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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.
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.