Member Info for Cowichan

Feb 22, 2019
"The new amendments are drafted now following immense pressure from the wining companies and other investors in this field who called for other terms to enhance gold mine investment and protect investor rights...

He also clarified that the second tender will be announced during 2019, after applying the new terms, to explore and extract gold ore in five concessions in the eastern desert...'

https://menafn.com/1098159868/Global-company-to-draft-new-terms-to-benefit-from-Egypts-mining-wealth-official-source

A Glimmer Of Hope In Burkina Faso? Or is management preparing to abandon the country?

Think about this: As recently as Feb 13th Centamin held 10 permits totaling 1200+ km2 of land holdings (one exploitation + nine exploration permits) in BF

But today's presentation reveals we now have 8 permits totaling 783km2

That means in the last week or two Centamin relinquished 3 exploration licences *likely* converting one of which into 'exploitation' status i.e. 2 exploitation + 6 exploration (a requirement of converting permits)

This coincides nicely with the water use permit being granted a few weeks ago.

Also in today's presentation management highlighted Centamin's BF stats:
2018 meters drilled = 29,470
2018 expenditure = $ 5.2 M USD
Cumulative total meters drilled = 552,461 (that's an immense amount of data to crunch!)
Also noting there are currently 11 operating gold mines in Burkina Faso that produced 55 tonnes of gold 2018

We must look at the big picture. The growing Doropo reserves in Cote D'Ivoire is literally 20 kilometers across the border from the Napelapera deposit in BF which means it's really all one continuous deposit. No chance in hell they're going to dump these BF permits.

Furthermore it is irresponsible (and/or pure ignorance) to suggest the BF deposits are uneconomical out-of-hand i.e. without seeing the scoping study and/or to suggest another gold miner could develop the project more economically.

We have $300 million in the bank precisely because these deposits will be developed by us.

One last thought: Today we witnessed the power of uncertainty and fear at play on Centamin's share price. Nothing more.

We have now had 3 quarters of rising feed grade in the open pit.

How then is it possible that Q1 2019 will see such a reduction over Q4 2018?

Do they expect to hit another low grade section?
A drastic reduction in material movement?

So I noticed a change in land holding status in Burkina Faso:

Centamin NOW has 8 permits equaling 783km2

(WHEREAS at the end of 2018 we had 10 permits equaling 1100 km2 ; one exploitation + nine exploration)

That means in the last couple months they relinquished 3 exploration licences *likely* converting a second to exploitation status i.e. now possessing 2 exploitation + 6 exploration (considering the reduced land holdings, a requirement of converting)

This is only my musings but remembering that water use permit being granted a few weeks ago... something may have begun.

I was very disappointed!

What we are constantly missing from this management team is any sort of enthusiasm or vision. Tell us how we are going to grow!

The Burkina Faso update was supposed to be out H2 2018... tell us why it's being delayed!

Now I don't agree that no news is bad news but the market will always assume as much... and that's apparently okay with this team!

And then no mention about the COO departure?

What genius thought that was so insignificant as to ignore?

I sympathize with all who want to throw in the towel... the damp down on expectations by management is seriously getting old. Maybe the CEO does need to go??

How does Egypt's economy make use of such a project?

All of AL Sokari's gold sales estimation which is worth $ 4.4bn were transferred to the bank account of Al Sokari gold mines to boost the Egyptian economy. In addition, we signed an agreement with the Central Bank of Egypt (CBE) by the end of 2016 to provide the project's need of local currency with about a monthly EGP 50m, and in return, Al Sokari has to recover this amount with its equivalent in dollars through gold slugs. This action is to increase the gold reserves in CBE in this critical phase and also to enhance the national economy, and based on that we transfer about 1,000 tons of gold were shipped till last January.

What are the estimated reserves of gold ore in Al Sokari?
About 13m ounces, estimated to be produced within 30 years since the beginning of exploring the project.

And what is your company's performance in this regard?
Well, operating expenses for the producing of gold recorded over $2.6bn, while investment costs exceeded $1.3bn. Actually 58% from this cost was injected into the Egyptian market. Also the gold imports from Al Sokari shape 2% of Egypt's exports.

What is the estimated workforce in the mine?
About 4,500 labourers is the estimated workforce in Al Sokari, and we deal with 100 suppliers and more than 50 contracting companies.

Let me clarify that a ton of rocks contains a gram of gold to be extracted which reflects how this industry is very difficult. Actually this system is crowding investments out not attracting them.

So, there is a complicated situation now?
The terms of the exploration and the nature of these companies alike. In addition to that the terms of bidding had been formulated in a frame of terms for petroleum exploration, but, there are bid differences between the two sectors. Each of them has a different nature and a different shape of investment.

And what about the legislative frame that controls mining in Egypt as the big umbrella that gold mining is subject to?
Indeed, the current Mining Law needs to be amended. Although it had been released in 2017 after amending the old one, but, the exploration terms need to be expressed to invest more investors to enter our market, making use of all incentives that the government is providing to all investors. Furthermore, this sector is very promising, as Egypt has about 125 locations that contain huge amounts of gold ore and ready to be explored and extracted.

Then, from your perspective, which is the most appropriate system to control gold mining in Egypt?
If the government approved the ‘taxes and rent' system which allows the investor to benefit from the entire production of his concession versus paying the required taxes and the rent of the concession, it will pave the way to welcome not less than 200 new companies and investments. Neither profit sharing nor production sharing boosts the gold mining industry in Egypt. These systems are suitable for the petroleum sector, and do not suit the gold mining sector.

And until then Egypt will not experience a real gold mining industry, do you agree with that?
Al Sokari will remain the one and only productive gold mine and Centamin will be the one and only investor in this industry in Egypt if the current law still adopts such terms. Actually the current law is very bad, and completely hurts the mining industry. It needs to be entirely amended if the state really wants to establish a genuine mining industry, especially in the gold mining sector.

For Al Sokari mine, how does Centamin introduce a successful model to establish a gold mining industry?
Our project succeeded to set a standard for industrial safely and environmentally friendly for the first time in this industry in Egypt. In addition, the government has earned from Al Sokari production till now over than $360m, including ante up $122m as royalty fees and $238m in advance on the account of profits. Furthermore, the national treasury collects about EGP 9m per month as taxes and insurance fees, recorded EGP 600m by the end of December 2018. That illustrates how Al Sokari is an important income resource for the state and how this industry is significantly profitable.

How does Egypt's economy make use of such a project?

Part 1
Daily News Egypt discussing these challenges with Youssef EL-Raghy, the general manager of Pharaoh Gold Mines which owns Centamin Company that has the rights to explore and extract gold in Al Sokari concession.

In this exclusive interview EL-Raghy expressed his optimism about gold mining industry in Egypt, but, it requires amending the system of exploring gold ore and its terms. He asserted that the companies which won the right to explore gold in the last gold tender have no background about the mining industry anymore bar one.
The transcript of the interview is below, lightly edited for clarity:

How do you foresee the delay for the first bidding to be resumed?
Actually it is not the first tender to be conducted here in Egypt,; as there were two tenders for exploring gold ore in the eastern desert which were conducted in 2007 and 2009. But, unfortunately, all companies that owned in them-there were eight companies-did not achieve any progress till now. And Al Sokari is still the only productive gold mine in Egypt.

Youssef EL-Raghy So what are the reasons behind failing to control such an important economic sector?
Simply because the four companies that owned the exploration in the five concessions have no background in gold mining anymore. Moreover, the resumes of these companies show that none of them are actually working in any mining industry except one of them called Resolute. Ghassan Spain is actually a company that works in the real-estate sector, while Vertas opened a branch in Cairo-before the announcement of the tender's winners-as a mining services company. In addition to Ghas Al Sharq which is specialised in gas exploration not gold mining.

Is that why these companies have not received their concessions yet?
Resolute itself, which owned two concessions, has announced through its official website on the internet that although it owns the right to explore in two concessions, it will suspend its work until the government take serious actions towards amending the terms of mining exploration in Egypt.

Could you clarify that in more detail?
Well, the new system of gold mining that had been applied since 2017 was wrong and does not comply with international standards and was not in line with similar systems in other countries which have a solid experience in gold mining. All countries which work in this sector apply the system that allows the investor to benefit from all gold ore he explores while paying only three kinds of fees which are taxes, royalty, and rent. On the other hand, Egypt has approved in the new system taxes, royalty, and to get 50% of the concession production in favour of the state. These terms really hurt the gold mining industry in Egypt, as investment in this industry is high-risk and a long term one, so, in case the investor realises a loss, he will bear it alone.

https://menafn.com/1098159877/Egypt-Mineral-Wealth-Law-terms-of-gold-exploring-do-not-attract-investors-AL-Raghy

#1 Sukari underground reserve update
#2 2019 production guidance... 600k?
#3 Burkina Faso resource update & plans
#4 solar power feasibility report
#5 COO
#6 Chairman
#7 wildcard announcement i.e. M&A... which might explain recent #5 & #6 developments

It's curious the Barrick 'leak' comes the Friday before this big event;

February 24 - 27, 2019
BMO 28th Global Metals & Mining Conference
Global Metals & Mining • Hollywood, FL

Canada's Barrick Gold is considering a hostile bid for Newmont Mining for about $19 billion in stock, in what would potentially be one of the largest-ever mining deals, the country's Globe and Mail newspaper reported.

https://www.cnbc.com/2019/02/22/canadas-barrick-gold-considers-hostile-19-billion-bid-for-newmont-mining-media.html

My Aussie friend, I sometimes don't know how to take you.

It seems as if perhaps you saw this departure coming. Oh please do tell me, nay us, what will happen next?

I for one did not see this coming, a senior position, in charge of development, gone just over a year into his tenure.

And to be clear it's the COO leaving Endeavour that has the connection with Ampella, not Mark.

To me his rushed departure is even more curious, as he was with Endeavour a long time and was essential in the development of all their operating mines.

Until the All-Knowing replies, I remain, your humble student.

**update below

Endeavour announces the appointment of Mark Morcombe as Chief Operating Officer, with effect from May 6, 2019.
He will take over from Jeremy Langford who will be leaving Endeavour on February 28, 2019.

Mr. Morcombe has more than 25 years of experience in the mining industry with extensive expertise in leading cost and productivity initiatives. Prior to joining Endeavour, Mark was Chief Operating Officer of Centamin Plc.

https://www.linkedin.com/in/markmorcombe/

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/1125-tsx/edv/58526-endeavour-appoints-new-chief-operating-officer.html

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Why are we the last to know these things??

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** Just wanted to add this; The COO that's leaving Endeavour to make way for Mr Morcombe was instrumental at Konkera/Batie West in BF back in the day...

"Prior to joining Endeavour, Jeremy served as Project Director at Ampella Mining..."

https://www.endeavourmining.com/about-us/management-and-board-of-directors/person-details/default.aspx?ItemId=8f094118-3c6e-4821-a417-41272992cd77

https://www.linkedin.com/in/jeremy-langford-38869a125/

Endeavour announces the appointment of Mark Morcombe as Chief Operating Officer, with effect from May 6, 2019.

He will take over from Jeremy Langford who will be leaving Endeavour on February 28, 2019.

Mr. Morcombe has more than 25 years of experience in the mining industry with extensive expertise in leading cost and productivity initiatives. Prior to joining Endeavour, Mark was Chief Operating Officer of Centamin Plc.

https://www.linkedin.com/in/markmorcombe/

https://www.juniorminingnetwork.com/junior-miner-news/press-releases/1125-tsx/edv/58526-endeavour-appoints-new-chief-operating-officer.html
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Why are we the last to know these things??

A model of success: Kirkland Lake Gold

2016 production guidance 270,000 - 290,000 ounces of gold; All-In Sustaining Costs US$1,000 - US$1,050 ; Share price at start of 2016 $3.00

Fast forward 3 years;

2019 guidance 920,000+ ounces ; AISC $550ish ; share price $44.00+

How many Kirkland Lake shareholders anticipated such a return on their investment? My guess is very few.

Bottom Line: Having the right management team in place makes all the difference.

https://www.klgold.com/news-and-media/news-releases/press-release-details/2019/Kirkland-Lake-Gold-Increases-2019-Production-Guidance-to-920000--1000000-Ounces-Fosterville-Mineral-Reserves-Increase-60-to-27-Million-Ounces-at-310-gt/default.aspx

Oh yes, where was Centamin's production & share price in 2016?
And where are they both now?
We have some catching up to do!

Good read Rebess, I am wary.

I don't know how anyone would classify our management team as adequate in terms of relaying information to shareholders.

And, if they imagine themselves professionals they must take responsibility and admit 2018 was a production disaster.

It will be very interesting to see how our CEO and chairman rate their own performance. Will they pat themselves on the back and say 'Good job team!' We'll see.

As a reminder, this is what management told us in last year's annual results released January 31 2018...

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"Ongoing decline development and exploration at Cleopatra, to access the high grade western contact, a key near term growth catalyst; Ongoing underground decline development at Amun and Ptah, to access the Horus, Bast and Osiris zones, which are key drivers of medium term growth;"

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I point this out because at the time Cleo was classified as a 'near term' growth catalyst but somewhere throughout 2018 it was reworded as 'medium term' yet no explanation of the change was given (surprised?). I for one would like to know what changed the time frame and if we are back on schedule...

Problem with gold mining in general is that investors have been willing to fund projects without sound business models ie they are mostly hoping to win the lottery.

As long as this is the case there will be unscrupulous, short sighted, flash in the pan operators willing to take the money and roll the dice. (How's that for mixed metaphors?)

As far as energy costs are concerned a move to solar seems like a no brainer considering the amount of sunshine in the desert!

Judging by the numbers at other mines a switch to primarily using solar at Sukari could chop $80 off AISC

If I'm reading the stats correctly our present fuel costs make up about 20% of total production costs

Hopefully we'll get an update Monday, until then those interested can check out Resolute's proposed power plant here

https://www.rml.com.au/uploads/7/2/0/8/72081691/181126-rsg-asx-new_solar_hybrid_power_plant_for_syama_gold_mine-final.pdf

(MENAFN - Daily News Egypt) The Canadian Chamber of Commerce in Egypt (CanCham) is negotaiting with several official gold refining organisations to operate in Egypt, Fayez Ezeldin, CanCham's chairperson told Daily News Egypt.

'Hopefully, we will be able to attract one of the official gold refining organisations, following the country's deals for gold excavation in 2018,' he mentioned.

While Canada captures the world leadership in the technologies of gold industries, Africa enjoys enormous natural resources, like gold, which supports Egypt's opportunities to be a regional gold refining hub, Ezeldin added.
CanCham's activities in 2019 will be implemented under the slogan 'Egypt is your gate for Africa' in line with Egypt's presidency of the African Union (AU), he said.

https://menafn.com/1098141788/CanCham-negotiates-official-gold-refining-organisations-to-operate-in-Egypt