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.@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
More details from the Liberum initiation report "Seeking Redemption post midlife crisis" - the case is pretty weak IMHO
https://twitter.com/InflationX/status/1397911277637312512?s=20
Basel III!
Four weeks until Basel II - everyone knows it - BBs gotta be audited for their physical gold before 28th June, LBMA are bricking it - you've gotta expect paid-for games and massive BTFD plays too :)
Absolute hatchet job bu Liberum. Must be as short as you like!
She'll recover.
DaggerMal
Should be good support @ 114p
Broker Upgrade:
Peel Hunt Limited Buy 150.00p (27th May 2021)
"This will be a good laugh if it climbs back where it started from before the close, seen it happen often here on the aim casino..."
You're in the wrong building this is the FTSE 250...Aim is downthe street on the right next to the sewer lol
buying on the dip
Most posters do post their rationale for their view, but obviously on new news, the posts ramp up. None of know the markets directions for sure, we just make the best judgement on what we can. It's good to disagree, the SP can only go up or down, so at some point, of course, all views are can be right. We do, obviously prefer the rationales so we can decide for ourselves. I enjoy this board, lots of good posters and opinions, long may it continue.
subdec, on many of these boards including this there are contributors who only like positive views, and are very aggressive to negative views however well founded, just ignore them and carry on posting both sides, it is so helpful to have opinions on why the share should rise and others on why it should fall, for the market is a tussle between the two. We holders are betting that 2023 will indeed see a return to old Sukari output and costs, and that gold will stay level or rise. If liberium doesn’t believe that, well that is a view. I think Horgan will probably pull it off and gold should rise but nearly as likely the opposite will happen.
Have people possibly considered we have a new board and team and they are low balling to then be able to say we have Q on Q improvement. Take a closer look at the new Chairman and his less than perfect track record. Maybe the execs are more muppets and we have another chairman running the show for his personal gain !!!
I don’t know but this continued destruction is not good for any of us.
Lol Rebess
Analysts at Liberum started coverage of Centamin shares at 'sell', arguing that while its "strong" balance sheet gave it the resources to finance the turnaround of its flagship gold mine at Sukari, the shares were overvalued at present.
Said balance sheet strength would also allow the miner to maintain its dividend throughout the process, they judged.
Yet the 450,000-500,000/oz. target for annual production assumed underground resource upgrades to reserves and "sizeable" satellite ore bodies had to be found in order to materially prolong Sukari's life into the 2030s.
In any case, using an 8% discount rate and assuming $46/oz. of resource at its West Africa assets, then at the current market price of $1,800/oz. of gold, the outfit's estimated net asset value was 85.0p per share, for 30% potential downside.
Liberum set a 82.0p target price on the stock.
Indeed Steve - Summers lease is all too short a day. - Where have I heard that before? :-)
Who knows FireAnt- I agree we are but passive passengers on this board- a lot to read today although I hope everyone is out in the sun whilst reading and typing- the summer is very short here in the UK, and sunny days are rare :-).
Fun and games in the Gold space - no surprise really :)