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Spoonington, Not praising or criticizing anyone just asking the questions behind the criticism hopefully using logic and common sense to discuss an issue.

OK I am not sure where you get the information that the contract wasn't tendered other than by Capital.

Are you aware given that you have the information that I don't have what the cost per tonne or cubic metre was for the total contract period?

Rebess where do you get the information that the equipment was leased because I very much doubt this to be the case given the cross border nature of such a transaction?

Yes Centamin know how to move waste material and I haven't said that Capital or any other contractor know better or that Centamin don't know how to move waste.

What I am saying is that Centamin don't have enough equipment to move what is an abnormal amount of waste over a relatively short period of time (although feels like an eternity) and maintain production and the normal mining waste that comes with mining in an open pit.

I have already said that I am not happy with the SP being halved BUT even though I have many years experience having visited and discussed material movement with senior managers in large and small mining concerns, also discussed the predicament at Sukari with current mining and equipment professionals, can't come up with an alternative solution other than a major cut back/waste material blitz.

So given the waste needs to be removed the question is do it yourself or get someone else to do it.

Horgan has already answered that question and basically it is doing it themselves wasn't cost effective as at the end of the 4 years the equipment would be owned by EMRA not Centamin/Pharoah Gold. I don't know the detail of the EMRA/Pharoah Gold contract but if we accept that Centamin doing it themselves over 4 years then writing down machines over 4 years becomes way more expensive than the depreciation that would normally apply to such equipment.

So it isn't that Centamin doesn't know how to move waste of course they know how to move waste but in this instance they can't use the existing valuable resource of equipment and people to move the abnormal waste AND maintain mining.

So Cowichan rather than calling us names for raising questions for debate which is what this forum is extremely good at, please tell me given that you are far better informed than others on this board what do you say should have been the alternative to using a contractor to remove the abnormal waste?

At no time have I said that Capital know better or can manage equipment better than Centamin what I said was to achieve 30% ROI they must be very efficient and have minimal downtime over the period reported but suggest the next reporting period might not be so rosy and when the contract ends they could well take a hit to the bottom line when the demobilisation costs are accounted for.

I am sure Capital will have done their homework on equipment life time costs because they have considerable experience running drill rigs which have very high running costs. Cowichan has jumped on early profits made by Capital which can be expected during the honeymoon warranty period.

Can this carry on for 4 years doubtful but with careful planned maintenance and service unforeseen issues can be minimised.

Just googled Arab Contractors and looks as though they are still going strong and particularly successful with Government(s) contracts but don't see them doing much if anything with the private sector.

Cowichan So Centamin gifted a contract to Capital who competed against several other experienced mining contractors who were more expensive.

If Capital have to date earned 30% ROI then they must be doing an extremely efficient job with minimal equipment down time so that would I hope mean Sukari are benefitting from the efficiency.

Has Capital allowed for adequate depreciation and demobilisation I have no idea? Has Capital allowed enough for component repairs/replacement over the life of the contract I have no idea?

Will the low equipment down time continue?

Will the ROI at the end of the contract be 30% who knows?

I ask what would you have suggested to be the alternative when Capital were the most competitive bid?

Gnome, Back in the day there was only one largeish indigenous contractor in Egypt known as Arab Contractors and they were a quasi government company, not sure they would have bid on this project, not sure if they are still in business.

Cowichan, Barrick buying Centamin and Horgan making them more desirable. So is Horgan doing a good or bad job?

So why would Barrick want to buy Centamin or Pharoah Gold Sukari when it is 50% owned by EMRA who contribute zero funds. I think you will find Barrick has already put Pharoah Gold into the too difficult basket.

Now for Horgan destroying the share price.

So what would be your alternative to the decision made to accelerate waste removal or open up the mine to access a number of areas rather than basically nowhere to go when the planned area became unstable?

Am I happy that SP halved certainly not but I would suggest if they continued driving themselves into a cul de sac then we would have been looking at major cut backs with very little return if any from the open pit.

Horgan and his team were in an almost impossible situation damned if you do and damned if you don't. In my opinion the do was the only way to go.

If I am wrong and Barrick do have a go at Pharoah regardless of the 50% ownership then Horgan must have done an excellent job because they will be deemed as a star achiever rather than a problem child.

Gnome I thoroughly agree Doropo reminds me so much of the early days of Newmont's Akyem resource in Ghana. Prior to start up and from memory the resource was known as a string of pearls approximately a dozen areas over about 20 km or more.

Initial talk was so similar to Doropo but I am told they are now extracting about 400,000 ounces per annum, however Newmont are known for playing cards close to their chest. The initial fleet was similar to the initial fleet for Sukari, based around 150 ton trucks Cat 785 size class.

I am sure Centamin will initially go contractor mining to work their way into the resource and feel this will mean the truck of choice for contractors in West Africa being the 100 ton Cat 777 size class, which is OK given the tonnage that is likely to be involved over the first 5 years production.

I don't like long hauls particularly in developing countries that can suffer from heavy rains on laterite roads especially the night shift where sleeping is extremely difficult during the day for machine operators in the tropical heat. Also conveyor systems can be expensive to maintain.

Agreed all doable but we both agree getting it right at the start is all important and cutting corners and rushing to produce such an important document is asking for trouble.

Best

Cowichan I don't think we will hear anything earlier than June as putting together a PFS isn't like writing an individual report this will involve numerous people and entities editing and auditing before the final document which needs to be accurate.

This will be the document that will drive a decision to spend a considerable sum of money or heaven forbid walk away so a few more weeks for accuracy is OK as far as I am concerned.

Doropo is a little complicated not just the metallurgy and processes but also 9 zones over 7 km so where to place the process plant without incurring expensive mining/haulage costs. We know from Sukari that it is crucial that the mine has flexibility.

Personally feel strong rise to SP isn't going to happen until Sukari get the waste contract done and dusted and back to a realistic 6:1 or below strip ratio. Coupled with a positive we are going mining at Doropo and the Court Case finds itself in file 13 known as the waste paper bin.

We aren't going to see anything coming out of the other Egyptian zones for a good few years, imo ABC will come or go long before any impact from the new Egyptian zones.

All of this will still need a strong GP as this will always be the major influence on profit.

gnome I thoroughly agree there would have been a very detailed study carried out and such studies are easy to compile with the number of software packages that have been developed. All of which would be able to play what if analysis comparisons.
I am certain you are correct about some eye watering numbers that would have impacted the SP and ??? the seriousness of an unstable wall at any other time than when you have nowhere else to mine of a half decent grade.
Horgan must have been sh---ing himself when the pit boss said all of your nightmares have come at once.
That is why I feel the studies had already been done and the news of an unstable wall brought forward the planned cut back.
I have to agree with geologists running a mine and to then be replaced by an accountant? Experience has to count for an awful lot when running a mine and when Josef had Harry Micheal and Trevor Shultz on the team both of whom had experience in bucket loads I felt comfortable.
Like you I again agree that history can't be changed and we must look forward, as I have said looking forward to the Doropo PFS but really looking forward to the end of the waste contract.
Don't care what anyone says a 30% reduction in the strip ratio will positively impact the bottom line.

Spoonington I understand your pain and you put your case very eloquently and I think you should ask Horgan to provide us with an executive summary with numbers covering the decision for the waste contract.
Personally I think the need for a concerted effort to open up the mine with a major cut back was being analyzed before the west wall instability. Like you I have never seen a dedicated waste contract but given the circumstances I struggle to see an alternative solution.

Spoonington I am not an accountant but whatever is said it is still a cost and it is a bit of both yes pre strip but pre strip after the fact.
Could it have been done differently maybe but to do it differently my thoughts are it needed to have started 2/3 years earlier so that when they got themselves in a tight hole and had nowhere to go when the west wall was unstable, they would then have other areas to mine and it would have had little or no impact.
Is this hindsight maybe but I would suggest management took their eye off the ball, because it is important that mines have flexibility?
Given that they didn't start 2/3 years earlier to open up the additional areas then yes I feel a contract to fast track waste removal is the way to go. What would be the alternative continue the way they were going and with the existing fleet this would mean a reduced number of trucks, loaders and support equipment available to mine ore and the need to mine ore at a lower grade with the reduced number of machines.
The other alternative is to buy a new fleet of equipment and undertake the waste movement in house and this wasn't deemed viable as writing down the full value of the fleet over four years wasn't cost effective.
In my opinion yes I think the anticipated benefits are reasonable and if the mine is going to achieve 500,000 ounces pa it is important to have the flexibility of a number of areas to mine and it sounds as though those benefits are now coming to fruition.
Do I wish the contract wasn't necessary most definitely.

Tibbs strip ratio is something that directly impacts the bottom line and without spending time on actual numbers from memory the cost of waste removal just on contract with capital was about $20 million for first quarter and believe they moved just over 10 million tonnes so about $2 a tonne which is about right give or take 20/30 cents.
However this is 10 million tonnes and no ounces contribution so a direct cost. When compared to ounces of 105,000 produced in 1st qtr we are looking at $190 per ounce purely for the waste contract and then add the cost of waste removal by Centamin's fleet from memory another 20 million tonnes and it is clear high stripping ratio hurts.
That said when the waste contract which in my opinion is a necessary evil finishes we can enjoy an overnight reduction in AISC and hopefully a flexible mine with a more realistic strip ratio closer to 6:1 supported by a more productive underground contribution.
So if Kees Decker is of the opinion that hurt today will hopefully give us golden flip flops in the future than I am with him but at the same time I wish we didn't have to go through the pain caused by management taking their eye off the ball.

Thoroughly agree gnome West African government departments can't be rushed and hopefully Centamin no longer need a simple renewal of exploration licenses and are now applying for mining licenses which will also incorporate mining exploration.
Actually I am looking forward to seeing the results of the PFS in the coming months.

Yes the ball mill is part of the processing plant but there are many links in the chain (moving parts) involved in the production plant, Not all will need upgrading annually but as I say wear parts will need upgrading at set intervals to prevent failure. Problem is all of the working parts commenced at the same time so suggest many of the wear items will need some attention around the same time.
The plant is one thing then you need to look at other areas of the mine example open Pit mining fleet of trucks, loaders and other equipment will all have arrived on site and started at around the same time and to service 10 trucks, 3 x dozers, 2 Graders, 3 x loaders etc will all need to be programmed especially when getting to the time for rebuild and change out of components. Then the power house engines generators and switchgear will need to be programmed into the schedules. Everything and more all started close to the same time basically at mine start up and or when new equipment packages fleets are replaced.
The introduction of the new Paste Fill Plant is another case in point and will be another link in the chain that in a years time could well need some attention during the first quarter.

It's like buying a new car and warranty applies providing it is serviced annually or on the anniversary of so many miles. The plant will have been the largest single capital expense and the first quarter will therefore suffer days when the plant isn't working and when it isn't working there is obviously an impact on production ounces.
An annual service and or change out of wear items is imperative to safeguard the plant efficiency.

Pleasantly surprised albeit a little disappointed with grades in the open pit but underground now pulling its weight even when still transitioning equipment.
Extremely pleased with the mention of the flexibility in the open pit with multiple areas opened up for mining, the pain from the waste contract easing a little but will be wonderful when the pain has gone completely.
Strip ratios reduced a tad but still too high.
Very grateful that the plant maintenance went without a hitch because this is a time when issues can occur, only takes something taking a few hours longer than expected to snowball and to seriously hurt production.
Overall as I say good first quarter and I like boring if targets are met and slightly exceeded.

OK looks as though I was a bit premature with my GP worries as appears the US guys and gals want the price to stay closer to the $2000 mark. Lets hope tomorrows numbers are better than forecast. GLA

Just what we don't need right now is a drop in the Gold Price the day before the first quarter numbers. We have been told that the ounces will be down because of a Plant Service but doubt that will prevent the Share price taking a hit.

Rebess I thoroughly agree and whilst I have no issues with incentive bonuses I am strongly against bonuses regardless of performance. I am sure there are team members who are deserving but as far as I am concerned none of the BOD should receive a bonus until we see the mine back to mining and not mining and extraordinary muck shifting. Back to an AISC that isn't suffering from high costs relating to playing catch up.
I don't see any significant improvement to the SP until the waste contract finishes and we will also imo see a hit after 20th April results even though we have been pre warned of the "plant servicing" affecting production ounces in the first quarter.
I am confident that once the waste contract finishes the only way is up and I would also hope that Doropo gets the green light very soon, with ABC following quickly afterwards because we need to get away from abnormal hits to SP for normal scheduled "servicing", due to being a single mining operation.