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The LBMA uses the pandemic a reason for being unable to abide by Basel 3 requirements?
Strange how the pandemic certainly appears not to make a jot of difference to the Comex manipulation of precious metals prices?
If he precious metals markets prices are unmanipulated by Comex paper trades as some claim then why such opposition to compliance with Basel 3?
There's not really any ideal number in the CPI data for gold. The markets overestimate the Fed's willingness and capacity to control inflation. A high reading and the market prices gold like the fed is going to raise interest rates to 10% in a fortnight and a low reading the market says: inflation, what inflation? Must be transitory after all...
Inflation is high and lingering, but the fed really doesn't have full use of the tools it needs to control it. The bond market is already signalling that it can't stomach rate rises with a flattening yield curve and the stock market is on very precarious over-inflated ground; uncertain about slowing growth rates worldwide, persistent labour shortages with the pursuant wage inflation, and what may or may not turn out to be short term supply chain issues.
Inflation is the macroeconomic undercurrent, that will guide gold over the longer term, but for the short term price movements the 3, in my humble opinion, main catalysts for gold are:
1) China. There's no such thing as zero covid, and after the winter Olympics are concluded, China will surely relax its draconian level of vigilance - it can't and won't play wack-a-mole with it forever. Officials there say they've only kept it up so long as to not spoil its winter Olympic vanity project (not the genocide and human rights abuses haven't done that already).
Further, the controlled demolition of Evergrande and the deflation of the property bubble there will, even if handled to perfection, surely have economic blowback in terms of slower growth, lower consumer confidence and spending which will spread, at least a little, internationally.
2) The collapse of crypto. By no means a given, but it is by most measures a bubble and bubbles do burst. It is hard to argue the utility of the combined crypto-market is worth the ~$3 trillion (excluding any derivatives) sloshing around in it. If it bursts, the sums involved dictate the splash might cause ripples elsewhere in the global economy.
3) Ukraine. Any escalation there, with variously direct and indirect conflict between NATO and Russia, is going to translate into gold. Even the simmering threat of it until the supposed January flash point will support gold in the short term.
That's my fairly bullish case for gold over the next 12-18 months. Prices will be suppressed, but suppression can only hold back the tide so much.
So 8th December has come and gone and another slap in the face for shareholders.
Martin Horgan, his management team and Centamin employees have done a great job and should be applauded. Detail and information in the presentation was excellent, albeit increased costs not so good.
However the manner of delivery from a corporate communications standpoint was atrocious.
Missing was a simple one page summary with a clear positive message for the one brain cell, cut and paste so called "brokers" to pick up on.
We had the detail but not a positive simple message for the market and share price to pick up on.
One saving not mentioned was the cash to be saved if Centamin's corporate communications adviser was let go and replaced by one that could actually do the job.
US CPI data tomorrow could give gold a boost.
It's always enjoyed very strong support at 89-90p, so it's a fairly critical moment again. If it breaks down below this mark it's probably time to get out for a while, otherwise, it's opportune buying territory.
https://www.bis.org/press/p211014.htm
Basel Commitee reports on Basel implemtium progress.
Note progress ,it is being fought tooth and nail.
Implentation date now for all 1 January 2023.
My calculations as the baseline price at 1775 gold price is 101p.
This valuation is $40 per resource ounce and $140 reserve ounce in the ground and $250M held in the bank. These rates allow for plant and fleet with on-going operations and all the info we got yesterday. At $1875 gold Centamin should be 111p.
How low can it go. Is there a risk of gold to the upside due to Ukraine. With a 6 to 12 month period for an acquisition what a great turnaround story for anyone acquiring in the next few months - a good / great team on the ground, with numerous potential synergies for any of Egypt's newcomers. The window of opportunity for any buyer would appear to be greatest within the next six months.
completely agree...if you were Endeavour, Barrick or one of the other majors why would you wait for the higher share price that will come as they deliver the production?..the greater certainty and details on Sukari provides the visibility and reassurance that a buyer would want. M&A in the sector is picking up..see Kinross buying Great Bear for $1.42bn today....https://www.mining.com/kinross-to-buy-great-bear-for-1-42-billion/
sorry typo below ecourse should read resource!
Equities in Europe traded higher in the premarket on Thursday after Pfizer Inc. and BioNTech SE stated three doses of their vaccine against COVID-19 showed capability to neutralize the new strain of the virus, Omicron. As a precaution, England slightly tightened its restrictions aimed at curbing the spread of the disease, urging all businesses that can do so to switch to work from home.
Traders are now focusing on the forthcoming update on Germany's trade balance, due for a release later this morning.
Both the DAX and the CAC 40 gained 0.09 at 7:22 am CET. At the same time, the FTSE 100 advanced by 0.08%.
The euro lost 0.14% to the dollar to go for $1.13331 at 7:39 am CET, while the pound sterling declined by 0.08% to sell for $1.32144.
Baha Breaking the News (BBN) / JR
Tis the value of Gold that will bring joy sooner!
(Perhaps)
Hi Dasut
What does concern me about borrowing is will they spend it wisely to get some return or just waste it on more projects that come to nothing?
Hi Tony,
Yes thank you indeed for your analysis !
White vinegar is the probably the most effective glass cleaner and brilliant descaler and mould killer for the washing machine rubbers1
Also forget fabric conditioners and instead buy a pack of Soda crystals, first put half the bag in the drum of the washing machine an run on a hot cycle, washing machine id totally cleaned of all gunge, then each wash cycle put half a cup of soda crystals into the drum, this softens the water and prevents odours and limescale .
https://www.dri-pak.co.uk/cleaning-products/soda-crystals/
Very interesting Mr Bond,
With so much to be depressed about today at least informative positive solutions to Sukari problems gives us some hope .
Hi Dasut,
I am very grateful for your generosity and patience in sharing your professional knowledge over the years over the years I have been invested in Centamin, however through your past professional experience you will have formed some good idea of what should have been achieved thus far at Sukari .
I sense from your statement that the mess created by the poor practice of previous management was understated and the rectification works needed has been severely underestimated, possibly even purposely for whatever reasons
Sukari may have had the potential to become a world class mine had it been managed in the right manner by the right people, although as we are now painfully aware Josef ,Youssef and Andrew Pardey were condoning high grading whilst denying concerns about poorer grades to give the impression that the 560- 600,000 0z per annum was sustainable , that said this seems to have never been questioned by the BOD until a near catastrophic disaster forced their hands.
Sammi El Raghy may have discovered and promoted the recourse, what a great pity it wasn't operated in a more professional, capable and possibly even more honest manner by his siblings and appointed management.
Centamin is in a mess, will it recover is still open to debate, West Africa seems to have been little more than a poorly thought through and shambolic diversion exercise over several years that has achieved little more than huge expense for no return.
I have great faith in Martin Horgan and his team, but that said they cant perform miracles and it seems Sukari may have become a basket case unless things improve dramatically or Centamin becomes part of a much bigger concern.
SJ
The gold price floundering is setting the price at the moment, and the LOM plan for Sukari was largely positive (not overly inspiring) in a LOM time span, but not so pleasant for the short term. I read the LOM now being well in excess of 10 years now, and continue to be intrigued about the underground potential.
So to the heart of the matter..the price of gold ...
Been going back over some notes circa 2007/8. In his Fall 2008 GMO letter, Grantham commented on his evaluation of the underlying causes of the then-ongoing world credit crisis:
"To avoid the development of crises, you need a plentiful supply of foresight, imagination, and competence. A few quarters ago I likened our financial system to an elaborate suspension bridge, hopefully built with some good, old-fashioned Victorian over-engineering. Well, it wasn't over-engineered! It was built to do just one under favorable conditions. Now with hurricanes blowing, the Corps of Engineers, as it were, are working around the clock to prop up a suspiciously jerry-built edifice. When a crisis occurs, you need competence and courage to deal with it. The bitterest disappointment of this crisis has been how completely the build-up of the bubbles in asset prices and risk-taking was rationalized and ignored by the authorities, especially the formerly esteemed Chairman of the Fed. ..."
I ask myself, 'Why is it that several dozen people saw this crisis coming for years?' I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even U.S. Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke – none of them seemed to see it coming.
Well somethings do not change eh? Political and economic competence went missing a decade ago. No lessons learnt.
In the southern colonies we have state borders getting opened and shut like a sh@t house door in a storm (pity the poor tourism operators as the planes are still at 50% and getting less, which wshes into hotels, tourism operators etc), people preferring to work their way and at their pace, and get a pay rise for it. If not out on strike. Since early November the A$ has been descending from 75.5 US cents and is now hovering around 70 US cents. Chinese developer Evergrande is likely to be in default, amid reports it has missed a final bond payment deadline, but ... markets are shrugging off the news amid stimulus from China's central bank.
Just wish John Lennon would come back and give us an update in "Gimme some truth"...41 years ago, how time flies
https://www.youtube.com/watch?v=UaiGABTj0aA
best
the gnome
Thanks Tornadotony
The effort you put into your analysis is much appreciated. - Cheers.
ps://www.centamin.com/media/2471/cey-lom-investor-presentation-final.pdf
On three different slides they break some of it down, $74 increased processing costs, $21 sustaining capex costs above the mean, $34 was on shipping and G and A costs, Corporate ESG etc was $18, rebuilding of inventories $18, $48 additional capex that is non-sustaining as they are doing a lot of drilling etcetera, $50 was a carryover of capex from 2021 that was not spent this year. Which have added $275 per ounce into 2022. Some of these disappear on 2023 and contain elements that are 2022 only. AISC did increase during 2021 higher than the base from 2020 so the starting point becomes $1150. 1150 plus 275 and gives the top end figure of $1425. What can happen during the year is only half the non-sustaining spend happens and that we could get another $50 carryover into 2023 and the company through savings achieves another $40 off and quite quickly the figure is $1300. If the gold price is lower the company would re-plan other activities and that is where the $1250 may come in or inflation reduces and so forth. Hence the wide range.
So before when AISC was $900 and gold was $1250. Real profits may have been just $200 an ounce. With AISC say at $1350 and gold averaging 1800 the profit is $220 an ounce. If AISC goes down to $1250 the profit strikes $270 in future years. If gold goes up a further $100 the additional profit for CEY is 21%, but usually AISC overruns as well and hence why I suggest that every $100 in gold increase pushes Centamin up 10p which is 11.2% on its base price which for simplicity I call 90p a share.
It isn't possible to explain the reason for the higher AISC for 2022 without looking at the detail behind it , however it is likely to be the 'in year recognition' of one off expenditure from that or earlier years .
The main thing to note is that they are indicating that cost price inflation going forward is very high. Gold prices will need to rise from their current prices just to stand still on the profits front
The headline of making significant progress against production reset levels is laughable , but not in a good way ... given that the word reset actually means reduction ..so they are making progress in achieving these reduced levels of annual production.
The cash in the bank has fallen to $ 250 million ..when they talk about reviewing capital structure , they mean introducing debt ..not necessarily a bad thing depending on what they are using it for. If it's to fund genuine future growth, then that's ok , but if it's to fund future dividends ( running around $ 105 million p/a) then that isn't good . It's the equivalent of borrowing money to pay for the house keeping ...the prudent thing to do would be to either reduce or cease dividend payments . just think how that would go down though ..
I cannot understand how anyone could read the future production and AISC targets and be reassured by them.
Sorry to be so negative ..but this was my worst case scenario .namely extending life of Sukari mine by 2 years , to be achieved by reducing annual levels of production . The cost savings on top give me the impression that they are squeezing out every last drop before the patient dies.
Dasut I suspect the problem is traders who hoped for a big SP rise today ,so as to move on.
I suppose lse after all is their platform for the moment ;-)
Tibbs I would also have loved more sooner but an expensive major contract for waste removal tells me that the problems were and are still very large.
Solar panels can be cleaned quicky with air spry such as gardeners use.
If further cleaning is neccesary water vinegar and a small amount of detergent can be used with a spray.
In desert conditions only an occasional dust removal is needed as the Eastern Desert has little air pollution.
Dust would only lose 5% and likelymuch get blown away naturally.
That happened with a dormant Mars rover, it suddenly woke up after more than a year :-)
Cowichan , certainly very hard to justify the worth of the present BOD, but has'nt it always been that way, possibly too much family nepotism as well, although lazy orincompetent board members seems to be the norm in many other mining companies, they get the bonuses and free shares, the share holders get the scraps and shafted when it suits!
Hoped for better sooner!
Just a thought: - Have we seen the shop window dressed today ready for the January-sale.