Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Hi Dasut,
Thank you
Not being an industry experienced professional I was hesitant to post in case it was likely to be too optimistic,or on the other hand worry or disappoint other holders.
So thank you for giving the benefit of your professional knowledge and reminding us of your conversation with Martin Horgan in the Q&A webinar.
Good to know that it wasn't a fob off, but as you say although not ideal it seems that they are at least making the best of what ore they have available helped by the strong POG!
Hope you have an enjoyable holiday!
Kind Regards
Tibbs
Tibbs, Paul sorry rushed my previous post because trying to get organised for travels later today. What I should have included that yes the detailed response certainly isn't a fob off response far from it because it is almost a bearing of the soul. I am somewhat surprised that the cut offs are so low particularly for the mill but it is amazing what a high gold price can do.
OK the heap leach providing it is well managed can be used for pretty much any grade providing the leach process is easy therefore weathered oxide ore is ideal. One of the issues on the heap leach can be compaction so as I say needs to be carefully applied/managed. With compaction the diluted cyanide solution doesn't penetrate efficiently but way cheaper process than through the mill.
Often see the heap leach at the start of an open pit mine operation with oxides prior to the mill being commissioned this gets the mine into gold pour early.
Tibbs guess your analyst friend will be critical of the low grades and it is easy to criticise but this is what flexibility is all about going with what you have got and making the most of it.
There isn't any mention of the slightly lower grade underground guessing the ventilation installation took them away from the more productive stopes.
Paul, As I have said many times the proof will be in the results after they have moved past the waste contract and are able to mine in numerous areas, albeit I am sure they are already benefitting from flexibility.
I like the idea of adding the cheaper heap leach process for the weathered low grade oxides because this will add production ounces, and contribute to profit rather than a cost which is what waste is.
Dasut--having been in the business, you understand the jargon a lot better than most of us and hell of a lot better than me. I am pleased that you think it makes sense. It does seem a pretty detailed explanation and not one designed to fob off Mr T. IF we achieve the 500 mark mined at reduced AISC for a couple of years that would be pretty good I guess, especially if POG holds up.
For now, I guess we are waiting on the next update and hoping that will be a good one and the ounces mined and the share price will kick on from there.
Tibbs, Thanks all makes sense and whilst nowhere near as detailed this is pretty much what Horgan summarised when answering my question during year end numbers.
Fair commenst Dasut,
Posted as requested although I am a shareholder and not a mining analyst !
Cont Part 2 Final-
In summary, in Q1 we mined planned low grade material as well as additional Waste to ore conversion that went to the dump leach at 0.4-0.45g/t. We also mined our planned open pit mill feed at ~1g/t, this mill feed was slightly lower grade than usual for Q1 due to oxide ore in a region of stage 7 - we have mined the majority of this in Q1 and expect minimal quantities in Q2. On a combined basis the LG dump leach ore plus the mill feed meant the overall mined open pit grade was lower than the overall reserve grade.
As regards the reclassification of waste as ore, as described by your analyst, this is an obligatory accounting adjustment required by our auditors under IFRIC/IRFS and has no impact on AISC. If we reclassify material, we deduct the costs of mining it from operating costs and move it to sustaining capital costs – both of which sit within AISC.
We share your frustration with the current share price which we do not feel fairly values the business or rewards the progress we have made in recent years; however, we note that we are not alone with most gold mining stocks and much of the London stock market in general trading at historic discounts to NAV.
Once again, I think you for your support as a shareholder. We will announce Q2 and HY results on 25 July and hope you can again listen in to the webcast – and you are very welcome to submit questions to management via the portal.
Kind regards
Centamin
Thank you for your letter of 22 April and for your support as a shareholder. We take governance and transparency very seriously and so wanted to respond in detail to your concerns.
Before addressing some your concerns directly, I wanted to explain where we believe we are in the strategy that was outlined with the arrival of the new team from 2020. Firstly, we embarked on a 3- year reset programme to restore Sukari production towards 500,000 ounces per annum from this year. We have also made considerable progress on improving the quality of our operations, reducing AISC, reducing carbon emissions, and maintaining an excellent safety record. Our production guidance for this year remains 470,000 to 500,000 ounces
With the reset successfully delivered, we are now increasing our focus on growth. This includes exploration and development work in Egypt and also at our Doropo project in Cote d’Ivoire, where we will deliver a DFS this year.
As regards your concerns regarding the grade of ore being mined at Sukari, I’m sure the following points will set your mind at rest.
At the US1,450/oz gold price we use for our reserves – we have the following economic cut-off grades (the minimum economic grade) – any material mined above this is cashflow generative at a gold price above US1,450/oz. These are externally Audited and verified (NI 43-101 and Reserve Audits).
Open pit cut-off grade for reporting
0.4g/t Au for mill processing
0.2g/t Au cut-off for dump leach
Open pit design is based on a cut-off of 0.4g/t Au for M&I Mineral Resources only
On a full year basis within our mine scheduling, we aim for a mill throughput from the open pit of ~ 11Mt @ 1-1.1g/t in line with our open pit reserve grades, this is based on our detailed modelling of the open pit resource which we continue to refine.
What we’re seeing is that in addition to mining our modelled and planned ~11Mt of open pit ore for the mill, in certain areas that were difficult to resource drill due to the historic terrain, material that we planned to mine as waste in the resource model is mineralised at grades above the economic cut-off grade when we grade control (GC) drill it. It is therefore reclassified to low grade ore:
This ore is around 0.4-0.45g/t and the majority is sent to the dump leach which, as above, has a cut-off grade 0.2g/t, we do not process this material – we invested in dump leach expansion last year and this has generated good ounces with a very low cost. We would have had to originally mine and dump the material on waste dumps but now are able to realise economic ounces from this.
Also, depending on where we are in the pit – typically near surface push backs - we mine planned low grade ore which is typically designated for the dump leach.
In summary, in Q1 we mined planned low grade material as well as additional Waste to ore conversion that went to the dum
Tibbs why do you need to check things out if you have had an answer to questions ? Who better to debate with than this forum of people who have been following Cey for a considerable time. Surely Cey haven't sworn you to secrecy when answering your questions.
Hi Dasut,
Thank you for your detailed reply , it is greatly appreciated!
I quite understand why you couldn't ask questions last time and I hop enjoy enjoy your next trip!
I have had a reply from fti, although I wont post any of it as yet on an open forum until I have had a few things checked out
Tibbs
Tibbs I have had a good experience getting answers to my questions. What specifically worries you the most? Maybe I or other members of this group can either answer or ask on your behalf. Not sure PR is the way to go for specific questions normally only any good with generic questions when it gets to the nitty gritty like all PR companies they need to ask someone on the ground and this not only takes time it can often then get lost due to work load and demands on peoples time.
I wasn't able to participate in the last 1st quarter presentation because I was on holiday but to be honest after the last call in at the year end presentation I wasn't expecting a good 1st quarter. In fact the only good thing that I took out of the presentation was that at long last they are laying down on leach pads very low grade ore that would normally be dumped on the waste dump. Why they haven't done this with the stockpile material I don't know but will be asking the question once I get time which won't be soon as I am off on my travels again. This could be an exercise/project worth talking to Capital about when the waste project finishes.
Low grade ore from the open pit is still viable take a look at the "Interactive Analyst Centre " numbers and you will see the comparisons in costs when compared with underground they both need each other otherwise the cost of processing would rise exponentially. Processing grades are crucial as is volume.
I see you are asking why the waste project costs have been capitalised or deferred and my reading is smoothing of the numbers and taking at a later date when they are in the areas where ore has been exposed. Someone on this board who has better experience of creative accounting may be able to explain.
Like others I am not expecting to see real progress until after the Waste Project has been completed and then the proof of decisions made by Horgan and his team will be in the results, albeit I know we will still have some blips on the way because that is the nature of investing in high risk markets and mining is very much one of those markets.
3bear take a look at Centamin web site "Interactive Analyst Centre" it will I hope give you the numbers that you are looking at starting with cost per tonne for open pit against undeground.
Hi 3bear
Also good to hear from Cooperman again, pity the ipad played up, you may be able t salvage what you composed though if you do then please post it.
Glad you now see what I am concerned about at 3bear, I do hope that my concerns about what seems to be slick accountancy tactics are due to some misconception or misunderstanding on my part rather than some intending misrepresentation of the true facts.
I'm certain that everyone myself included were hoping for a far more shall I say inspiring or encouraging Q1 2024 report which unfortunately certainly wasn't the case !
Interestingly at 1755 Fri 26th April I received a courteous and professional reply not from Mr M Stoner but from Centamin's PR representative Ben Brewerton of fti Consultancy in which Mr Bremerton has attempted to address my concerns, although I have yet to do some research on the reasoning and rationale contained in it before I will be able decide if I feel reassured or not about the the future prospects of Centamin.
Tibbs
Tibbs there weren't many lights to be dazzled by in Q1.
Q2 on the other hand, revenues ought to be off to the moon.
I do share your concern about AISC manipulation. Out of $190m earned in Q1 they spent $180m on AISC + investment/exploration leaving only $10m free cash flow.
We are going to see record revenue in Q2 but if the FCF is still rhubarb, then I'll be inclined to join you in the grousing gang.
Good day 3bear,
I have expressed my main points of contention as a UK shareholder in a courteous manner on numerous occasions and although it may be coincidence its seems since Buchanan PR haven't represented Centamin I haven't received even an acknowledgement, let alone any utterance of reassurance or answers to my concerns-
Considering Martin Horgan's initial claims of being open with all shareholders this is a very poor show, even basic courtesy or business protocol from a limited company requires at the very least an acknowledgment of some kind.
I take your point on the 325,000 from the open pit, but consider the true cost of processing such low grade ore and what if the grade quality worsens even further?
Then consider the points I raised below that the company seems reluctant to address openly.
Also consider why are some long term institutional holders selling, possibly they may too have concerns over the Sukari operation?
Just to clarify I first bought into Centamin in 2010 as a growth stock added over the years so I continue to hold a not inconsiderable number of Centamin shares.
I really do want the company to succeed and I would be delighted if my concerns were proven groundless, but as yet I receive no reassurance on the latter from the company.
This is very poor show and that seems to display an arrogant disregard to UK retail shareholders
In my experience Cowichan is a good chap, he cares about what's right and he is passionate about all manner of animal welfare and environmental issues
Various derogatory and spiteful remarks are made about Cowichan for asking questions, well good for him, I only wish a few more shareholder would do the same, it is in their own interests and if the company had any idea of good PR they would answer, or offer some explanation as to why they can't, failure to do so can only and understandably raise suspicions that all is'nt as being claimed!
So why don't you, or any of those still wearing the rose coloured specs or are dazzled by the bright lights of the Q1 2024 presentation disprove Cowichan's and my concerns by contacting the company by whatever means is preferable, even copy and past my comments, I am likely known to various relevant and senior member of the Centamin management and I would be delighted if they are willing and able to prove me wrong or at ideally allay my doubts in their present strategy.
Tibbs
https://www.agbi.com/industry/2024/01/uk-owner-ramps-up-output-at-egypts-largest-gold-mine/
Hi Tibbs
So you still want to close down the open pit?
Say goodbye to 325,000oz, they're not exactly processing sawdust.
I just don't get your argument.
Hi 3bear, appreciate your post is well meaning, however and not wishing to appear rude you do a better job than the Centamin PR team!
This Q1 2024 is reason for some very serious concern when considering the much lower grade mined, both from the open pit and underground.
For the open pit Martin & Ross put a brave face on it and claimed it was a “reclassification” of waste as ore.
It seems as if they cannot properly distinguish between ore and waste resulting in much more waste being sent for processing!
For the underground grades any explanation is missing?
So assuming they sent 3,395,000 tonnes to the stockpile at a grade of 0.36 g/t AU should they ever get around to treating this it will generate precious little cash flow!
The management seem to be are playing games with capex classification and to call deferred stripping “growth” capex is ridiculous!
Waste stripping is part of normal mining operation to achieve the planned LOM production and the reason why they (mis)qualify it is to avoid having to include it in the calculation of AISC cost metric.
AISC is a nonsense metric easily to manipulate.
Just classify capex as “growth” and it drops out!
This is why so many companies with fantastically low AISC are unable to generate free cash flow.
Why not calculate the revenue from the mined grade taking into account a low recovery.
Then calculate the mining cost for one tonne ore and all those tonnes of waste, processing cost, G&A and capital investments to keep going.
From this exercise It will become apparent that it generates very little to no cash flow!
Why not put these points to Centamin, if they respond their answer should be interesting.
It is Tibbs it is, but for every 1oz coming from underground the open pit produces almost 3oz.
What I don't have is the Open pit AISC v Underground AISC but any way you cook it, the pit is central to the business.
Hi 3bear ,
Thank you for your opinion on this, I was always led to believe that the underground operation is crucial to the viability of the whole Sukari operation.
Tibbs
Tibbs to put your mind at rest:
Of the 450,000 ounces produced last year 325,000 came from the open pit.
Almost 75% of total production.
So, far from being a basket case that needs to be binned, the pit is the beating heart of the business.
The underground at 125000oz last year is a very tasty bonus.