Member Info for Cowichan

Why are your posts always so boring and off topic??

please stick to discussing Centamin , not forecasting nonsense and constant bla bla bla

If anyone wants to have a look at the outstanding amount the CBE owes Centamin as of year end 2022 it's on page 199 here :

https://www.centamin.com/media/2940/centamin-ar22.pdf

albeit in very small print

However we are 8 months into 2023 - and as the total amount outstanding to Centamin may be approaching $100 million US dollars for 2021, 2022 & 2023 combined I've posted a note on LinkedIn asking Centamin to respond

As Siko says, he has no idea about this amount outstanding , and the CBE could ostensibly print money to pay for it, although I suppose any and all Central Banks could print money to buy gold - maybe they do?

But, if it was that easy - the CBE would have printed money to pay their bills instead of their government borrowing billions from other Arab states, the World Bank and the IMF - then Egypt wouldn't be paying 60% of their revenue as interest on their debt - but their money would also be worthless, so there's that...

https://www.linkedin.com/posts/don-lawson-98619370_egypts-gold-reserves-rise-by-24-percent-activity-7097677235167363072-dSXM

PS - an alghad news journalist may be doing a story about this and other Centamin issues in the coming weeks , he can be contacted here:

https://www.linkedin.com/in/mena-habeeb-egypt/

Do you know if the CBE pays Centamin solely in Egyptian pounds for their monthly gold purchases?

I was under the impression they did - which facilitates Centamin in acquiring local currency to pay worker salaries and local procurement. If so, does the CBE now pay nearly double per ounce of gold as they did last year? Or does the CBE get a discounted price from Centamin?

If the CBE pays double because of the currency devaluation - in your opinion - is that a good use of government resources in such a time of hardship for the Egyptian people? And if the CBE gets a discount on the gold it 'purchases' - is that fair to Centamin shareholders?

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a recent news article from Egypt

August 14, 2023

Egypt’s gold reserves rise by 24 percent in first half of 2023

Egypt ranked fifth in the Arab world and 31st globally among gold-possessing countries after its gold reserves rose by 24 percent to reach 125.8 tons until the end of the first half of 2023, economist Ashraf Ghorab announced.

Statistics indicate that the central bank seeks to increase the strategic reserves of gold to break the barrier of 200 tons

https://www.egyptindependent.com/egypts-gold-reserves-rise-by-24-percent-in-first-half-of-2023/

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if the article is correct the CBE will be making many more 'purchases' from Centamin in the coming months and years - I put 'purchases' in quotation marks because Centamin has yet to be paid for much of the CBE's past 'purchases'

according to the annual report https://www.centamin.com/media/2940/centamin-ar22.pdf

Centamin is compelled to 'sell' up to $960,000,000 egyptian pounds worth of gold to the CBE per annum ( $80,000,000 per month ) - and that the CBE has an outstanding balance owing to Centamin for 2021 and 2022 and 2023

I can't get confirmation of the amounts the CBE has left unpaid for its 2023 gold purchases because Centamin is refusing to answer questions regarding this arrangement , but page 198 of the annual report lists some historic amounts accrued thus far as : at December 31, 2022 the amount receivable from CBE is approximately $ 23,681,000 US dollars ( and 2021 net payable $ 24,761,000 US dollars )

https://www.centamin.com/media/2940/centamin-ar22.pdf

Siko, if you can provide some clarity on this issue it would be appreciated -

my thinking is that the CBE sees the gold coming from Sukari as belonging to the Egyptian people anyways - which may be what many Egyptians also agree with - so why pay for it ?

And it doesn't take a magician

the facts are posted online for anyone to confirm -

Centamin's website still lists its MAJOR holder data as thus :

#1 VanEck Inc 111,244,970 shares 9.62%

#2 BlackRock 75,482,689 shares 6.53%

#3 abrdn plc 59,896,169 shares 5.18%

#4 Dimensional Fund Advisors 57,019,844 shares 4.93%

#5 The Vanguard Group, Inc 52,983,780 shares 4.58%

#6 Schroders 45,208,584 shares 3.91%

#7 Ninety One 43,647,274 shares 3.77%

#8 Aberforth Partners 41,332,214 shares 3.57%

#9 Wellington Mgt 39,703,129 shares 3.43%

#10 Hargreaves Lansdown PLC 39,227,049 shares 3.39%

https://www.centamin.com/investors/shares-dividends/shareholder-information/

while updated Marketscreener lists Centamin's MAJOR shareholder data as thus :

#1 Van Eck 110,273,580 shares 9.519%

#2 Dimensional Fund Advisors 47,425,970 shares 4.094%

#3 The Vanguard Group 41,000,780 shares 3.539%

#4 Hargreaves Lansdown 3.386%

#5 Aberforth Partners 38,141,675 shares 3.293%

#6 Norges Bank 2.811%

#7 Schroder Investment Management 31,157,324 shares 2.690%

#8 Ninety One UK Ltd. 27,128,540 shares 2.342%

#9 BlackRock 18,356,831 shares 1.585%

#10 Abrdn 18,275,264 shares 1.578%

https://www.marketscreener.com/quote/stock/CENTAMIN-PLC-9730915/company/

this means:

Blackrock SOLD 57 million shares

Abrdn SOLD 41 million shares

Vanguard SOLD 12 million shares

Dimensional SOLD 10 million shares

Schroders SOLD 14 million shares

Ninety One SOLD 16 million shares

Wellington SOLD a minimum of 21 million cuz they're no longer in the top ten

etc.

I see Siko's rebuttal to my posts about Egypt have garnered many 'likes'

I am glad Siko is still posting and setting the record straight about the facts on the ground

However, the bitter pill many private Centamin shareholders are refusing to swallow is that strong hands (institutional investors) have already made their decision to sell. Like I posted before the major shareholder info on Centamin's website is not up to date. Institutions that had held for over a decade have SOLD over 200 million shares. Now many of these shares are in weak hands. What does that mean? It means many new holders won't hesitate to sell when spooked. They are not in for the long term.

https://www.marketscreener.com/quote/stock/CENTAMIN-PLC-9730915/company/

Centamin's management (chiefly Mr Horgan) has faced a confidence crisis and lost the trust of many mining analysts/portfolio managers - one remaining of which is reassessing her position. Actually THE largest position (currently Centamin's largest shareholder) You can contact her yourselves:

https://www.linkedin.com/in/imaru-casanova-75b58b64/

I will not be surprised if in the coming days and weeks she decides (if she hasn't already) to significantly reduce her Centamin holdings (nearly 10% of Centamin's float). When this happens it will be just more bad news for Mr Horgan and the share price stability going forward.

Can things turn around? Yes! The Market does not have access to the information Mr Horgan has access to. Step out drilling, geophysical surveys, satellite deposit resource figures and grades, the legitimacy (or not) of the bonanza zone, negotiations with EMRA, negotiations with interested 3rd parties - all is not lost. Yet, Mr Horgan hasn't made the choices that pleased the institutional investors - and many of the unanswered questions I've raised over the last few years are still unanswered (or the answer is not favorable)

Imaru talks about her promotion to manager of the VanEck gold ETF group of funds here:

https://www.youtube.com/watch?v=QQ-8sNJeYlo

A bit off topic (but highly relevant to Centamin investors) my other Egypt investment - energy

An excerpt from VAALCO Energy's Q2 results :

Second quarter of 2023 realized pricing (net of royalties) was down 10% compared to the first quarter of 2023 and decreased 35% compared to the second quarter of 2022. This was driven by lower commodity pricing, higher royalty costs, as well as Egyptian sales in the second quarter that were sold domestically resulting in a $10 per BOE reduction in price achieved quarter-on-quarter. In the third quarter, the Company expects to sell an Egyptian export cargo offshore which should improve the pricing.

Foreign income taxes for Gabon and Egypt are settled by the government taking their oil in-kind.

VAALCO continues to work with the Egyptian General Petroleum Corporation on both collections and offsets and expects to have a third quarter 2023 export cargo offshore of around 500,000 barrels.

https://www.vaalco.com/investors/rns-releases

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Egypt changes the rules, makes negotiating difficult and basically takes the stance of 'my way or the highway' when it comes to extractive industries - yes it's been that way for a long time but it's getting worse as the country is increasingly strapped for cash

VAALCO's above statement 'continue to work with Egyptian General Petroleum Corporation on both collections and offsets' is polite talk for 'these b@stards are holding us over a barrel' , literally

I really don't know if the risk is still worth it (for me) when safer jurisdictions are not hard to come by

The point I was making isn't about the lawsuit at the University or the Egyptian law - but the mere fact tuition rates were doubled from last year - this is due to rampant inflation in Egypt which is much higher than many other countries

this foreign university isn't under the artificial umbrella that most other publicly or military controlled entities in Egypt operate - thus the true cost increases are necessarily passed on

to reiterate the point - Centamin faces uniquely higher cost pressures because they operate in Egypt - as a comparison both Newmont and Barrick's Q1’23 AISC were up by 13% q/q to US$1,376/oz & up 10% q/q to US$1,370/oz respectively

once price agreements with suppliers are renegotiated/renewed Centamin's AISC will rise considerably more than country's with lower inflation

An article for those who claim Egypt's currency devaluation is a boon for Centamin - read this:

August 15, 2023

LEGALEGYPTEDUCATION

Egypt - Parents of students at Coventry University’s Egypt branch have submitted an official objection to the university’s decision to increase annual tuition fees by more than 100%.

The parents say the Coventry University’s decision is illegal, as it violates Egyptian law. Article 18 of Law No. 162 of 2018 regarding the establishment and organization of branches of foreign universities and university institutions within Egypt states that tuition fees must be collected in Egyptian pounds.

The law also prohibits universities from increasing tuition fees after students have enrolled, except in percentages that were agreed upon in advance.

Moreover, Law No. 194 of the year 2020 of the Central Bank and Banking System stipulates that “dealings within Egypt shall be in Egyptian pounds.” The regulations of the Ministry of Higher Education also stipulate that the permitted annual increase in tuition fees in Egyptian pounds is 7%.

The parents also say Coventry University’s decision is unfair, as it comes at a time when the Egyptian economy is struggling. Many parents are unable to afford the increased tuition fees, and they are concerned that their children will be forced to drop out of school.

https://www.zawya.com/en/legal/regulations/parents-of-coventry-university-egypt-students-object-to-illegal-tuition-hike-vik5uwem

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Summary:

Egypt pound devaluation and rampant inflation are forcing a foreign owned school to double tuition to stay afloat. Input costs are up whether goods/services are acquired locally or abroad. The same is true for Centamin - expect AISC upward pressure

People's Daily, China

@PDChina

Argentina’s far-right outsider candidate Javier Milei, who wants to abolish the central bank and adopt the US dollar as the country’s currency, received the most primary votes for presidential candidates in the October general election, media reported on Monday.

https://twitter.com/PDChina/status/1691168310132641792

Brad Setser

@Brad_Setser

I rather doubt there will ever be a BRICs currency in any real sense. India doesn't want it. And at the end of the day the only logical way to make it work would be to have other currencies orbiting around the yuan, which Russia may do b/c it has no choice but others won't

https://twitter.com/Brad_Setser/status/1691474290833555456

“I’ve learned that when a man with money meets a man with experience, the man with experience ends up with the money and the man with the money ends up with experience.”

H. Jackson Brown, Jr.

When Putin came to power in 1999

$1 US = 24 Rubles

Today

$1 US = 94 Rubles

very unfortunate for the average Russian who doesn't have the wherewithal to stash savings abroad

the bank of russia claims the country's official inflation rate is 3.6% which would be an amazing feat no other country in the world has been able to achieve lately

unofficially the inflation rate in Russia is estimated to be around 60%

https://markets.businessinsider.com/news/currencies/russia-economy-inflation-60-percent-falling-ruble-steve-hanke-2023-7

- We now expect Egypt’s annual gas production to decline in 2023, as ongoing water infiltration issues at the country’s mega Zohr field weighs on output.

- In turn, this will see the country’s LNG exports marginally decline this year.

- High depletion rates at the country’s existing fields, coupled with a thin project pipeline, paints a bearish outlook for the country’s long-term gas production.

https://www.fitchsolutions.com/oil-gas/declining-gas-production-egypt-underlines-need-further-discoveries-18-07-2023

Egypt's lack of funds to import fuel is only getting worse - a wake up call to Centamin contemplating connection to Egypt's power grid

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Madbouly said that the value of the additional shipments will be between $250m to $300m. He stressed that these numbers were not available in the current budget or estimate, and therefore, it is an additional burden that the country will be able to provide under the current circumstances.

Egypt’s Prime Minister also announced that the government will be working to reduce electricity consumption in public facilities, such as street lighting and government buildings.

Madbouly also directed the Minister of Youth and Sports to play matches before sunset to reduce electricity consumption in sports facilities and stadiums.

He added that it was agreed to operate air conditioning devices at 25 degrees Celsius or more to consume electricity in the smallest possible amount.

Moreover, Egypt’s Prime Minister stated that the country will need to implement load-shedding procedures for about one to two hours daily due to high temperatures.

Madbouly said that the load shedding will be implemented in a balanced manner across the country and that it will not affect hospitals or strategic facilities.

https://www.dailynewsegypt.com/2023/07/27/egypts-prime-minister-announces-measures-to-address-power-cuts/

Apparently Egyptian expats can buy off their mandatory military service obligations by paying $5,000 in US dollars or Euros. By doing so they'll be able to 'travel to and from Egypt without fear of detainment' (not kidding)

This policy falls somewhere between a threat and a bribe. Good one Sisi!

To further complicate matters, the Egyptian military wants the $5k payments to go to the Abu Dhabi branch of the National Bank of Egypt - in Abu Dhabi! (might that be in order to bypass any legal difficulties the Military has in collecting their graft? ) Incredible.

On a side note, Egypt has had some form of military conscription in force since the 1840's - leave it to Sisi to break a 175 year tradition

https://alanasserlaw.com/2023/07/27/egypt-allows-egyptians-abroad-to-settle-their-military-service-status-for-5000/

https://www.egypttoday.com/Article/3/125897/Egypt-offers-conscription-settlement-for-Egyptians-abroad-at-5-000

"The strip ratio in the first five years of operation (2009 to 2014) was less than the LOM average. Strip ratio is forecast to increase to the LOM average (5.9:1), and in some future periods is likely to peak higher than the LOM average when waste pre-stripping is undertaken for the final three pit stages."

That's an excerpt from the year 2015 document 43-101

https://www.centamin.com/media/2317/cey_sukari_43-101-technical-report-231015_final.pdf

More recent open pit data; "The strip ratio for the quarter was 9.1:1 (waste:ore)"

That's an excerpt from Q1 2023 report https://www.centamin.com/media/2959/cey-rns_-1q23-quarterly_final_200323_website.pdf

Centamin's stock price will only recover if and when the AISC declines - and the biggest contributor is a high strip ratio. The Capital waste stripping program could never achieve this result - i.e. lower the strip ratio - therefore it simply made a lower AISC all the more impossible.

For those who mistakenly believe rushing a huge expense through would magically cause the average LOM strip ration to fall - sorry, but you're ignoring basic logic. It was just a higher cost realized earlier than originally scheduled.

In fact, nothing Centamin has published indicated to shareholders the Capital waste moving project would lower the LOM strip ratio & AISC - how could it?

Accounting for the end of mine drop off in costs the LOM ratio is currently forecast as 8:1 (see page 40) which itself is a significant upward revision than the mine plan of 2015

https://www.centamin.com/media/2877/cey-investor-presentation_141122_final.pdf

Worryingly, year 2024 looks to be the same as year 2023 around 9:1 whereas 2025 through 2029 look to be around 11:1 before improving back towards current levels - good luck making a profit the next several years! And forget about a dividend during the 11:1 period

This calls into question the whole purpose of utilizing Capital Drilling to expediate the process. The only counterargument that could be made is if a new ore body that was outside the LOM plan was the objective behind the Capital Drilling project - but that isn't the case.

Bottom Line: Unless a grand new discovery is found outside Sukari that can add ounces to the existing mill cheaply, or higher grades than forecast from the open pit or underground start to average the feed grade up, even the current share price is at risk.

During the last 12 months. 200 million shares!

Many of these companies like Blackrock, abrdn, Schroders, Vanguard, etc had held for over ten years - through thick and thin - collectively owning 524,413,488 shares

So then, to collectively sell 200,000,000 Centamin shares in such a short period of time is THE strongest sell signal an investor will ever witness and the biggest indication CEO Horgan actions' have not won their confidence -

On Centamin , and you're right - they have sold out

while Centamin's website still lists its MAJOR holder data as thus :

#1 VanEck Inc 111,244,970 shares 9.62%

#2 BlackRock 75,482,689 shares 6.53%

#3 abrdn plc 59,896,169 shares 5.18%

#4 Dimensional Fund Advisors 57,019,844 shares 4.93%

#5 The Vanguard Group, Inc 52,983,780 shares 4.58%

#6 Schroders 45,208,584 shares 3.91%

#7 Ninety One 43,647,274 shares 3.77%

#8 Aberforth Partners 41,332,214 shares 3.57%

#9 Wellington Mgt 39,703,129 shares 3.43%

#10 Hargreaves Lansdown PLC 39,227,049 shares 3.39%

Marketscreener lists Centamin's MAJOR shareholder data as thus :

#1 Van Eck 110,273,580 shares 9.519%

#2 Dimensional Fund Advisors 47,425,970 shares 4.094%

#3 The Vanguard Group 41,000,780 shares 3.539%

#4 Hargreaves Lansdown 3.386%

#5 Aberforth Partners 38,141,675 shares 3.293%

#6 Norges Bank 2.811%

#7 Schroder Investment Management 31,157,324 shares 2.690%

#8 Ninety One UK Ltd. 27,128,540 shares 2.342%

#9 BlackRock 18,356,831 shares 1.585%

#10 Abrdn 18,275,264 shares 1.578%

https://www.marketscreener.com/quote/stock/CENTAMIN-PLC-9730915/company/

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Thus unless Marketscreener data is bad , which it probably isn't ( note: Centamin's website data hasn't changed in a long, long while) Centamin's MAJOR shareholders have sold down massively -

Blackrock SOLD 57 million shares

Abrdn SOLD 41 million shares

Vanguard SOLD 12 million shares

Dimensional SOLD 10 million shares

Schroders SOLD 14 million shares

Ninety One SOLD 16 million shares

Wellington SOLD a minimum of 21 million cuz they're no longer in the top ten

Yes, VanEck and a few others are holding steady - but to present this current weak share price as a buying opportunity , and then pointing to the larger players as proof - is not accurate, in fact it's just the opposite

Aug. 6, 2023, 5:54 a.m. ET

Egypt's tutors rose to fame by accurately predicting questions, whether through experience or by greasing government palms. These days, a star tutor can draw 400 or more students per class, and the most sought-after tutors earn enough to drive Porsches.

Before the coronavirus pandemic popularized online classes, such tutors often rented theaters, mosques or halls to fit an audience of thousands for final pre-exam cramming sessions, said Maged Hosny, an industry veteran who opened some of Cairo’s first centers.

The most popular teachers drill facts and figures into their students with jokes and mnemonic songs they make up themselves. Others build their brands using self-published textbooks and notebooks with their names and faces emblazoned on every page. On Facebook, their fans argue heatedly about the best teachers.

She abandoned Egypt’s chronically overcrowded and underfunded schools midway through middle school, joining millions of other students in private tutoring, where the same teachers who were paid too little at school to bother teaching could make multiples of their day-job salaries on exam-prep classes.

Small wonder, then, that the centers compete to hire top tutors. Even doctors have been known to switch to tutoring to make more money.

The only qualification that matters is how many students they can attract.

“What I’d make in a month at my school, I could make in a day here,” said Mohamed Galal, 35, an Excellent-Oxford math tutor who also teaches at a nearby private school. “And it’s not just the money. You also get the status, the respect.”

The tutoring industry in Egypt has become a big business by filling the void left by public schools, once the bedrock of middle-class advancement. The government’s mismanagement of the economy has shriveled Egypt’s once-robust middle class, analysts say, dragging families toward poverty not only through repeated economic crises and subsidy cuts, but, increasingly, by the cost of supposedly free services like health care and education.

Juggling a booming population, a sluggish economy and extravagant building projects, Egypt has long spent well below the constitutional minimum of 4 percent of gross domestic product on education, even as students skid far down the global educational rankings.

For-profit tutoring centers are where Egyptian families try to outrun their country’s decline. Lessons are the only way to secure better futures for their children, many believe, even if it means sacrificing meat, fruit and vegetables amid 35 percent inflation.

“Sometimes what we eat today depends on whether I have class tomorrow. If I have two classes tomorrow, for example, then we’re eating koshary today,” said Zeinab Moawad, 18, a public school student at Excellent-Oxford, referring to the cheapest of Egyptian dishes.

https://www.nytimes.com/2023/08/06/world/middleeast/egypt-public-schools-tutoring.html

- Higher interest income on a larger cash balance further drove much of the gain

- Berkshire's cash mountain now $147.4 billion - up from $128.6 billion at yearend

- total firm debt now $84 billion. (against $147.4 billion firm cash, net cash is $63.4B)

- Berkshire is earning over $7B/year in interest income on its T-bill holdings, up for nearly nothing two years ago. Interest expense on debt outstanding is less than $4B pre-tax

- railroad is noticeably weak with revenues down 11.6% on 11.1% lower volumes

- trucking taking share from rail on lower spot rates. Industrial, agriculture, coal volumes all down. Chemicals, plastics, lumber shipments all weak. Higher interest rates are hammering residential construction

- Berkshire's top 8 publicly traded company shareholdings make up 86% of all its publicly traded shareholdings - notably Apple makes up nearly 50% alone

1) Apple: 48%

2) Bank of America: 9%

3) American Express: 7%

4) Coca-Cola: 7%

5) Chevron: 6%

6) Occidental Petroleum: 4%

7) Kraft Heinz: 3%

8) Moody’s: 2%

My Thoughts:

The most successful investors didn't play by the commonly held investment rule of high diversification, at least not until their fortunes were amassed, and even then to outperform the market benchmark they were able to pick a winner and ride that winner to great highs (Apple!). Still, Buffet managed to get out of some too soon and miss others completely ( Amazon! )

Cowichan posts:

Buying power of one dollar over 90 years:

1933: $1.00

1943: $0.75

1953: $0.49

1963: $0.42

1973: $0.29

1983: $0.13

1993: $0.09

2003: $0.07

2023: $0.04

MrBond replies:

I don’t know where Cowichan is buying his dollars, but they still cost $1.00 for me