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oops with should be without
The penny has finally dropped. The only way they can save global stock markets is to revalue host currencies against gold. FIAT essentially devalues against gold and this allows the stock prices to sail along with an almighty crash. Finally the gold miners should at last be invited to the investment party. Bring your own shares!
$1830 gone. Next stop $1865?
Here's hoping... 1836 as I type...
Well Mr T. I agree with a lot of that. Its seems that Martin Horgan is looking at playing a long innings, rather than a cameo roll.
He could probably have got stuck into the wall and then give some more Bull along the lines of the previous crew and got the share price up around the 135 or 140 mark before moving on to somewhere else with a golden handshake. BUT he does seem to be playing this with a straight bat. I suppose most of us long term holders will suffer this for longer and take the divis and hope that things will fall into place sooner rather than later.
The extra costs because more waste was moved , we cannot really complain about as the sooner the waste is shifted the sooner more normal operations can resume. Also as it is costed on tonnes moved, its not like someone is upping a price for a job just that they are ahead of schedule.
You never know, they might hit a rich seam or a giant nugget and then things will seem a bit more jolly.
Hi Tony,
Sorry presume I was not clear. Meant AISC is horrible next year (2022) and was referring to thereafter when I wrote 'reasonable' (2023-onwards).
Does that make sense?
Best wishes,
Prof
I'd just like to commend most is not all participants on a good sensible thorough analysis of today's news. Whilst some have put some figures to their arguments they're all based on some (necessarily) heroic assumptions.
Soloto I feel your pain. We were well and truly stitched up by the previous management and sorting out the mess is a thankless task. Still I think the management are going about it in a workmanlike way and just like any supertanker once they succeed in turning round the ship it will all remarkably obvious that this is what would happen. In hindsight of course. I'm also increasingly optimistic that a rotation is occurring from intangible assets like crypto back to physical assets like metals that you can actually make use of. Just look at BHP's share price in the last 2 weeks or the performance of the FTSE 100 beginning against all expectations to outperform other indices.
We'll see...
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.
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
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
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
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.
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!
DASUT will the trucks be owned by Centamin or Capital at the end of the stripping contract?
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.
No doubt that Blackrock et al as usual are trying to get the sp going down so that they can buy lots more on the cheap.. maybe won't happen this time? Momentum is turning upwards imo.
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
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.
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.
Except it would appear, knowledge of how to win over a sceptical audience. The market reaction was worse than I had feared
Reuters did a far better job of selling the results..maybe Centamin should ask them to prepare future press releases ..
We’ll be able to watch Sukari on Safari!
Dog to the park…
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
Currently at the bottom of a rising channel with the top end at 95p or so. Bloomberg this morning had a banker pleading with the FED out there not to raise rates to fight inflation. The FED is going to find itself between a rock and hard place. Putting up interest rates is not going to suddenly reduce energy costs in winter with pipelines having problems in the supply chain. A staginflation problem is already hitting bank customers as well.
“A culture of continued improvement.”
Reuters
2 minute read
Jan 19 (Reuters) - UK-listed Centamin (CEY.L) on Wednesday reported a 58% jump in gold production for the fourth quarter as the Egypt-focused miner benefited from higher-grade ores, while keeping its 2022 projections for gold output and capital expenditure unchanged.
Centamin, which operates Egypt's sole commercially producing gold mine, said production reached 107,549 ounces during the three months ended Dec. 31.
The company last month said a review of its Sukari gold mine in Egypt indicated the largest reserve growth in a decade, supporting its plan to produce 500,000 ounces per annum of the metal over the next 10 years.