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Not long for the update, hope good news
Seems reasonable. No surprises in there.
Hitting the midpoints of guidance lends credibility to their guidance going forward. Slightly easier to be confident of actually achieving the promised higher ounces.
As expected nothing changed about poor 2021 compared to pre Covid years or the guidance that 2022 will be much worse. Remember profits are affected in order by gold price, aisc and then ounces, as any percentage change in gold price and aisc affect profits three times more than ounces mined and sold.
Gold goes up 7%
Aisc rises 12%
So profits down by around 30% this year compared to last
2021
415,370 oz for the twelve months of 2021
Aisc 1211
Capex 233
2022
Gold production of 430,000 to 460,000 oz
· Cash costs of US$900-1,000/oz produced
· AISC of US$1,275-1,425/oz sold
· Capex of US$215 million, including US$25 million of deferred solar and paste-fill plant construction expenditure from 2021
Hopefully the market know all of this and will begin to look toward 2023/24 and hole the management is right that costs will be controlled but of course also affected by hefty mine inflation.
We badly need a higher gold price to save us, but in real sterling terms still falling
Imho
Sorry to be clear profits predicted to be down 30% this year 2022, compare to last 2021 reported today.
Incidentally
2019
Gold oz 480k
Aisc $943
So 2022 aisc up an amazing over 50% more than halving profits compared to 2019 before reduced ounces thought of, obviated by increased gold price.
All with my simple sums but makes one think this is around the right share price which would be lower without the premium for hope built in for 23/24. I expect a drift down but what do I know…markets are v fickle and may be relieved no worse and as said nothing we don’t know (sadly not for the good either’
Sotolo the markets look forward not back...and the future looks much better now..Looking back the sp was over £2 and now it's bellow £1. I guess you sold too soon
I haven’t sold at all apart from a few a bit over 200, but still sadly have held 430k all the way down. Mea culpa. Yes the market do looks forward, which is the worry that next year reporting in Mar 2023 will be far worse that the one we have just had, at this gold price, and as said profits will be way down. However hopefully sometime in not too distant future markets should begin to consider 2024
Sotolo
The price collapsed when all the past events arose. The fact is that the company earns more revenue in 2022 on same gold price metrics and half the AISC increases are profits that do not go to EMRA. When adjusted the share price should be 113p with a likely 2p increase on the price today. The 113p is based on a gold price hitting $1870 or so at some point during the year and having updated and favourable resource and reserves updates. Centamin is a buy and hold with 22% upside imop.
You may well be right Tornado, and s’more your rose tinted specs that appreciate every pound less profit mend 52.5 p less to Emra, bit like I am thrilled when my salary halves as more than a third less to taxman! (not)
Again Sotolo an unfair example as the AISC increasing is being spent on increasing reserves and resources and replacing diesel with solar energy and so forth. Its a bit like you earned less but were better trained with new skills and you took more time out to improve own mental and physical health and the boss is able to up pay next year.
exactly, but will the boss pay up next year, and that is what the market questions, are these just more away days or real skills that will make proper money? On a more encouraging note RPI is 7.5% today so Cey would have to climb to 250p to get back to where it was at the top in real terms, so nearly 300% so quite a lot of these ghastly figures must be in the price, tho when if ever the investment yields this kind of growth is a bit doubtful, only exploding gold can do that imho
Or a gold rich seam find which is likely considering the licensed areas of exploration. Does anybody with an ounce of sense really believe pog will go down with the real inflation the world is and will experience for the foreseeable future?
Inflation which will highly likely turn to stagflation..
Halfpenny, of course historically long term gold has risen in line with inflation, but over the last year of inflation increasing, to this months whopping 7.5%, gold has fallen - an annual -10% in real terms so far, and hasn’t been a hedge at all. Could be because of worry if inflation is temporary, worry about nominal interest rates rising, competition from Bitcoin, or gold is just waiting catching us out as she goes, or investors just don’t like it, who knows…but if the trend is your friend it is a bit gloomy, added to unimpressive figures as Mrs Market points out
Sotolo You are right to be cautious and yes the figures are disappointing with strip ratios through the roof due to an extraordinary waste management and major cut back and restructure of the mine plan to expose ore. Would the waste management have been better handled in the years past most definitely but if they had then targets wouldn't have been hit and you would not have had the opportunity to sell shares at or above £2.
We have choices to make ride the storm or cut and run I personally will ride the storm because what I am hearing from current management makes sense to me and am so glad that we got the new team on board when we did. I hate to think where we would be if the difficult decisions hadn't have been made and they continued ploughing on with head in the ground production line type mentality.
I've been more than happy to top up, substantially this morning, on a nice "boring" update with a decent outlook. There are very, very few precious metals miners offering predictability and very many miners who'd be thrilled to put out an RNS as unremarkable as this one.
Hi Swampmonster,
I'm with you, as a long term investor I was dreading Horgan dressing up this mornings update to please, at the best, current fickle and non credible analysts and short term market dippers.Credibiity needs to be built layer by layer and to my mind this steady as she goes approach is exactly the strategy to build confidence in the large Institutional holders.
To my inexperienced eye the middle achieved on previous guidance hints that there may be some cards being held up sleeves . Just my feeling .
Somewhere the more experienced members here forecast some figures of Capex against AISC reductions on energy costs going forward. Can someone point me in the right direction to review
those again. In view of the massive spike in world wide energy costs are Centamin ahead of the field in this direction. Are they reflected in any forecast AISC figures. Not lazy just deferring to better able minds on this one.
Regards to all
Happy bunny Bob
Bobliz35 It is almost impossible to say where Centamin sit when compared with other gold mining companies given that Centamin are going through so much change, so much investment. This means extraordinary costs that won't be typical to other mines. Comparisons will be more realistic when they get back to mining Sukari rather than restructuring Sukari.
There are so many scenarios to look at once the waste contract project finishes as I would suggest the then strip ratio should reduce significantly down to say 5 or 6 to 1 which is half of where it was last year. So straight line costs mean no more dollars per tonne outgoings to waste contractor. More ore to waste reduces costs and increases ounces. This is just the basics as could be increased costs due to longer haul distances but who knows if this is true and where the grades will be. Will there be more influence from underground with higher grades?
One thing that is interesting is at the end of the waste contract there will still be a young fleet of very high quality machines available. Can these be contracted to mining ore at a similar cost per tonne, an interesting scenario as it will certainly be in the best interest of the contractor to use them locally. The cost of decommissioning and transporting out of Egypt would be considerable.
Sorry a long winded answer to your question but very interesting long term opportunities at Sukari and the surrounding areas plus the bonus of resources in West Africa.
DASUT will the trucks be owned by Centamin or Capital at the end of the stripping contract?
Hi Dasut,
What more could we expect really, as much as some might like to imagine miracles, as you rightly point out the burying of the heads in the Sukari sand couldn't go on forever, although it was curtailed rather abruptly by the unexpected crack in the pit wall, although in many respects that was preferable to the alternative of a catastrophic open pit wall collapse which had the potential to bring about a far greater collapse of the share price and possibly even the ruination of the company.
It seems that the pit wall crack was in many ways fortuitous and indeed a preferable occurrence because it hastened the unavoidable admission of the several years worth of neglect to instigate sound mining practice at Sukari !
At least now the new management have a credible program in operation to put things right and restore safe and sustainable future output at Sukari.
From what you and other former and indeed current mining professionals have explained the present Sukari operational strategy is really the only sensible and viable option.
I am as disappointed as any other long term holder about the now apparent sharp practice, corner cutting, even deliberate spoofing to share holders by the previous bunch of carpet baggers, there is little doubt they had our legs up and its always hard to swallow when one has been conned!
So I see no quick fix, but a steady and sustainable one, which I understand in some area's is already ahead of schedule regarding waste clearance which should provide much improved operational flexibility and accessibility potentially higher grade ore.
It's hardly surprising that AISC are where they are , although at least we know these will reduce with the benefits accrued from cost saving efficiencies already being instigated.
Today's report wasn't full of baloney, but seems honest and illustrates there is lot's gong on and all being well lot's more good news to come!
Capital will own them as suggest Centamin are just paying a hire rate of so many dollars per tonne moved, which will be the reason why mention was made to additional costs due to contractor being ahead, so more tonnes moved.
Thankyou Dasut, your concise thoughts are of immense help to us more mining naïve investors.
Am I wrongly assessing that given a base fixed costs for the gold mining industry Centamin has more positive than negative position going forward. I do have a habit of wearing rose tinted specs but
1) Rising wage inflation benefitted by Centamin home bred mining education programme.
2) Exponentially rising energy costs offset by solar and battery storage . Crude Jan 2021 53 dollars a barrel ,as of this morning WTI crude 88 dollars a barrel. Futures off the scale.
3)Benefits as you say from plant freed for production from the waste stripping exercise in 2022.
Happy to be shot down by others expertise.
Bob
Hi Tibbs
As always a concise and cohesive post covering issue and views posted here. It would appear that my Rose tinted specs are somewhat supported by Peel Hunt and Berenburg on their broker ratings this morning. Berenburg uplift especially after their earlier lesser rating in December.
Bob
Dasut,
'When they get back to mining Sukari rather than restructuring Sukari'.
Beautifully put and in my mind the cornerstone of the investment case in CEY.
Yes we know that the previous regime maximised the today at the expense of investment for tomorrow.
Yes we know the current regime is addressing that.
Yes we know it is expensive to do that.
Yes we know CEY are ahead of plan with the restructuring.
Yes we know CEY have aspirations to get back to 500k oz per year.
We know next year will have horrible AISC as a result of the restructure and that if gold falls substantially we will be generating little or no positive cash-flow.
To me the outlook for gold, with inflation where it is, is excellent and I would expect it to move up not down. As such I am another one who will sit here and draw the dividend, keeping my fingers crossed that they can afford to keep it close to current levels, and wait for the restructure to be complete. We should then have a mine with great reserves, a company with no debt and an infrastructure that will enable sustainable mining at c500 oz per year with reasonable AISC.
Hope I am not being too optimistic.
Best wishes to all,
Prof
Prof correction the AISC is higher for 2022. (Although very much in line with the real inflation rate with a USD falling in value). We just have to wait for the gold price to reflect that AISC change along with the costs in all of the sectors and services listed on the stock markets.