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I wouldn’t make investments decisions on the basis of recommendations from analysts from Liberian - these individuals are not fit to tip dustbins - look at their past record and decide for yourself. Given the amount of money printing by the US / EU / Japan....... the price of gold will increase sooner or a little bit later as a hedge against inflation and giving private investors an option as a store of value. Given Centamin’s balance sheet the net worth of the company will rise in line with the price of gold - I will top up tomorrow at this price for sure and more if the price goes lower - the current economic context - the implications of Basel III are missing from the Liberian forecast for Centamin - otherwise what we have is a naive forecast. Do your own research when making investment decisions
Hi Dasut
Let's see what the coming days will bring. - One point that Cowichan raised which struck a chord with me was the Liberum 82p release occurring at the same time as Centamin RNS release. - I believe they even beat Peel, the Centamin Nomad, to the draw. A release that played no small-part in the collapse of the SP. - Coincidence or what? - A person could be forgiven for thinking this was a contrived/collusive event. After the shenanigans of recent history, it would not be an unnatural thought. IMO
Rebess as I say I really don't get it we get good news and a kick in the teeth at the same time. Sell of Batie/Konkera to one of the big boys (or maybe Horgan can sort out something with Resolute who are not necessarily one of the big boys but they have some great guys working for them and like a challenge), to finance Doropo and ABC, an additional mine or two no longer a single resource, not hampered by the Burkina risk, Cote D'Ivoire less risky and NOT land locked so easier logistics, experienced contractors, including Lyco working in West Africa for many years also well known to Horgan and his team. What's not to like?
So let's give Horgan some credit Batie was always somewhat complicated and risky and could have proved expensive in the long run and if maybe Lyco struggled with the process then best cut your losses.
Liberum initiates at sell with a target price of 82p, seems a bit harsh, why so low ?
Hi Dasut
I think the collapse in the s.p. after such good news had something to do with the doom and gloom. - A repeat of the short-ladder long-snake syndrome that has plagued Centamin for so many years now. - It's before us and behind us and we cannot shake it off. - Or so it seems.
I really don't get it I am out in the garden labouring for the wife from early on this morning. I switch on my emails at 5pm and see the West African announcement and pretty much everything I read came as no surprise whatsoever. Batie West/Konkera has been pretty much mothballed since 2014 and OK yes they have tried to make it viable by drilling over the large expanse but as expected has been placed in the "Too Difficult basket".
OK yes frustrated that we aren't digging for gold in the next months at Doropo BUT it does point in the right direction "they have something worth going for" and again this wasn't a surprise as this resource came on board later and the good news is they are now going for a pre feasibility study so we are on the home stretch of putting a shovel in the ground at long last "a plan"!
So then I logged on here expecting to see a healthy rise in our SP as I say I don't get it. Conspiracy theories wasted funds on drilling confirmation that Burkina doesn't cut the mustard ???
OK yes frustrating but to be expected and to be very honest surprised that Burkina decision wasn't announced earlier guess they wanted to combine the announcement with the good news at Doropo and ABC, to actually reduce the impact.
Also as expected contract mining and also great news that Lycopodium part of their advisory team so process pretty much sorted and sounds simple operation.
Not enough proven to go for broke so still needs the due diligence to satisfy the money men but as I say at long last a plan is out there for a way forward and another 200 thousand ounces per annum on the horizon. So why all the doom and gloom?
Razor I think that was a very mild statement about being disappointed today, also thought we were going in the right direction, it seems that the rug is always pulled from underneath us when we get settled, unfortunately it does seem Centamins way to have its shareholders going through turmoil . I really hope we will recover soon. All the best to all.
I wholly agree Razors.
It will recover soon.
The rumours and speculation are to me unfair.
The sheep panic without that. It has shaken many Traders out, but nothing is sure fire in these times. Times have changed , if people gamble they can expect losses. On top of that MMs and Anylists love days like this, quick commissions.
I’m disappointed with the last 8 hours.
What I was feeling was that patients and steady as she goes will rule the day.
The reason for my post is there points being pondered with no real evidence to back.
My attitude is the pps dropped circa 5%, with a couple of positive days with gold rising today’s loss will soon be recovered.
So I’m ready and willing to wait for the progress to resume.
Onward and upward... keeping a close eye for the near future.
Pretty sure we have not yet seen and end to the rise for precious metals. They is no way that interest rates will start rising as quick as the banks would like. In fact they are being crucified at the moment by the US Authorities for feeding off other people misfortunes! Fed wants to let inflation run for a while too with no sign of raising for a while yet. Dollar falling will help too.
I forgot we were open for business tomorrow before the bank holiday. I suppose with all the April weather we have been having in May I have become quite confused.
Glad the squeeze is on the shorters already as immediately we will see gains -although no shorts over .5% on short tracker were listed for CEY when I last looked.
If there is the even the remotest possibility that today's announcement is somehow a part of something devious, then it must rank alongside Pardey's previous attempts at sabotage. - Strange how Centamin's official tweet withdrawn. -
I think so Rebess. And here I thought things had changed. Along with the inability for a true resource around Konkera/Batie West to be shared publicly all we've really seen was the decision to develop Doropo kicked down the road another whole year! That's insane. A total betrayal of any goodwill shareholders might have been holding out for the new CEO.
We all need to ask ourselves - what was the point of waiting a year (Mid 2020 to mid 2021) if all we are told now is it will be another year before we make a decision? A stall tactic when we should be moving forward. Personally, I think it is some part of the old guard - a board member or two that's holding out for other purposes than what's in th best interest of Centamin shareholders. And if that's the case I don't know what our new CEO can really do.
There is a big short squeeze on at FRES right now.
It could get quite interesting over there in the next few days.
Hi Cowichan
Just read your post. - Amazing stuff. - They say a Leopard never changes it's spots. - Is the mystery/intrigue surrounding this company as strong and prevalent as it's ever been?
i.e. HARGREAVES LANDSDOWN quote Centamin as one of their largest sticks traded today where 67% of all trades were in fact buys? Perhaps after a weekend of contemplation we will see a bounce back Tuesday (after the long w/end). Hope so anyway.
At least my Fresnillo and Hochschild have come back quite well today instead.
Today's fall has wiped-out the value of the upcoming dividend payment and some. - It's a very difficult share in which to sustain meaningful progress. - You really need a crystal-ball and nimble-feet. - It's going to require a leap of faith to stay with this. - IMO
.@CentaminPlc must disclose the true resource in Burkina Faso including 600k meters drilling in Napelapera & Wadaradoo — shareholders have rights
Withholding information artificially lowers asset value allowing 4 an unjust takeover
@TheFCA
@OSC_News
@IIROCinfo
@EndeavourMining
------------------------------------>>>
My Thoughts: What the hell is happening? How does management 'manage' to collapse the share price with an update on West Africa? How does a sell rating with a ridiculously low valuation magically appear simultaneously?
I hope some of the LTH's will join me and contact IR with the very question I have tweeted above
Signaling to the market one's willingness to dump the Burkina Faso assets as they are not good enough is a hellofa way to extract the maximum value for shareholders...
Somewhere in his evil lair Mr de Montessus is laughing a wicked laugh
https://twitter.com/DonLawson_/status/1397933849267507200
Also note --> just five minutes after I posted this reply Centamin has removed their tweet - looks like they don't want the regulators sniffing around!!
Upcoming Catalysts. 2Q21 Production Results (22 July), 1H21 Results (5 August), Exploration Roundtable (3Q21).
Valuation. CEY trades at 3.5x 2021 EV/EBITDA or 0.7x P/ NPV. We reiterate our Buy recommendation with a PT of 175p, derived via a 50/50 weighting to P/NPV (1.25x) and 2021 EV/EBITDA (4.0x).
The Long View
| Scenarios
Base Case
- LT gold and silver prices of $1,500/oz and $20.00/oz - Improvement in UG and OP grades drive higher production in 2021/2022 - PT Derivation: 50/50 weighting between P/NPV (1.25x) and EV/EBITDA multiples (4.0x) - Price Target: 175p
Upside Scenario
- Stronger gold/silver prices; peaking at $2,500/oz & $35/oz, long-term $2,000/oz and $30/oz
- Optimisation drives cash costs lower
- Valuation discount vs peers is not fully erased until second producing mine or geography
- PT Derivation: 50/50 weighting between P/NPV (1.25x) and EV/EBITDA multiples (4.0x), same as base case - Price Target: 300p
Downside Scenario- Gold and silver prices decline to $1,250/oz and $15.00/ oz with no improvement thereafter - Increased political concerns over Egypt lower multiples investors are willing to pay - Operational disruptions push cash costs higher - PT Derivation: 50/50 weighting between P/NPV (1.0x) and EV/EBITDA multiples (3.5x), discounts to base case - Price Target: 60p
| Investment Thesis / Where We Differ
- Sukari is a world-class gold asset, though recent difficult operating periods have clouded its underlying valuation - Clean balance sheet with no debt and cash & liquid assets of $331m as of 1Q21
| Catalysts Higher metal prices- Brownfield exploration success at Sukari further increases reserves and resources - High-grade discoveries through ongoing exploration in
West Africa- Increasing shareholder returns
- Value accretive M&A
Centamin
Pushing Ahead with Doropo
27 May 2021 Key Takeaway
This morning's update around its West African exploration portfolio clearly places priority around the Doropo project with a good chance to become the company's second producing asset by middle of the decade. Successful delivery of a pre feasibility and subsequent bankable feasibility study has the potential to deliver real value to shares where we feel the market currently ascribes little value to.
Reiterate Buy with 175p PT.
Asset Overview. The Doropo project hosts 5Moz of contained gold (primarily inferred
resource) and is located in northeast Côte d'Ivoire. The PEA envisages a 13-year mine life with life of mine (LoM) production averaging 151koz per annum and 208koz per annum in the first five years. The conceptual multi open pit operation assumes a processing rate of 4.9Mtpa and overall recoveries c90%. Initial capex of $275m includes a 15% contingency and sustaining capex of $90m includes a closure provision of $18m. Based on $1,450/oz gold and an 8% discount rate, the NPV is $234m or a 21% IRR. Consensus gold prices of $1,829/oz (vs spot $1,897/oz) improves the economics to $487m NPV and 33% IRR.
Exhibit 1 - Doropo PEA Summary
.
PEA Summary First Gold Prod (koz) TCC ($/oz) AISC ($/oz) NPV5% IRR Gold Price
Doropo 2025 151 790 904 $234m 21% $1450/oz
LoM Average
Source: Company Data, Jefferies
Next Steps. Positive PEA results improve the potential for Doropo to become CEY's
second operating asset. A $14m spend over the next twelve months will progress
a prefeasibility study (PFS). Among other items, the PFS work program will include
70,000m of drilling, aiming to bring a large amount of the inferred resources into measured & indicated. Following completion of the PFS (mid-2022), CEY will advanc the bankable feasibility study (BFS) and an 18-24 month construction period pegs conceptual first gold production by end of 2024 or early 2025.
Group Level Implications. Exhibits 2-4 show conceptual group level metrics. By 2026 (second year of production), we estimate group level gold production of c700koz, EBITDA of c$560m and FCF of c$260m (15% yield vs current share price) based on a $1,650/oz gold price assumption. Spot gold ($1,897/oz) would improve financial metrics to c$720m EBITDA and $350m FCF (21% yield).
Shareholder Return Story Undisturbed. With $331m in cash and liquid assets (no debt), and the ability to fund development of Doropo out of current cash on hand and future cash flow (JefE 2021-2025 FCF of $740m), we don't see CEY's ability to remain a leading divi payer in the gold sector in jeopardy.
Further, the capex cycle related to Sukari waste stripping will have peak ed two years prior to the assumed bulk of Doropo development capex in 2023 and 2024.
Upcoming Catalysts. 2Q21 Production Results (22 July), 1H21 Results (5 August),
Exploration Roundtable (3Q21).
Valuation. CEY trades at 3.5x 2021 EV/EBITDA or 0.7x P/ NPV. We reiterate our Buy
recommendati
Peel Hunt Research Disclosures
Number Disclosure
1 Company is a corporate client of Peel Hunt
2 The Analyst has a shareholding in this Company
3 The Company holds >3% in Peel Hunt
4 Peel Hunt makes a market in this Company
5 Peel Hunt is Broker to this Company and therefore provides investment services to the Company
6 During the last 12 months Peel Hunt has received compensation from this company for the provision of investment banking
services
7 During the last 12 months Peel Hunt has acted as a sponsor/broker/ NOMAD/ financial advisor for an offer of securities from
this company
8 Peel Hunt holds >5% in Company (calculated under Market Abuse Regulation (EU) 596/2014)
9 1% beneficial ownership (calculated for purposes of FINRA under Section 13(d)/(g) of the Securities Exchange Act of 1934
and IIROC Rule 3400)
10 Peel Hunt holds a net long position that exceeds 0.5% in the Company (calculated under Market Abuse Regulation (EU)
596/2014).
11 Peel Hunt holds a net short position that exceeds 0.5% in the Company (calculated under Market Abuse Regulation (EU) 596/2014).
West Africa growth from Doropo
Centamin has released the review of its West Africa gold project portfolio, with the announcement that its Doropo project in Cote d'Ivoire will be progressing to PFS stage. Management seems fairly high conviction on Doropo being in production by late 2024 at an impressive capital intensity. At 150-200k oz pa,
Doropo should also provide a substantial production uplift to CEY after Sukari operations have stabilised. Diversification and growth are now firmly part of the CEY strategy.
Doropo project could be in production by late 2024 Centamin (CEY) completed the West Africa portfolio review, from which the main conclusion is that the Doropo project is likely to be CEY’s second mine.
The Doropo PEA showed potential to build an open pit mine for US$275m in capex with the aim of producing just over 150k oz pa over a 13 year life of mine (LOM). Doropo’s average AISC is estimated at US$904/oz with cash costs estimated just below US$800/oz. Doropo could also produce over 200k oz in the first five years of production for an early payback period. Management has stated that the PFS will be technically heavy so time to DFS could be short, while costs included (capex and opex) could well come in lower than stated today. CEY has
allocated US$14m in 2021 for 70km of drilling and to move the project to PFS stage by mid-2022.
Batie West looking for strategic options
Meanwhile, the board has decided to explore third-party development options for its Batie West project in Burkina Faso. The Batie West PEA showed potential for a US$265m capex mine with a LOM of just 8.5 years of 140k oz at an AISC of ~US$1000/oz. However, with a higher opex and capital intensity compared to
Doropo, the CEY board has decided that this mine does not fit its investment criteria, and so will categorise the project as non-core.
Production uplift expected by 2024/2025
The ABC project in Cote d'Ivoire has also been allocated US$3m in exploration spend for 2021 to get permits by mid-2022, but was the project with the shortest update today. It sounded as if management would like Doropo in production by late 2024, in our view, with any potential construction capex for Doropo being timed to come at the tail end of the current Sukari pit stripping. Meanwhile, the reclassification of Batie West as non-core could potentially bring in funds to CEY should they sell off the project.
Buy Centamin
27 May 2021
Price (close 26/5) 121p
Target price 150p
Market cap £1,400m
EV £1,227m
Net cash (FY1) £173m
Index FTSE 250
Sector Mining
Source: Company accounts, Peel Hunt estimates
Y/E Dec 2020A 2021E 2022E 2023E
Thanks Marmot74
For what it's worth, my re-entry price is 107.4p. That was the price before opening on the results RNS a while back and that gap hasn't been filled yet. There are some small gaps below that but I don't think CEY will get anywhere near 82p. I think it will take a while to get there; maybe in July if we have a pullback from the $1950ish level in the gold price - if it gets there.
As ever, all the above could be wildly off target. I just thought I'd step out of the way of the line of fire for the moment.
Take note of their 85p NAV @ $1,800 - Gold will be $2,300-$2,500 in Q3 and they know this of course :)
They're now bankers and analysts.
Perhaps we were getting too complacent with the share price slowly drifting up for the last 3 weeks. We were due a Centamin banana skin. Yet to put this into perspective today's price drop is only the second of more than 4% in 2021. At the same stage last year we had had 17 >4% sell-offs and that was 4 months before the pit wall RNS !
It is a fact that bankers, brokers and analysts don't signal their real intentions, after all they want to make money for themselves not you or I.
As a long term holder Centamin has an uncanny habit of having positive news or momentum colide with a black swan event. The Company RNS got knocked off by the 82p headline. Make the target price outlandishly low to maximise the catch. 82p was the ATH way back in 2008 before the mine was producing. The share price hasn't traded down there since Feb 2016.
Note also that Liberum use a gold price which is already 5% below the current gold price and make no reference to the fact that a rising gold price and even a revaluation of fiat currencies would change all their assumptions.
I don't hold much value in broker ref's but Berenberg's have tended to reflect the mood and sentiment of the share price well for the last 18 months. Their last one 22/4 was Buy and raised target from 126p to 131p.
For my part gold, silver and their miners are likely to do well over the next few months. Today's tree shake just gives investors a cheaper entry price.
I think you’ll find this years PE ends up over 20, not 13.7 which isn’t including costs this year of around $1400 inc extra $200 oz capex and around 415k oz. Costs come down a bit next year tho still extra capex, only in 2023 do we return to a more normal PE. I think Liberium is looking at this year that will be horrid rather than forward which I thought our share price was beginning to, until Liberium, if this is how the market react to this I should think it will hate the year end figures unless we are saved by a gold rise. Of course another worry is W Africa capex hitting profit and PE further so we don’t get 2023 rise