Member Info for candidinvestor

Sorry I didn't finish my post it got cut off :

3. Enterprise Value = Market Value plus overdrafts or in Centamins case minus cash = £1.04bn - £215m in cash = £825 million (£0.72 per share )

Of course in reality a company is only worth what somebody will pay for it and the last time that this was tested was with Endeavour Mining bid of $1.9bn or £1.4bn or £1 .25 per share in Dec 2019, which was a 13% premium on the previous day's share price ..
Endeavour withdrew their bid because of amongst other things a 'lack of information' from the company surrounding the medium term outlook for the company .
The practical and relevant question to ask now though is where does the current share price of 90 pence stand in terms of fair value. .

Again lots of different ways of assessing this , the most credible ones being those acknowledging the cyclical nature of mining earnings .

I like to see if the share is under or over valued using Schillings Cape formula which is to calculate PE ratio using the 5 or ideally 10 year rolling average EPS and marching it against the current share price

Using this formula, Centamin has a PE ratio of about 11..which is low .. in fact the PE ratio of Centamin for the past 5 years has ranged from 9 to 25 with an average of 18.
Likewise EPS has been in the range of 6 and 19 cents ( 4 to 14 pence with an average of 8 pence ..

So if you multiply the average 8 pence per share by the average PE ratio of 18 you get approx £1.45.

What this means is that based on the previous 5 years results £1.45 would be an equilibrium price to pay for the share That doesn't mean it's worth that now , but with an estimated EPS of 10 cents this year (7.25 pence) you might expect a share price of around £1.30, hence me waiting for around £1.35 to exit

The question remains why is the share price so low then and I can't come up with any better explanation than the reluctance of the market to forgive the company for the disappointment of the reduced levels of production

I will write another post highlighting another metric which suggests the level to which the current share price is undervalued ..

During my long career I came across numerous different ways of valuing a company. The main ones , and the corresponding value for Centamin were

1. Net asset value on Balance sheet ..i.e. it's book value , which for Centamin would be £965m (£0.85 per share )

2. It's Market Value ..which for Centamin is £1.04bn or £0.9 per share

I agree Mine check ..it won't be a big bang effect like a light switch on and off motion between..fossil fuel / green energy .it will likely need to be a gradual transformation

What it does do though , is to create huge opportunities within the green energy sector ..one such massive opportunity is electric powered vehicles..we have a level playing field for this at the moment . Can the UK grasp the nettle and take the lead in it .somehow I suspect not ...I wouldn't mind betting that Germany does though ....

Cowichan ...thanks for your intervention in setting the record straight. That was very helpful .
I have read by the way that under future licences the share of profit going to the Egyptian Government is going to be reduced to 25% I think , in a bid to encourage other mining companies to enter the region .. They recognised that the current 50% share was discouraging other mining companies from operating there which defeated the purpose of increasing their revenue receipts.

Goldgnome. For some reason I can't actually initiate a thread myself ..do you have to be a premium member ?
Yes if you could start a thread to pool the questions that people have that will be great .
It will also be useful for people to provide some background thoughts behind their questions .
Thanks for the contact email . I had been sending texts to the mobile number listed

Patryk. As you raised the initial question about why profits haven't increased this year despite Gold prices having risen from $1300 to $1800 since 2013 , the following is relevant to explain the comparable decline in profits . There will be other items in the equation too.

1. There has been 8 years of inflation in mining costs since 2013, so the gold price had to increase to pay for that.. If you add 8 years of inflation since 2013 to get a real comparison with gold then the real increase would be much less than $500
2. You need to factor in real increases to costs of sustaining the mining operations. these tend to increase over time as it becomes that bit harder to reach the next tranches of gold
3. More items are being added in to sustaining of the mining costs due to increases in regulation regarding mining safety and environmental reparation.
4. Real increases in costs arising within Corporate admin due again in part to increased admin burdens , , one example is implementing staff diversity , equality , training etc . lately they have upgraded accomodation for employees...all of these are new costs against the same gold prices and none of them produce an extra ounce of gold , apart from at the margins maybe

Ken ..Centamins share price was only 35p in 2013 because the Egyptian government gave notice that they were going to withdraw Centamins licence to mine for gold ..you can't make profits if you can't mine gold ..naturally it was a ploy by the government to extract more favourable shares of profits. It did get resolved but only after a 2 year battle ...just see how much the share price rose after settlement was reached. .

A couple of comments were raised about dividend payments. .these are a distribution of profits not a charge against them , so they won't in themselves affect profits...they will though have a natural eroding effect on share prices , because dividends represent the returning of capital to shareholders , rather than retaining it in the business for future expansion

Mr T....you mention asking questions to the Board of Centamin ..I sent in 3 questions which is all I, myself needed to know about Centamins outlook ..I haven't had a reply
I will post what those 3 questions were on a more appropriate thread .
As always DYOR ..Good luck .

Mr Elang . Under different circumstances that would be a good idea ..the benefits are that it allows a capital reduction to take place at a reduced cost whilst also propping up the share price by mopping up distressed share sells. Also the effect will be to increase EPS and make the same dividend payments per share at less cost , which will leave more funds available for exploration , but in the future ...
The main downside is that £300 million in the bank , whilst being able to buy back 30% of the outstanding shares leaves no further cash for exploration in the present ..good question though.
I presented a number of questions to the investor relations team , but unsurprisingly no reply , despite a reminder yesterday ..not even an acknowledgement . Statements saying they are committed to being open with retail investors are just words . Words are cheap . Actions are what count ..and there is none .

You can't time the market ..but personal gains and losses only chrystalise when you sell . Until then they are just paper gains or losses

The other thing which is being mooted along with the possibility of raising rates is the fed gradually bringing an end to quantitive easing , both of which have a negative impact on gold price .

The current gold price is being more influence by the prospect of the fed raising interest rates. Gold doesn't pay a dividend so in that sense , there is an opportunity cost of not being in interest earning cash .

Thanks Cowichan . I hadn't seen that before . I agree with everything that they are proposing . In particular I like the strict time limitations for non significant share holding directors. It stops them from adopting a less ambitious " sufficing strategy '
I also think director remunerations should be linked to EPS and that the " overboarding' element be developed further .
It also provides 3rd party opinions about low equity prices within the mining sector when compared to financial performance .

Ah ok .. that explains it. Thanks

Mando . If you just Google the share price you get a graph showing today's movements . I just happened to take a glance at it when it spiked at around 98p when I looked back 20 minutes later it had fallen to around 95 and the spike had disappeared on the chart so that large purchase had been smoothed out .
You can check out the Hargreaves Lansdowne website for it and you can see what it opened at and what the high and low trade for the day figures are too, along with the trade volumes which lag behind by about 20 mins

Yes I noticed that , but it got eliminated when the charts were summarised into a 15 minute slot.

That is an opinion changing piece by him. I haven't heard of him but I pay heed to anyone with over 40 years of experience.
Thanks for the link

Beer Stalker ..funny you should talk about Polymetal. I bought their shares in 2018 for £6.20 ish and sold within weeks when the share price reached £9.00. They went on to top £20 within a year.. I have done that a few times, most notably with Ferrexpo during Covid . I bought in at £1.10 , I read their balance sheet perfectly as it turned out but it fell below £1.00 so when it shot back up I sold out at £1.50 and within a year it hit £4.00. They were both profit moves but sold too quickly .
This might happen with Centamin . I have a price target of £1.35 ..if the bulls on here are right then I might be departing too early . Yes I do have balls , but unfortunately they are not Chrystal !
Good luck

Thanks Bob , much appreciated. What you say makes sense . Hopefully on an upward march now ..

Unfortunately lots of sells went through after the close ..a sell of 228k at 90.5 went through around 7 pm. Not sure what this means. London Stock Exchange had final registered share price of 93.1 after traded shares closed. Tomorrow's opening could be anything !
Anyway , not much to be gained by real time price grazing.

Mr T. I suspect you are right with my £1.35 idea being too premature ..but I prefer to make 3 quick 35%s for rapid share moves than hold on to the one share. .its about my comfortable risk reward ratios. I like cey at £1.00.. less so if it gets above £1.35.. I will aim to find another cey equivalent with my now £1.35 for the prospect of another quick 35% return et al

Just keep an eye out for shares trading at 1 year lows, and research them further. It has worked for me in the past ..of course I have made mistakes though. partly because you only ever know about a company what they choose to tell you.
Good luck in your strategy
I think a risk with Cey is that we have only had one piece of bad news ..and they say that bad news comes in threes ..time will tell.

Anyway we are getting off the point. Good day for Cey today