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Here's some of your comments: "This isn't a growth share. It's midway through its life cycle"
How so? Every miner has depleting assets. Barrick, Newmont, Agnico Eagle, Kirkland Lake. If you are going to label Centamin as such you have to label all miners as such. And that doesn't begin to take into account exploration or development as exploration. All miners depend on the same formula. Drill. Drill. Drill. Randomly placing Centamin as midway through its lifecycle is nonsense and ill informed by any measure.
Another comment: "we are trying to extend the life of the mine for as long as possible until the reserves run out and hope that we can find another Sukari in the meantime. Unlikely given Barrack golds entry along with their huge financial armoury"
Do you understand how orebodies form? The reserves will grow as long as the source of the orebody continues along strike and at depth. It doesn't fall from the sky like manna then you gather it up in baskets until nightfall.
Last comment: "Buy and hold strategy for this share is unwise."
For whom do you offer this sage advice? Those who despise consistently generous dividends and fantastic growth opportunities in Egypt and Cote D'Ivoire? I suppose if that is your target audience then yes, by all means encourage them to sell.
Cowichan - we are all frustrated at the moment (my average is about £1.20) but I must admit I am also having second thoughts about how prudent it is to hold these shares relying on "consistently generous dividends". I agree with Rebess that "for every pint of dividend received, a gallon of share-price has been sacrificed to pay for it". It fell 5% on the last ex div date breaking all the TA support lines on the way and allowing further heavy selling this week! I am really better off without the divis if that's the price I have to pay.
Cowichan
"This isn't a growth share. It's midway through its life cycle"
As I commented on before I knew a very profitable gold mine in west australia (or 3!), that only ever had about 2-3 years if mine life....
and so it was always in the back end of its life, but it went on like this for more than 50 years.
I know some old gold mines which were shuttered down, at the end of their life, and some bright young thing came along, drilled some more holes int he right place, and added another 20 years onto the life of the dead mine!?
Companies have been built on old gold mines all at the end of their life..LOL Have a look at Northern Star's History...built on old dead Mines at the end of their lives!
https://www.nsrltd.com/investor-and-media/asx-announcements/2005/october/2005-annual-report
Did they find a new mine? No they were a lot smarter than that they bought old Gold MInes, and got them to work, did smart exploration...company now has 20 years of mine life, 2 m ozs pa of gold production from mines "past their mine life"
Mine life, is function of dicovery, and this can be a function of the cost and time to get cost effective drill access to best get enough pierce points into a orebody, to get that orebody rated as JORC compliant reserve. It can be a function of the board, the management , the exploration technology,... the exploration manager.
In fact one of the mines I worked in did not have time to get the ore interestections into reserve, they just went for it.
There are some very naieve comments on this board, which does suggest that quite a few, have never worked in a mine, and if this is true, then it is very easy to not know how they work. Conclusions based on no knowledge can be misleading.
Can I suggest (again), the Extraordinary Popular Delusions and The Madness of Crowds (written in 1841, and nothing much has changed from a behaviourial sense):...all I can say is make sure you are not one of the crowd, get some real knowledge, and don't follow messiahs with no clothes on...or idle chatter on chat boards
Footy game tonight! Must limber up, ....
best
the gnome
An excellent post Goldgnome - seems you always have something relevant and informed to share. Thank you - I know it's very helpful and encouraging to many on this forum - myself chief among them. Enjoy your footy time and have a great weekend.
Hi Seible - having second thoughts is prudent while investing in any company. The only thing I can say is remember all the gold miners have been hit.
Barrick started the year $31.49 now $24.53
Yamana started the year at $7.79 now $5.23
IAMGOLD started the year at $5.02 now $2.75
Newmont started the year at $81.02 now $72.25
Agnico Eagle started the year at $96.21 now $69.95
There are a few exceptions (like Endeavour and Kirkland) but overall the gold miners are down significantly - however of those that do pay a dividend through these ups and downs Centamin pays the most - and in my opinion offers some compelling opportunities for growth - as stated in my last post about West Africa & Egypt - Cheers
Yep Cowichan, as I keep on trying to remind people too- sector unloved.
https://www.bbc.com/news/business-54230737.amp
Please read this link . This isn't my link. It is a BBC news article from September 2020
I will comment on it again when I get the chance.
Please read it with an open mind
Hi MrGnome,
You had some questions you wanted put before Martin Horgan, I wonder if you would care to submit them to Alexandra Carse.
Head of Corporate Communications
E: investor@centaminplc.com
Please provide your full name, address and contact details,
You may have seen that Centamin intend on running some private investors webinars .with Q& A
Best
Hi Cowichan,
Very interesting and informative posts, especially so considering your knowledge as a geologist and indeed long term holder helps people to understand and come to realise that things are not a simple or straight forward as some forums would have them believe!
Tibbs
https://www.bbc.com/news/business-54230737.amp
Look at this chart . Does this look like the chart of a growth share to you .the growth part was around 2008 when the first gold ingot was mined and there was a 20 year clearly identified production path ahead of it .
The share price should equate to the NPV of future cash flows ..which is does in the years to follow ..now though we are half way through with no new mines in production .
Look at annual reports ..annual production levels reduced to 400-450 for foreseeable future . If this was a growth share the annual productions levels would be increasing significantly year on year ..they are not ..continually finding enough reserves for the next 2 years
Sorry I got cut off....continually finding enough gold to mine for the next 2 years does not I repeat does not represent a growth share , it represents an extended steady state share, new gold extraction barely exceeds gold depletion from production
More on a new thread ..otherwise the post becomes too long winded
Apologies , I can't post links to these but just google the following share price charts and click on the " all time" portion for the share price on the share
1. Centamin
2. Gold Rock mining Trust
As you can see , the shape of both of these charts are virtually identical ..the latter will include Barrick and Newmont ...they all say the same thing. We have or are approaching peak gold ...the growth phase was years previously . We are not in decline yet but as gold reserves world wide diminish then the industry as a whole will decline. It isn't in dispute Gold mining is a currently steady state industry heading for decline . This is borne out by share prices across the industry as a whole . Just take a look at any of the historic share prices of ALL the mining companies including Barrick Gold ..
Take Centamin ...its share price has never ever increased beyond £2.20 . Yes I think the current share price correction is overdone, which is why I have invested here , but I am not deluding myself from the fact that I shouldn't be staying here on the hopes of future discoveries
Gold like oil is a finite resource . Currently 190 out of the 240 million ounces widely renowned as economically viable gold reserves have already been mined. Does this make it a long term growth sector or one in decline ?
As the article says , the only major area where there are known untapped resources is West Africa . Yes Centamin are going there , but so are the major players like Barrick etc ..why ? Because there are few other large places left for them to mine .
What will happen in time is a consolidation of gold mining companies because there won't be enough gold for everyone to mine, apart from the moon , the Antarctic and beneath the sea bed ...not economically viable . The reason West Africa has been left until last is the political instability within the region .
If you want to know what a growth company is then just take at look at Microsoft Share price of Tesla and compare their returns over the previous 5 years ..they are growth shares. Centamin is NOT.
Next post will focus on my thoughts on Centamin itself take it or leave it ..opinions and questions welcomed
Again my apologies for the mix up of my earlier posts but either the site played up or more likely my posting on it .
If you take Centamin as a company ..you can see that the growth phase took place beyond 2008 when the first gold bar ingot was mined . Therein lay 20 plus safe years of steady gold mining production ahead. That figure now is 10...midway through its life cycle
Gold gnome has repeatedly said that some companies keep identifying new reserves worth two further years of gold production..this doesn't represent growth ..it represents an extension of steady state production since new finds barely match gold depletion from previous production . Growth would look like a scenario where 10 years then 20 years then 30 years worth of gold were discovered in successive years ,not the 2 year hand to mouth discoveries which have been taking place ..which as I said is no more than extending the life of the mine .
You only have to look at Cebramins major strategic reviews , they are geared to extending the life of Sukari . Cost cutting exercises are short term sticking plasters to delay the inevitable. I should know , I was a Finance Director for 25 years and did it numerous times . No I haven't even seen a gold mine let alone worked on one . But being a qualified accountant for 40 years with a Cranfield MBA in addition has taught me a little about strategic assessment, analysis and direction .
Other people are commenting on the reliability of dividend ...they are not steadily reliable at all, they are lumpy .
Besides , the existence of dividends depicts the status of the company . Consider what dividends are for a minute ..they are surpluses of cash returned to shareholders. This means that they can't use... by their own admission, this cash productively anywhere else within the company.
Microsoft and Tesla don't pay dividends ..their surplus cash is reinvested to grow their company even more . This is why dividends are not important to their shareholders .
Note the remark by the CEO ..the board has abandoned the idea of striving to achieve 500,000 ounces of production per annum and reset production to 400,000 to 450000 ounces per year ...people think this is growth ...really ?
Someone mentioned that the new CEO cares about retail investors. .I laughed out loud ..I as Finance Director, have written numerous reports saying the same in my companies annual reports very much similar to that . Giving him the benefit of the doubt though..maybe he does .
The best comment for me which sums everything up was the remark of how much dividends had actually cost him when measured alongside the performance of the share price.
Agree with me or disagree that's fine ..enlightening me would be better.
I agree in some respects with your comments but think you underestimate the ability of the huge area surrounding Sukari which Centamin controls to provide ore to sustain 400 - 500k oz operations for many years to come.
Combine this with the likely increase in gold price from rampant money printing and other measures we employ to avoid having to face the reality that sometimes we have to put up with tough times & I think Centamin will be able to continue to be a solid dividend paying company for a long time.
I am certainly increasing my holdings at these prices with next to know concern, when the price gets back towards the 200p level I agree it will be time to take profit & wait for the next fall. A single mine operation will always be subject to big volatility, the nature of gold mining pretty much guarantees it, I agree it is much more rewarding to take advantage of that volatility than whine about it but unfortunately that is the way of the new worldwide attitude, complain about everything and blame anything & anyone else but ourselves for our perceived misfortunes & inequities - if it wasn’t so annoying it would be a good giggle :)
"Gold gnome has repeatedly said that some companies keep identifying new reserves worth two further years of gold production..this doesn't represent growth ..it represents an extension of steady state production since new finds barely match gold depletion from previous production"
LET ME TRY TO INFORM YOU. A gold mine is from a geological perspective, a record of a gold mineralising event. The event generally involves large/crustal scale leaching of gold, followed by focussing the deposition of gold into a favourable area. The scale of the favourable area is generally at the scale of 10's of kilometers. At this scale, a mine is generally not much more than a point on a map.
Sukari known gold reserve is a point on the map.
The probability of finding more gold in the scale of 10's of kilometers is relatively very high.
The cost of discovering this is incremental, and contained within a mine site exploration budget. It does not involve additional political risk, governance risk, Capex risk, personnel risk in operating in new countries, etc.
If one makes a discovery within the 10's of kilometers of the present owned mine, then the conversion of the discovery into minable ounces does not involve a rehash of the exploration/acquistion (new country, new laws, regulations, logistics, mine build, etc) risks, requires substantially less invetsment and happens in substantially less time.
You can say increasing the JORC Resources and Reserves, the production profile and decreasing the all-in company risk profile does not represent growth, but then what does such a change represent my dear accounting friend. Steady state? A decrease? Call it what you may like, but I call it growth, at a lower risk in less time, and companies are built around this every day.
Why dont you look at how Northern Star was built,
https://www.nsrltd.com/about
Evolution Mining
Evolution in November 2011 and successfully turned that initial resource at Mt Carlton into one of the world’s highest-grade open pit gold mines.
https://evolutionmining.com.au/our-story/
good luck in your investing,
the Gnome
Thanks Mr T
My questions have been emailed in as you direct. For your and any others reference, they are below
....
I am a CEY long term investor (years )
I have several questions which I would like your company to answer. The answer can be made public, and I would prefer in writing, but happy to take a call
to clarify questions.
1. What portion of your Exploration budget will be spent on near mine versus new mine discovery?
2. What portion of your "new mine discovery" budget will be directed at new mines in Egypt, versus new mines out of Egypt?
3. What are your plans for creating value in the short term from the assets you hold in West Africa, and what do you see as the most significant risks in achieving these (and how do you plan
to manage such risks?)
4. What efforts is the company going to, to assess acquisition and merger opportunities? Is this formalised and are maangement/ staff accountable for this, or otherwise?
5. What are the major cost saving initiatives being put in place now and in the next 3 years?
6. CEY is undervalued now, how does the board plan to create value in the next 1 year, and given that this would entail several initiatives, can you prioritise the initiatives.
7. CEY is undervalued now, how does the board plan to create value in the next 5 years.
...
best
the gnome
Let's Cut to the chase
Centamin.... Down 57% 1 year , Down 32% 5 years
Microsoft . Up 44% 1 year up 416% 5 years
Tesla ..Up 75% 1 year up 1692% 5 years
Good luck to anyone who still thinks Centamin is a growth share .
I invest in recovery shares and do extremely well thank you . Centamin is an up and down share. I bought at £1.00 after latest div and I will exit around £1.35.
That doesn't mean of course that the share price won't fall further in the short term ..It probably will, I never time my purchases exactly right
I want it to reach around £1.35 or there soonest and I can move on to the next share
I am not whining or complaining, I make my money on shares like Centamin but I don't get too carried away with them, or have blind faith that they are something they are not.
Centamin is not in my view a growth share and you don't need to be a qualified accountant to see that
@Candidinvestor
I think we will all be relieved to see CEY get back up to 135 in a timely manner. I have been averaging down on this more than any other. There is of course a story behind the SP drop with the reported instability at Sakuri triggering a large drop, which was my original entry point. The original anticipated fixing of that has taken longer than my amateur estimation.
TBH if I wasn’t so heavily invested already I’d top up again, but it does not make good sense to have too many eggs in one mining; plus I through caution to the wind a couple of weeks back in fund allocation to purchase shares in HE1, which is a whole different level of risk.
It’s good to see investors like you buying into this share though, as we all believe it’s due to turn the corner some time soon.
To be Candid,
I think you should cut your losses and invest in Tesla, and do it now. Lets cut to the chase, and dont invest in something you dont understand.
best
the gnome.
Beer Stalker
Yes I bought in around the same time at the then one year low of £1.03 before dividend . Yes I think the market over reacted to the bad news and like you I think the share price will stage a recovery at some point.
Of course just because the share price, in my view, is under valued, doesn't mean it can't fall even further , which it is doing. I will remain patient as I say, until it reaches around £1.35 ish and leave ..that doesn't mean I don't think it could go higher , it's just that for me , a 35% profit over hopefully no longer than a few months will do me just fine.
I am reassured by goldgnome and others optimism . I am optimistic too , but as you can see from their reactions to my postings , I am not as optimistic as they are , and that is fine.
Good luck to us all.