any dividends I receive too, unless in SIPP of ISA of course...
Hi Sotolo,
Re - "Personally one of the great attractions of Cey under the previous management is they didn’t plough lots of profit back into the ground but gave it to us even if the collapse may have been a bit of a result" ??
Unfortunately the last management wasted millions upon millions drilling holes in West African projects on pie in the sky projects that were poorly managed that could have been better spent, for instance running Sukari properly!
What ever heppene tio the Cleopatra slope
Steve,
Th e mistake I made in the past was to give the benefit of the doubt and trust in the in the integrity and professionalism of the management by believing they were telling the truth, they weren't!, they knew what they were up to and they had the advantage of knowing when to get out , this sis why Josef decided to fill his saddle bags ride off and take a back seat and why Youseef sold his shares to invest in real estate, something I pointed out at the time to Centamin, although all they admitted was iYoussef's actions didn't give a good impression!
This stock now is an established unpredictable and unreliable stinker and at present as you rightly point out has become ideal for trading!
Where are the results on these new Egyptian concessions, are they even worth mining, who knows despite all the work including helicopter surveying done this far?
I doubt any company in their right mind would bid for this now, Due Diligence might well be a stumbling block, again!, but if they did and the share price attracts a decent premium all the better!
Tibbs!
"This stock now is an established unpredictable and unreliable stinker and at present as you rightly point out has become ideal for trading!"
I think the current management are doing a fantastic job. They sensibly budgeted 60c for diesel but it was 90c because of Ukraine, costing an extra $60million. Yet they still brought the AISC in under 1400 for the year, within guidance.
What we are seeing now IMO is a prolonged reaction to the FY results and the sobering realisation that heavy investment will continue at Sukari for the foreseeable.
This is not dead money, even the waste stripping is an investment that will improve access in the pit and result in consistently higher production.
I believe the fundamental benefit of all this investment will really start to show from the Q2 results onward. So in short it's hurry up and wait, there'll be jam tomorrow. Promise.
Fair comments, oil companies using Ukraine as excuse to exploit customers and central bank trading cartels using Russian sanctions as excuse to manipulate and suppress POG!
After over a decade of broken promises missed guidance and bullshi(it presentations I have become cynicle to say the least!
Hope you are right 3 Bear!