Member Info for DASUT

Tony are you sure that Horgan said waste contract ends end of this year? As awarded end 2020 but not started until mid 2021, for what was supposed to be a 4 year contract and to move 120 million tonnes of waste with a prediction of them only moving 62 million tonnes by the end of 2023.

Wonderful news if they are finishing end of this year.

Unfortunately if we are expecting a quick outcome of the court case even though the claim has now been deemed unlawful don't hold your breath the legal system will drag on and on.

Paul The open pit at the end of 2020 was pretty much mining one ore area and the aim is by the end of this year the 2 year accelerated waste programme will have moved 222 million tonnes of waste (Centamin's fleet moving 160 million tonnes and Capital moving 62 million tonnes) and they will then have 4 open pit ore areas so providing for a more flexible pit.

Cowichan, Tibbs sorry for being naive but what has this got to do with Horgan?

Sorry should read $259.2 million.

Cowichan question where do you get a contract value of $295.2 million as my information tells me $235 million up to $260 million with inflation, and this includes the 15 month drill and blast extension?

Thanks

Cowichan

What facts? Your over 100 million dollars into the coffers of Capital.

My numbers for cost per tonne are approximate as stated previously because I don't know the exact split between waste and the added 15 month drill and blast contract so took $240 million as the waste contract to keep maths simple.

If you know for a fact that the contract value is $259.2 million and the cost to Centamin is $2.16 per tonne great now lets debate what that brings into the Capital coffers. 30% profit (or 30 ROI ?)means that Capital need to run at a cost to them of $1.66 per tonne and achieve a gross profit of $78m, I would say best of luck with that.

I don't know many if any 4 year contracts that don't cover an inflation clause so this comes as no surprise and Centamin doing the work themselves would also incur inflation.

I know and have said that it would be cheaper to do the waste contract in house if you can write machines down that have a residual value BUT the contract that Pharoah Gold has with EMRA says that after the contract the equipment reverts to EMRA so effectively no residual value. So the whole of the equipment value has to be written off over 4 years so this gives a massive edge to a contractor doing the work cheaper.

Now if this is incorrect then yes we have been misled and if you know that this fact isn't correct then yes we need to ask why we have been misled.

Paul from what I can gather the pit is being made larger so is being cut back. Whether this over a large expanse at the same level I have no idea. It could well involve some depth but as I say without seeing the plan and scope of work I can't say.

I will take a look at Centamin's mine plan to see if it helps us understand the scope of works.

Paul to answer your question about whether it gets quicker I am sorry I can't answer your question as it would be guess work. There are too many questions relating to the work still required to be done within the scope of the contract.

When mining we would think the haul distances will get longer and at the same time deeper which means the haul road gradients will get steeper and the cycle times longer so more expensive and therefore certainly not quicker.

However as we are talking purely waste I can't say that the same will apply.

Sorry I can't help.

Cowichan you have called me out on a my saying so let me explain. I have visited many mines in many countries and spending nights on site. Sometimes with a group of people carrying out studies or preparations for tendering.

This involves time organising, involvement with the site management teams responsible for accommodation, catering, health and safety and site passes etc.

If we are already on site conducting a contract then we will have an on site account with various departments such as catering, club, shop etc and this account will be charged for any expenses accrued.

When visiting in support of a contract any of the outside teams expenses would likely be charged to this account. If we were invited by the mine to conduct a study then in most cases some or all of the on site costs would be signed off by the responsible department.

As I say systems will be in place to cover all aspects of being on site and safety would be the of the utmost priority.

Also I don't take what Centamin say as being gospel and I am just as annoyed that such a large project to remove waste has had to be undertaken and wasn't taken on board earlier at the time of the record ounces.

What I do however see is the cost of this project hurting the bottom line and at the same time crucifying the share price.

My point is that it isn't the cost of the project which I believe at $2 per tonne to be acceptable it is the cost to the company worth and the SP that needs to be corrected. To achieve this the mine has to get back to basics and bring the strip ratio back to an acceptable level to give the mine a chance to make an equally acceptable profit to improve on the company value and higher SP.

The waste project unfortunately is a necessary evil and I ask again what do you see as an alternative?

By the way I thoroughly agree given the norm and writing down the equipment costs over 4 years with a residual value that an inhouse project would have been marginally cheaper but again $2 a tonne ain't bad. You try moving a tonne of earth for less than $2.

I can't believe how you attack people now I am a cohort of Horgan or I am ignorant.

Cowichan

When I have provided an on site contract the costs of things like accommodation, food, fuel, lube and any other expenses such as workshops, parts storage etc are all agreed at the time of tendering and or final negotiation.

At the end of each given period contractors are billed for such costs, believe me there's no such thing as a free lunch, although not sure why it worries you so much because added costs inflicted on the contractor encourage higher costs plus a margin to the customer.

The question as to why Centamin didn't do the waste removal inhouse was asked at the last retail shareholder presentation and phone in and the simple answer was the write down over 4 years was too expensive.

Explosives will have to be imported by the license holder and I would suggest that would be Centamin but the experts will likely be whoever is awarded the Drill and blast contract and in this instance it will be Capital. So not sure I understand the question, why charge for the explosives when the contractor is carrying out contract on your behalf only to be charged back with a margin?

The underground contract or inhouse decision would have been different because the underground contract was at an end so renew or go it alone? Length or life of mine says there are long term savings, if there was only 4 years to run doubt that owner mining would have been considered.

I have never said that Capital aren't making a profit of course they are making a profit BUT at $2 per tonne there is no way they can possibly be making what you claim is over $100 million on approximately $240 million contract.

The advantage Capital had over all other contractors is that they actually have the majority of the infrastructure and management/supervisors already in place given the length of time that they have been on site.

For the well known mining contractors to start afresh in what would to each of them be a new market puts them all at a disadvantage from the standpoint of set up costs and timelines. Also wouldn't surprise me if the larger contractors declined to bid given the short duration of the contract.

Do I personally need to see the detailed costs to justify $2 per tonne well no I don't because I know this isn't a rip off number and it will need to be worked at to make a good return.

Cowichan you keep criticizing what others say.

Tell us what you believe should have been done hopefully with some quantifiable numbers and facts so that we can understand your logic.

What information do you have that discredits the information that has been provided by Centamin and also what appears on Capital's web site?

Tibbs yes but hopefully we are getting back on track and the pain will stop once the waste contract is completed. Although I would hope the mine is already benefitting from the waste that has already been moved with flexibility. The problem with the waste contract is it impacts on costs regardless of how it is accounted for. Every truck load costs approximately $260 for no return, whereas every truck load carrying ore contributes approximately 130 grammes of gold.

Tibbs yes I understand just emphasising a point when it comes to questioning the accusation that Centamin has gifted Capital a contract that is lining the pockets of Capital's shareholders with over $100 million of cash at the expense of us Centamin shareholders.

It means Capital would have to move 120 million tonnes for $140 million or $1.20 per tonne of waste

I don't understand Cowichan's motive for claiming that we are hypocrites working off misinformation unless of course he does have other more accurate information.

Mr Bond I am not buying to rent just using it as an example to understand Capital's waste contract who is said to be earning 30% ROI at Sukari for their waste contract and a figure of $100 plus million earning that Capital are making on a $2 per tonne waste contract which doesn't compute in my calculations.

So if Capital has a contract at $240 million and they have a ROI of 30% then they are achieving approx $72 million divided by 4 as it is a 4 year contract so an annual return of $18 million before costs.

Mr Bond take a look at Capital Mining's (Capdrill.com) Financial's for 2021 and 2022 on their web site because if they are bringing in abnormally high profits I can't see them in fact 2022 is way down on 2021 albeit not bad numbers.

As I read ROI if I buy a house for £200,000 and rent it out for £1,000 per month my ROI for the year is £12,000 or 6% per annum and over 4 years 24%. This doesn't however cover the costs of maintenance, cost of finance and tax or any other costs, so nice that there is a ROI but this isn't profit.

Tibbs I am not sure Cowichan will agree but feel it is important to be constructive with criticism but believe me I am livid that the necessary evil is hurting Centamin's bottom line and SP, after all I am a long term investor.

I certainly welcome anyone constructively questioning my summary and other contributions without saying that the contributor's are stupid or hypocrites.

If someone genuinely feels there is a better alternative then we should all listen and discuss and respond.

I also feel it would be helpful for one of the accountants on the board to explain the difference between ROI and profit as an accountant I am sure will be better placed to explain than me.

Getting large mining machines into most markets takes time as the manufacturers don't have equipment sitting in stock so all important that the dealers provide accurate sales forecasts.

This is why I feel that plans were in place to carry out a major cut back prior to the issues with the west wall.

Rebess, Difference from finance and leasing in the UK is cross border leasing is extremely difficult.

Equipment manufactured in USA, operating in Egypt so risk is Egyptian and likely a US dollar transaction and difficult for other than a US based leasing company due to currency risk coupled to political and commercial risk, likely involving EXIM Bank.

Not saying it is impossible but it is an expensive complicated long drawn out exercise.

I have since ascertained that Capital has purchased the equipment fleet so leasing is a red herring.

Cowichan, I would also like to pick up on misinformation as you claim a loss of $100 plus million due to excessive profits. Given the contract awarded to Capital in January 2021 was for Both Waste Removal and a 15 month extension to the Drill and Blast contract valued at between US dollars 235 and 260 million, I am confused as to how the profit equates to $100 million.

The contract is to remove 120 million tonnes of waste over 4 years and therefore we are looking at about $2 per tonne, I say about because I don't know the split between waste and drill and blast contract values.

Is $2 per tonne expensive in the grand scheme of things too right it is but Is it 30% more expensive compared to doing it yourself well doesn't appear to be when you look at Centamin mining costs over the years.

You also say Capital enjoying for over nearly 3 years when contract was awarded January 2021 and then needed to mobilise.

When I was looking at costs per tonne and I am going back over 10 years a rule of thumb was about $1.50 to $1.80 so we are now talking just over 30% increase on the lower figure so is this now about right, don't know but would certainly add that doesn't sound like anyone is tearing the a..e out of the deal?

Spoonington the good and bad question how good would the previous guys have looked if they had moved the 120 million tonnes of waste when they were producing record ounces I would suggest about $200 million less good.