Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Out this morning. This is the same analyst who moved from Shore Cap who has been anti-CEY for the last 3 years. Yuen Low +44 (0) 20 3100 2091 yuen.low@liberum.com
Many issues with the note - specifically how he values the underground reserves/resources - he is way off the mark.
Always good to have one nay sayer out there - it makes a market after all!
Highlights
To restore investor confidence after several years of production disappointments, the Martin Horgan-led ‘new Centamin’ is investing for operational stability at its flagship Sukari gold mine in Egypt. A strong balance sheet provides the ability to pay for this turnaround while maintaining dividend payments, we argue. However, the current share price is 30% higher than our valuation, so despite the prospect of potentially transformational West African
upside, we initiate with a SELL rating.
Key points
If all goes to plan, Sukari will be reliably producing 450-500koz Au p.a. at low cost from 2024. A fully optimised life-of-mine (LOM) plan is to be presented by Q4 2021.
Value drivers
A strategic review of the West African assets should be completed in mid- 2021. Batie West and Doropo could add c.300-400koz Au p.a. to production post 2025, we believe
What market misses The 450-500koz p.a. target assumes underground resource upgrades to
reserves; sizeable satellite orebodies must be identified to materially extend Sukari’s life into the 2030s
Is there value?
We estimate NAV/share of 85p using an 8% discount rate and US$46/oz of resource for West Africa, for 30% downside. The current share price exceeds our NAV at US$1,800/oz AU
Cont
'We wander there we wander here
We smell the rose upon the briar
Unmindful that the snake is near
Amongst the leaves'
Apologies to Robbie Burns..
Liberum are just one broker who may have an agenda. 22-Apr-21 Berenberg Bank Buy 126.00
oops new for knew
Taking any analyst price on a gold miner without knowing their predictions on gold price with it is a futile recommendation. So if Liberium believed that gold price was to tank to $1500 then 82p makes sense. I believe the low on gold and Centamin was $1675 and 101p. It is possible for gold to slip to 1725 say on a much stronger US dollar but that would give a target say of 105p on Centamin. Recently Curry (Gold Eagle) got the pullback on gold wrong as all the drama happened on cryptos unfolded and his projection were correct for six months in a row. Perhaps a shallow delayed pullback is in play but the physical market will have all their knew designed coins out in June. Per haps a physical discount is in play to get more early interest. What most expect however is gold to go higher in H2. If it does my Centamin target is 130p as it has higher costs in H2 to moderate on a rise. Next year is a good high price for Centamin and i raise my target to 165p. I hope this missive is more informative than the Liberium guesswork and dart throwing.
Maybe the best thing would be to sell the West Africa stuff off to another established miner, and then (hopefully) invest in the the new areas near Sukari?
By the way, what will the expected divi be later in the year??? I seem to remember the total divi for the year being about 12 or 13 cents? Or is my memory going?
Here ..
Liberum starts Centamin at 'sell', says shares 30 per cent overvalued
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.
If anyone has their report reasoning 82p, please do share. I think they forgot the 1 also. With the market talking up inflation atm, PoG hovering around $1900, the West Africa RNS today, Cey is looking good even after its recent rally
The RNS was interesting because it lays out the information an accountant would ask for before making an investment. I think the aim is to show the cost and returns expected from Ivory Coast. This will interest any Company already mining there, as it will add to their scale, with possibly some cost savings. This will allow interested parties to contact Centamin and possibly make offers for the whole Ivory Coast business. I don't see any value in Batie.
As for the price decline, It wouldn't surprise me to see Black Rock increase their shareholding this week, alongside a short plus CFD buy at 115p
"They forgot to put the 1 in front"
Let's face it i doubt they would have put a sell rating out with a 60p increase on the SP now would they ?
A good RNS. Another example of Horgan's management sorting out past problems and laying good foundations for the future.
The review is delivered on time as promised in Q2. Clarity given on valuations, also on next steps. Hard-nosed decisions taken on Batie.
Increases further my confidence in management and my investment.
Looking forward to news of Egyptian licensing, and more optimistic that past legacies will be sorted out there too.
They forgot to put the 1 in front
82p, ignore and question it. Self appointed and probably self serving.
Come to your own conclusion. I have.
View from Kees Dekker on this latest RNS
At today's gold prices almost any project looks good. Just remember that PEA studies have a very positive bias and the NPV numbers will probably come down once feasibility studies have been completed.
A grade of 1.13 g/t for most of the Doropo deposit is not very high grade for African projects with their high cost structure.
What is the point of your posts?
Within the limitations of my understanding of W Africa RNS, on the face of it, it doesn't warrant a SP collapse. - If anything, I would have thought an enhancement to the SP. - We now have an assigned value which we've never had previously. - However, I'm prepared to accept the limi tations of my understanding of what has been announced.
Iglu
worth a look
https://liberum.com/people/
look nice in suits, any people with mine operational experience? exploration experience? engineering, geoscience degrees, experience, SUCCESSFUL EXPERIENCE...any people who enjoy a well earned GandT at the tavern on a Friday lunchtime? and lunchtime? Must dash to the local myself! been a hard day
best
the gnome
2m sold
3m bought
Just some minor detail..
THE NATURE OF THE RELEASE CONFIRMS MY SUSPICIONS THAT MARTIN IS AN UNDERSTATER/OVER DELIVERE...CONSERVATIVE GUY!
NOTES FROM DOWNUNDER
1. Consensus gold price (I BELIEVE IN GOLD SO IF THE OTHER PRICE IS A REALITY I AM PROBABLY EXITING SIDE LEFT)
Source: BMO Capital Markets. Five-year consensus gold price of US$1,829/oz, as at 31 March 2021.
2. DOROPO
· US$487 million NPV5% with a 33% IRR at consensus gold price per ounce of US$1,829/oz ("consensus")
· Total development capital expenditure ("CAPEX") of US$275 million, including a 15% contingency
3. ABC
· US$282 million NPV5% and a 26% IRR at consensus gold price
· Total development CAPEX of US$265 million, including a 15% contingency
4. BATIE
· The open pit Mineral Resources are estimates of recoverable tonnes and grade using Multiple Indicator Kriging with block support correction produced using GS3 software
· Indicated resources occur in areas drilled at approximately 25 x 50 metre spacing and Inferred resources exist in areas of broader spaced drilling
SO IF YOU SEE THE GOLD PRICE AS BEING AT US$1800 OR BETTER, THEN THERE ARE 2 PROJECTS THAT ARE WORTH MONEY.
THE FACT THAT MARTIN IS INVESITNG MORE MONEY TO PROGRESS THESE IN A MEASURED FASHION IS ENCOURAGING. THE OPTION REMAINS TO DIVEST INTO A NEW LISTED COMPANY...OR MINE...GOOD PLACE TO BE IN THIS CLIMATE.
BATIE IS SOMETHING THEY WILL HAVE OT MAKE A TOUGH CALL ON, NO RESOURCE UPGRADE SUGGESTS TO ME THEY ARE WANTING TO RESERVE SOME OPTIONALITY FOR ANY IN COMING PARTY? BUT THIS IS A DIVESTMENT.
THE GNOME
Blue finish!!
In the RNS Martin Hogan appeared to write down the choice of B/F.
Life of mine relatively short ,for now and problematic geology, IMO.
Cote de Ivory ,not so much cash tipped into holes ! Yet.
There needs hard decisions to be made.
The large Institutional .will be sure to voice their opinions to the BOD ,and will be heard.
Overall we need news of the Egypt concessions to clear the air of the smoke.
The way to look at analysts is like this...
If they want to buy, they will tell you to sell so they can pick up a better price.
If they want to sell, they will tell you to go overweight so they can get out higher.
Analysts are only useful to get a range guidance, as they at least have to make the stuff sound credible, so some actual math occasionally goes in.
About a year ago most royal mail analysts were reiterating sell with a price target of £.1.20...There about £6 now. Must be a miracle???
Tiger, I read $275 capex +15% contingency and then $265 +15% and thought as different figures for the two mines. It would be great to get rid of Battie even better imho both to someone already mining there
*Prompted
it’s rising back up now the manipulators got in at the sp they wanted...what a scam