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Thanks Tornadotony .
It is so refreshing to read posts which are well researched . I will give you my thoughts later when I have the time

It isn't possible to explain the reason for the higher AISC for 2022 without looking at the detail behind it , however it is likely to be the 'in year recognition' of one off expenditure from that or earlier years .

The main thing to note is that they are indicating that cost price inflation going forward is very high. Gold prices will need to rise from their current prices just to stand still on the profits front

The headline of making significant progress against production reset levels is laughable , but not in a good way ... given that the word reset actually means reduction ..so they are making progress in achieving these reduced levels of annual production.

The cash in the bank has fallen to $ 250 million ..when they talk about reviewing capital structure , they mean introducing debt ..not necessarily a bad thing depending on what they are using it for. If it's to fund genuine future growth, then that's ok , but if it's to fund future dividends ( running around $ 105 million p/a) then that isn't good . It's the equivalent of borrowing money to pay for the house keeping ...the prudent thing to do would be to either reduce or cease dividend payments . just think how that would go down though ..

I cannot understand how anyone could read the future production and AISC targets and be reassured by them.

Sorry to be so negative ..but this was my worst case scenario .namely extending life of Sukari mine by 2 years , to be achieved by reducing annual levels of production . The cost savings on top give me the impression that they are squeezing out every last drop before the patient dies.

Multiple growth opportunities available with " A review of the capital structure underway with a view to increasing financial flexibility ..".

What do you think that means ?

I appear to be the contrarian here, but I don't see much good news at all. A smithering of jam in 3 years time

Am I living in a parallel universe ?

RNS release on 8th December confirms that peak gold for Centamin was reached in 2016 with production of 552,036 ounces at an AISC of $ 694 an ounce .

RNS presentation later this morning to confirm future targets to increase current production of approx 410,000 ounces to increase to approx 450-500 ounces by 2024 at an AISC of $ 900- 1175 an ounce .

The initial reaction from the markets was muted .

Move along folks , nothing much happening here...

Agreed Sotolo. Of course the biggest determinant of AISC is volume...AISC per ounce decreases as production increases , until full capacity is reached , so if Centamin was able to produce 500 + thousand ounces per annum , instead of 400,000 ounces, then Centamin would have a lower AISC and would be more competitive than Endeavour . It's that simple .

This is also why the life of mine update is so important .. worse case scenario being that the life of mine is going to extend from 10 years to 12 by decreasing annual production from 500,000 ounces to 400,000 ounces (but not stated as bluntly.)

Based on what the mining experts on the site are saying, this is unlikely to be the case..fingers crossed they are proved right .

Thanks Mr T. I am afraid I lost the trail of your huge array of different numbers .

I am well aware of the capabilities of creative accounting techniques and also at mining companies propensity to use them .

AISC isn't perfect , nothing is , even in non mining sectors , however even though AISC is a non Gaap measure , companies are urged to include it to provide a greater transparency between mining companies .
They are also obliged to include a reconciliation between AISC and IFRS profits which are regulated , so without going into endless explanation , it is possible to make due comparisons

I will stick to my views re Endeavour and Cey, and others do likewise ..please note though ..it's Cey I am invested in and not Endeavour

Regards

Steve / Beer stalker...Cey is what I call a " sods law " stock when you look at the historical price chart . It can languish at low prices for long times , but when it does move back up , it does so in rapid speed , talking weeks not months . It's just a stock that you need to buy and hold until the big moves comes...these are likely to come just after many shareholders have capitulated and sold
Steve ..Do your global equity funds include Fundsmith and Lindsell Train , SMT, EWI and Monks ?

Inflation is already here ..

Mr T. That was a good reference to Norman Lamont , I remember it well. I bought a 3 bed house in Greenwich for £81,500 I wonder how much it is now
I sold it in 1996 for £105k
Those were the days

If interest rates rise significantly ( I can remember when they hit 15 % 30 years ago ..).then it wouldn't be inconceivable for the USA and others ( including UK ) to default on their debts .
They all need super high inflation to reduce their real value of debt , so the Fed better be careful about what it wishes for .

Somebody on here ( I can't remember who ) suggested that investor demand for gold was dependent on market expectations of future ' real ' interest rates which is a view I subscribe to. When inflation is higher than interest rates , then cash starts losing its value and that creates a demand for gold ..
If the talk of increasing interest rates at the same time as reducing monetary easing is correct , then that will be a deflationary act which won't help the price of gold

So did you super load up at 93p as you mentioned in an earlier thread or did your anxieties get the better of you?

In theory , I think the true cost of Gold is the AISC but without margin...this is 'cost' we are referring to rather than "price " which would include a profit margin and would therefore be higher.

In reality a few other things would come into effect

1. Different producers have different AISC so the true cost of gold varies from one company to another. As an example the cash cost per ounce of gold produced for Centamin is approx $ 850 ..it's AISC is around $1,200.
By comparison , for Endeavour mining , their AISC is only $850, which barely covers the cash cost of production for Centamin

2. Gold mines would carry on in the short term even if the gold price fell below these amounts , but eventually the pits would be " mothballed " when the gold price fell below the cash cost of production ..this makes sense because the more gold they produced , the greater their losses would be ..

3. Gold production would still continue if the price fell below AISC but above the cash cost , because by doing so the company would be recovering at least some of their fixed costs. .obviously that couldn't continue indefinitely

4. In view of the different AISC of the different mining companies , Centamin would mothball its production before Endeavour ..thus reducing global supply when it did so ...this process would continue, company by company , until supply had diminished to the level to satisfy the corresponding level of demand.

50 % of gold is consumed in jewellery and around 10% by industry , mainly tech companies and a further 10 % approx by central banks , so a new equilibrium gold price would be reached to rebalance the supply/demand equation , to satisfy this underpinning demand .

Regarding the investor demand for gold , the picture is less clear , would investor demand increase with falling gold prices and thus increase the price of gold or would the reverse happen ..who knows ..

I can remember hearing that irrational exuberance remark being repeated every time there was a stock market high.

Regarding money supply and inflation ..I think the velocity of circulation has a hand in it too.

Finally though , in the UK today a panorama report has said that the average household will spend £1,700 more in 2022 than in 2021 on tax hikes , fuel and electricity , council taxes , food and services ..you can see it happening already.

I think the inflation cycle has already began ..

I agree Razor...that was a very well thought out contribution , with necessary caveats included

As Steve J says , most of the contributions surrounding the LOM review have been positive; yours takes it to a different level .

Here's hoping you are right ..

Any thoughts on what the update will say ?

It seems to me that the profits for Centamin follow the formula of gold price plus or minus management competence , with a helping of luck thrown in . It also seems that the more competent the management team are , the luckier they get. .

On a more serious note and with regard to the Cey share price , I am looking for a noticeable shift in momentum , where the share price rises despite a fall in the price of gold ..of late is has happened on a few occasions but it corrects itself back again within a few days .

The fall in the gold price earlier today by the way , occurred after the markets closed in London .