The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Having read through the RNS I've just snapped up some more shares at a much lower price than when he started his campaign.
Mind you I rather think he's also bought a few. After that was the main purpose of his keyboard jockeying to cause untoward fear forcing the price down and then buying once confirmation was through that no further damage to the accounts have been detected despite all the forensic investigations. I reckon the accounts will now be a lot cleaner than your average plc. Given this RNS the final confirmation will be a collective meh from the market.
Remember also that exploration costs are not included. Given HUM are committed to a $10m exploration programme you need to add in another $100 per oz to assess cash profitability...
I can see 3 logical possibilities for the sale:
- 1 the management are idiot investors and for reasons for panic/emotion have chosen to sell at precisely the wrong time
- they need the cash now and are forced sellers
- opportunity cost says invest the money elsewhere given the opportunities available to the company.
I wonder which it is? It would be nice of the company to enlighten us sometime...
@Swatton. Thoughts. Well more like speculation thanks to management equating us to mushrooms but my guess is as follows. Whatever happened caught the HUM management by surprise. Pulling a share issue to complete a transaction is not a good look and I cannot believe they did it on their own volition. Then remains what caused them to take this action. Clearly it is either the govt or member thereof or Cassidy. In both cases somebody tried to pull as fast one at the last minute to pile pressure on the management. If this is true then HUM management called their bluff and refused to bend to the new demands and hence the stalemate we are now seeing. If I had to point the finder it would be Cassidy.
I'm hoping that come the Q2 update the management will realise they cannot stay stumm for ever and will at least give us the bare bones of what did happen alongside all the production data. If they don't at least acknowledge the non event and leave us hanging then that's a pretty good indication of how they view their shareholders and I for one will be on the warpath...
Swampy I don't disagree with much of what you say particularly about the over emphasis on SC being the main cause of the share price slump. It is not.
Also I'd go easy on the so called fearmongers. Just because someone disagrees with your generally solipsistic view of the company does not mean they are not putting up a reasoned argument. If you examine what they say they may even be pointing out logical inconsistences in your own analysis.
I'll suggest but one. You states that cost pressures are " in fact moderating". Really? Show me one piece of solid evidence this is the case please. Sure we have management assurances that costs have already peaked but that's all.
If you base your investing on what management say rather than what the real data imparts then that's your lookout.
I for one will withhold judgement until Q3/Q4 operational updates come out. If costs do indeed moderate then fine my confidence in management to understand their operations will go up. Unfortunately in the last 12 months all the evidence has been pointing the other way. In my eyes management have a job to repair their reputation.
And finally, what about the curt announcement of the share placing for Cassidy being delayed. Since then nothing not from management and hardly a peep from investors. What a placid lot we are!
Pile of Bile. If you didn't overcomplicate things and try and be too clever the evidence would be staring in your face. Trouble is you just trip over yourself repeatedly...
@ agro & chri55 - my pleasure
Happy to share my thoughts - happy to receive critique as well since knowledge is advanced that way.
HUM is by no means an angel - far from it. The latest non release on non share release is a real horror show. When will they tell us what is going on? After all we only own the company collectively.
Anyway I could be wrong on RSG but you have to act on the number and one's instincts derived from undertaking the comparison.
Perhaps Monday will bring us news...
I normally ignore BT's posts but as he/she mentioned RSG, a company I haven't yet looked at I thought I would have a quick look. My comments relate to the accounts rather than reserves etc. Overall RSG look a complete mess and whether by comparison on not HUM actually come out rather well since both sets of accounts cover the same period - 31/12/20.
As far as output is concerned HUM are a quarter of RSG but because of a higher average realised POG 1750 versus 1550 their turnover is only one third smaller
HUM made a profit as did RSG but that of HUM has 25m versus 5m for RSG and taking out discontinued business the continuing business made a loss of 36m in what should have been a banner year.
The comprehensive income table is long a complicated with large FX movements and also other items market to market.
The BS obviously has a lot of debt but what really catches my eye is 500m worth of capitalised development costs. How much of that is going to be realised in any breakup situation I wonder? By contrast the HUM equivalent is 75m
As far as cash flow is concerned although the net operations figures are not strictly comparable HUM still generates significantly more cash than RSG. Because it is a smaller operation investment is one third of RSG.
As a consequence of all of this HUM repaid debt of 42m whilst RSG repaid 110m but only after a share issue of 137m. In other words without this dilution debt would have increased by 27m despite record gold prices.
In short I wouldn't touch RSG with a bargepole - too big, too complicated, too badly managed, too indebted etc etc.
Sometimes there is value in simplicity, having one mine working more or less at full capacity. Let's hope the Guinea mine, if it ever transpires, doesn't dilute efficiency in the same way that having multiple mines all seemingly in a mess has undone RSG.
Some news would be helpful though...
Yeah - I don't buy the seller story either. It's always a convenient excuse for a loss making position.
I accept markets have always been subject to herd instinct or as it is known in its prettified term - momentum investing - but I think this tendency is today more prevalent than it has ever been.
For obvious reasons tech has had a stellar run, also tech related bitcoin etc. However, eventually the wave runs out and investors en mass look for a new momentum story. Right now my money is on oil stocks given the long term ongoing squeeze on investment is cutting annual production and boosting cash on both sides of the cash flow statement. Right now Brent is $71. It could go much higher.
As for gold, if it stays high momentum investors cannot fail to see the outsize returns delivered and yes, our particular "dog(s)" will have our day.
Traditionally successful investing has always been about patience. Perhaps this virtue never went away...?
Questor: either the gold price or this miner’s share price is wrong: we say back the miner
Questor share tip: Centamin has been a serial disappointment but even its curtailed targets for this year imply a yield of almost 6pc
By
Russ Mould
1 June 2021 • 5:00am
Gold is hovering around the $1,900 an ounce mark, which means the precious metal’s price has risen by 55pc over the past five years and trades at barely 7pc below last autumn’s record high. By contrast, shares in Centamin, the gold miner, are no higher than they were in June 2016 and stand at barely half the peak reached last year.
It is therefore tempting to argue that either the gold price or the share price is “wrong” – and given the current macroeconomic backdrop this column’s inclination is to believe that the share price is too low rather than the gold price too high, even allowing for Centamin’s history of operational disappointment.
America’s Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England are showing little or no inclination to tighten monetary policy. This is despite the fact that near-zero interest rates and quantitative easing were described as emergency policies when they were introduced in the West in 2008-09 and despite signs that inflation is gathering – last month’s 4.2pc year-on-year rise in the US consumer price index was the fastest rate of advance in more than a decade.
The central banks’ view is that this surge will be temporary because it is partly the result of pent-up demand and supply-chain dislocations as lockdowns ease and partly due to the low base for comparison offered by the economic downturn of 2020.
That view may be right. But commodity prices are rising, factory gate prices are on the up and consumer price indices are surging. If wages start to rise sharply we could indeed be in a situation in which inflation is truly making its return after lying dormant for the thick end of 40 years.
Real assets – commodities and property – or paper claims on real assets via shares in miners, for example, provided portfolio protection in the 1970s as the cost of living galloped higher, so those investors who do fear the return of inflation could be forgiven for researching gold miners such as Centamin once more. That said, those who see inflation as a transitory phenomenon will be unmoved.
Sign up to our Business Briefing newsletter for a snapshot of the day’s biggest business stories
Read Questor’s rules of investment before you follow our tips
This column has yet to strike it rich with Centamin: the shares are showing no gain since our initial analysis more than two years ago as the firm has disappointed on production volumes and costs more than once. A development plan announced last week for its assets in Burkina Faso and Côte d’Ivoire also went down like a lead balloon with analysts.
Yet the company should be primed to capitalise if gold prices do shoot higher, especially as a first-quarter update in
Actually meant for the CEY board not the HUM one. Thanks for your collective forbearance...
Questor: either the gold price or this miner’s share price is wrong: we say back the miner
Questor share tip: Centamin has been a serial disappointment but even its curtailed targets for this year imply a yield of almost 6pc
By
Russ Mould
1 June 2021 • 5:00am
Gold is hovering around the $1,900 an ounce mark, which means the precious metal’s price has risen by 55pc over the past five years and trades at barely 7pc below last autumn’s record high. By contrast, shares in Centamin, the gold miner, are no higher than they were in June 2016 and stand at barely half the peak reached last year.
It is therefore tempting to argue that either the gold price or the share price is “wrong” – and given the current macroeconomic backdrop this column’s inclination is to believe that the share price is too low rather than the gold price too high, even allowing for Centamin’s history of operational disappointment.
America’s Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England are showing little or no inclination to tighten monetary policy. This is despite the fact that near-zero interest rates and quantitative easing were described as emergency policies when they were introduced in the West in 2008-09 and despite signs that inflation is gathering – last month’s 4.2pc year-on-year rise in the US consumer price index was the fastest rate of advance in more than a decade.
The central banks’ view is that this surge will be temporary because it is partly the result of pent-up demand and supply-chain dislocations as lockdowns ease and partly due to the low base for comparison offered by the economic downturn of 2020.
That view may be right. But commodity prices are rising, factory gate prices are on the up and consumer price indices are surging. If wages start to rise sharply we could indeed be in a situation in which inflation is truly making its return after lying dormant for the thick end of 40 years.
Real assets – commodities and property – or paper claims on real assets via shares in miners, for example, provided portfolio protection in the 1970s as the cost of living galloped higher, so those investors who do fear the return of inflation could be forgiven for researching gold miners such as Centamin once more. That said, those who see inflation as a transitory phenomenon will be unmoved.
Sign up to our Business Briefing newsletter for a snapshot of the day’s biggest business stories
Read Questor’s rules of investment before you follow our tips
This column has yet to strike it rich with Centamin: the shares are showing no gain since our initial analysis more than two years ago as the firm has disappointed on production volumes and costs more than once. A development plan announced last week for its assets in Burkina Faso and Côte d’Ivoire also went down like a lead balloon with analysts.
Yet the company should be primed to capitalise if gold prices do shoot higher, especially as a first-quarter update in
I've much of my professional life consulting to IFAs and brokers albeit from a compliance/accounting/operational perspective and have seen how inept their operations can be. Perhaps that experience has inoculated me against seeking professional advice.
If you want a job done well - do it yourself. Or as Mr T puts it "If any of these brokers and investment companies were so good then why aren't they all using their own advice to become multi millionaires themselves instead of trying to get paid to take risks with clients money?"
Or as Cicero put it all of 2000 years ago - qui bono?
And I thought I was a cynic but Mr Tibbs you've outdone me!
You post a hellish dystopian picture of people fleeced to within an inch of the shirts on their back just because they lack the capacity or tenacity to think and act independently. I'd like to think you exaggerate but maybe not. You never here about this side of investing. Only the winners!
I hope I never join this particular madding crowd....ouch!!
I assume AISC does go up but by the same proportion as the POG so margin is maintained....
From what I've been able to glean from the shock Broker target price of 80p published last week they are under no obligation to justify themselves other than some general observations. If this is not the case then apologies but I thought I would do my own back of a fag packet calculations to see what I came up with. Assumptions:
- price of gold to stay the same at it is over a 10 year period when expressed in GDP deflated $. I.e. it maintains its real value when measure against USD
- AISC is at 1400 $/oz and stays that way over the life of mine
- life of mine 10 years
- only published reserves of 5m exploited no further gold at Sakuri exploited
- no further exploration expenditure since resources not converted into reserves
- break up balance sheet value is $400m based on intangibles and plant having zero value at end of mine life
- the west african prospect is realistic based on high discount factors.
First we have break up value of $400m
Next we have 5m oz at AISC margin of 450/500. Given the 45/55 split let's allocated $200 oz of CEY. Multiply by 5m reserves gives you $1b
Add in the west African prospect which, depending on assumptions, is worth 300-500m - take the median - $400,
Thus 400m plus 1b plus 400m gives 1.8billion or ~ 150p per share. Not a million miles away from other broker estimates
So what assumptions did the rogue broker use? POG? - in which case all miners are impacted. AISC - the 1400 figure I use is pretty steep already. Do they have such a low opinion of the new management to deliver. Reserves ? What inside information to they know that nobody else does?
Perhaps I have missed something obvious.?
Suggestions on a postcard gratefully received ...
Centamin has a high cost base partly thanks to previous management incompetence and laziness. Mining the best bits and no doing the hard yards of stripping.
However, a silver lining is that if gold goes up as it is currently doing its prospects brighten accordingly. We just need to see evidence of a root and branch reform of this company so that it ends up half way decent in the performance leagues.
It looks like the new guy understands this - whether he can force lazy local managers no doubt appointed because of the strength of their pollical connections not their competence to be fired or change their ways is open to doubt.
Depending on how you read the reserves figures there is 10-20 years worth of production left in Egypt alone. They just have to eke out every efficiency and capture value added in every way possible either through say solar power (as they are doing) or improving processing efficiencies (think Tharissa)
This is a punt but by no means a stupid one!
These are probably the first time they've had to be shown in the accounts. Looking at the BS as at 31/12 it looks like these are excluded from declarations of net cash. No doubt the management will plead this is consistent with past practice when they we tucked away in a note but a finance lease is a loan by any other name and should be included in the net cash figure.
Time the management did this...
Up currently ~ 10%
Presumably news out tomorrow and us poor schmucks can catch up....
There's no point at this precise moment in time. However, as soon as the management deign to let a bit of sunlight onto the matter and, assuming it is non trivial, then I'll be out of blocks and I rather suspect I won't be the only one too.
What's the phrase for being kept in the dark whilst manure is being constantly dumped on one's head? Something to do with mushrooms I believe?