Member Info for candidinvestor

Actually , the Q4 results if spun correctly will make excellent reading. .
They will show an approx 50% increase in production on Q4 from last year. It will also show a favourable comparison between the second half of last year and the second half of this year
It will however still show a year on year fall with 2020
Let's see what comparison they choose to highlight
If they highlight the Q4 year on year comparison then I would expect a sizeable uplift in share price ..but who knows what the market will make of it

In my view , selling now would be a big mistake for the following reasons :

1. Q4 production figures will be due in a couple of weeks and these will show more than a 50% increase against Q4 of 2020. Furthermore the second half of the current year will also be better than the second half of the previous year .. Hopefully this will be headlined ..
Granted , the year on year comparison will be unfavourable , but the higher average gold price this year will mitigate that to a certain extent
2. Despite the well publicised production problems, the actual 2021 year end financial result, won't really be that bad ...I am expecting a 10 cents EPS with a 9 cents dividend , which is actually the second best result in the past 5 years
3. From hereonin , all quarterly , half yearly and full year production figures will be higher than prior year comparisons ( based on their production forecasts ) it's amazing what impacts positive comparisons have, on the prevailing share price
4. Today's share price of 88 pence is, in my view, already undervalued against any metric you choose
5. Prospect of good news re Doropo and others
6. Potential takeover target ?

Biggest two risks remain 2022 gold prices and AISC projections , but pays your money and takes your chance I am not going anywhere .. reservations about the current BOD still remain , but I think the current share price has been battered enough
Please DYOR

Gnome..when you refer to AISC are you talking longer term ..
The company have already said that they expect AISC to go up to $ 1,275 to $ 1,425 in 2022 which will involve a significant whammy on profits unless gold increases up to average out at $ 1950 ish dollars for the whole year .

Lower AISC are projected for later years , but they are unlikely to be reliable given cost pressures

My mind is very active today considering various options designed to create maximum share holder value from here at lowest risk .
Using previous example Centamin could dispose of West Africa assets for the £ 300 million mentioned by Goldgnome
These proceeds combined with current cash would total £500 million , which could be used to buy back shares .
Wind down remaining Sukari asset, no further exploration , sell new exploration rights if possible and buy back more shares .
Manage Sukari for cash and distribute proceeds back to remaining shareholders ..same dividend amounts but fewer shareholders receiving them so DPS will be higher
Once depletion of existing reserves has been reached , sell off the remaining footprint with assets and switch the lights off at Centamin !

I am expecting outrage at that suggestion , but that might generate more wealth for us all than the current management are creating now and possibly will in the future ?

I know that I simplified the equation and that future returns must be discounted for risk , but I think there are more cash generating opportunities that i havent listed here .
What swampmonster is saying is correct , but Sukari has now been well prepared for future production , thanks to the underpinning work , so I can't help thinking that the disposal proceeds from Sukari alone will be significantly higher than the current market value of Centamin as a whole

I agree though , who would take that risk in the current environment , and in the end , the asset is only worth what somebody is prepared to pay for it

Not quite gnome .. You can ignore cash so Centamin is currently valued at £800 million

The income streams will come from 2 maybe 3 sources .

1. Cash profits from Sukari for remaining life of mine, no further exploration ..just extract known reserves and then either mothball the mine or which is more likely , sell off the untapped gold resources and remaining assets, once all of the current reserves have been depleted

Treating this as a life of mine cash annuity , the following returns are possible

Operating cash for 2020 was around $450 million and for 2019 a bad year was $ 250 million ..go half way so around $ 350 million ( this amount is after corporate admin costs , which could be chopped )

Assume the Egyptian government take around $150 million ( depreciation and other costs would be deducted before profit share allocation , so it would be lower )

So I calculate that the life of mine cash returns will therefore be around $ 2 billion which equates to £ 1.5 billion ..not a bad return from Sukari alone for an £800m outlay

Then there is the West African assets , to be sold as ring fenced entities..your figures suggest £ 330 million ..maybe a little high ...suggest £ 300 million

Finally there is the new exploration rights ..can they be sold? I don't know but if they can they will generate cash

So the minimum cash return will be £ 1.8 billion , possibly more , once you factor everything in,. and this excludes the proceeds from end of project disposal..

Or put another way , twice our current share price.

I don't think it comes as a suprise that the liquidated value of all of Centamins discreet assets will come to more than the sum of its current market value.

Risk factors will have to be discounted , but equally the returns could be higher.

It doesn't stretch the imagination too much to envisage a private equity firm acquiring the company and its assets , ceasing capex beyond that needed to sustain the business and selling off all of the individual parts of the business which , one would think, should undoubtedly result in a handsome profit , before moving on to the next target.
Just a thought . I hope that doesn't happen but it could

Paul..You can now actually buy shares in Centamin at a discount to their net book value ....

A billionaire could buy Centamin at current prices and inherit almost £200 million in their bank .

Staggeringly low share price, even I recognise that .
By contrast Polymetal shares for example are trading at 400 % of their net book value
Even Hoschild is trading at a premium despite all of their well publicised troubles

Silly to sell at this share price . The markets have over reacted , I will hold until a sensible price re-emerges

inconceivable to think that they will not be a target for takeover at their current price ..the question is how much ..

I like that word ' disgruntled ' Don't get too complacent though .
The last time it was 80p was nearly 3 years ago , when AISC was half of what it will be in 2022, and when gold prices were on the rise. Also there was more positive sentiment towards a more productive pipeline of future developments.
Since then Sukari has now had 3 years worth of depletion and by their estimation only 10-12 years remain ..news regarding West African assets look less promising than they were , and the mountain of cash is now being likewise depleted to fund capex

Not quite the same circumstances ..of course you could still be right ..let's hope you are

Retail shareholders , such as ourselves registering our disapproval , as you and gnome suggest is another angle to adopt, to strengthen investor revolt .. the third angle of attack would come from the trustees of the individual company pension funds who are investing their beneficiaries monies with those passive institutional investors ...there is always a way to succeed .
The problem here of course , is that none of these actions are in play.

Mr T...it is often predator private equity firms who take up positions on the cheap , looking to benefit from quick turnarounds that they think are achievable in the short term ...there only has to be the ' perception of changes in a company's fortune ' rather than the subsequent realisation of it, to bring about a rapid turnaround of share price . Of course , once they get ' inside the organisation ' and uncover what is really going on , they may conceivably increase their holding and become even more demanding in the process .

I have spoken previously about what I consider to be a sensible strategy to turn the situation around for shareholders
Create a devolved body to run the West African assets ..given free and autonomous power to operate, unencumbered by day to day interference from head office . They will be given adequate funding (possibly financed by debt ) but with progressive targets designed to create value from the asset.

In the mean time , dividends should be reduced to prevailing US interest rates plus 1 or 2 % equity premium . No room for debt AND excessive dividends given the current circumstances

A good way to gauge shareholders disapproval of directors performance is to look at the level of votes cast against the directors remuneration report and the re-election of directors. These can be found in the results of the AGM Rns

The votes registered against the Directors remuneration package was less than 0.1%. Similarly the reappointment of each of the directors went through on the nod The only director to attract an over 1 % opposition to his reappointment was James Rutherford I think, who had 1.6 % votes registered against him . It will be interesting to see how these votes change at the next annual report , until then, expect no change in direction .

Candidness of shareholders is required here , rather than blind faith , shareholder wealth is being destroyed and at a rapid rate ..markets were swift to react to the nothingness of the 8th December update of life of mine report , and momentum is only growing .

What we could do with is an activist investor , holding more than 5 % of shares , who can force his or her way onto the board, perhaps as a non exec director to shake things up . What we have is passive institutional funds probably managed by wet behind the ears ex public schoolboys, eager to be taken on a directors organised tour around the pyramids and the valley of the Kings and Queens or is that being unfair?

Mr B , I suggest you put your big boy underpants on and deal with views contrarian to your own. Diverse opinions add value to chat forums such as this .
If you read my post you will see that it was in support of an earlier posting by Steve J regarding an exit point. . I highlighted an opportunity which might be coming up to do this
Interesting that you didn't accuse SteveJ of the same .
No reply necessary.

Steve J. I think that's an excellent post regarding exiting Centamin and doing so around a positive RNS.

I think that the " roadmap to producing 500,000 ounces per year ", combined with yet another " year of transformation " amounts to nothing more than cheap spin. I was underwhelmed by it , I am sure many of you, if you are honest about it might have felt the same way

The Q4 update due next month will report a one off 50% increase in gold production compared to Q4 of 2020, because Q4 of last year was when production was curtailed

Any resulting uptick in SP might present a good opportunity to exit

I also think that taking on debt to fund this would be justified , but it would have to be matched by a new dividend policy , rewarding shareholders with a dividend, equating to current interest rate plus 1 to 2 % premium, to give shareholders a greater reward than holding their money in the bank.

I am talking myself into holding on to the share for longer.

The new devolved entity will need new competent people to run it ..I am guessing you might know one or two who would fit the bill ?

Cowichan ...I like the idea of spinning off Doropo , Batie and ABC into a separate entity , I would agree with that , but I don't like the idea of raising new equity to fund it , even if it remains a majority owned entity , because how can the equity holders of the new company get their returns without it having a corresponding taking away of returns from current Centamin shareholders ?

Whichever way you structure it , the raising of new equity will dilute the equity of existing shareholders.

My solution would be to do exactly as you say , but treat the new company as a devolved entity ( just like Scotland ) and allow it to manage its own affairs , unencumbered by central board apart from returns targets for the capital allocated to it .

That might just work and buy them more time

Regards

That is what I have been saying Cowichan in my earlier posts . Somebody posted on here that the FD looked solemn and uninspiring ..that is because he knows the score, I have been there, done that , and the words " proposing a capital restructuring to increase financial flexibility " is not good news believe me ...it can only point to a few things ..
...Either taking on debt , adding to old debt , taking on new debt or diluting shareholder equity via a new equity fundraise.
Face facts :
1. Cey might be able to extract a bit more gold from Sukari but it's at the margins , a new flagship asset should already have been identified...the previous management (s) I use that in the plural because they were all guilty of just sitting back and basking in the glory of their cash cow called Sukari, knowing that what followed Sukari wasn't their problem
2. Apart from Doropo ABC etc which only offer interim relief in the medium term , there is no " golden key" offering genuine long term growth .
3. They have to commence the process of finding a new Sukari from scratch , problem is there probably isn't another one of this size in the area where they are ...furthermore , they don't have the financial firepower needed to find one ..they have given the cash they needed back to shareholders in the form of past dividends .. not only that , they now have far bigger players each searching for the same ....They still have no alternative though , they will still have to explore , explore , explore which may or may not be fruitful ..think high risks and massive stakes.

Paying dividends from here will be reckless , indeed it could be argued that they should have stopped in 2016 when peak gold was reached , and earmarked for exploration then ..they have left it too late and gave too much money back to shareholders to appease them in the process ,.. all to prolong their own tenure as directors.

So the term capital restructuring ...put simply means that shareholders will pay , one way or another.

In my view , Cey is no longer a ' recovery share ' it's a dog share. I was wrong in my assessment of what yesterday's life of mine report would bring and I admit it It seems the market was too, based on share price falls since. .I will hold until early January though , when the quarter 4 production figures will be published , which will show a 50% increase in production from Quarter 4 of last year .. the market will react , the SP will rise and I will depart

Sage words kando. The breakout you referred to has just arrived ..key decision time