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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.
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.
Tibbs yes total nonsense and Trevor got stuck in the middle, I thought at the time what a total waste of his experience getting him involved with HR and remuneration. He was/is one of the most respected people in the mining industry and guarantee when he was onboard he would have been a major asset to the company. Unfortunately in time retirement comes to us all.
Tibbs, Sami got the Pharoah mine started based on his expertise related to the Geology and he built the initial team to be led by his son Josef who wasn't a miner and the team including Trevor Schultz did an excellent job in setting up the mine and many of the initial team I knew quite well and they were a very experienced bunch of mine start up people.
This is what they were the start up team and to be honest they did an excellent job in the early years and Harry Michaels joined them from Geita a then young General Manager who I am sure would if not for his untimely death under the guidance of Trevor Schultz gone on to be CEO.
This is when in my opinion things started to go off track because Josef had to go out to the market to find alternative people and the rest is history.
Don't disagree about uncle Youssef who was as I see it very much a political appointment who may well have been involved in the very early years with Sami to guide the way through the political complexities. Sami was away from Egypt for many years building his reputation in the Australian mining sector.
Paul,
Yes I believe Centamin are basically opening up/expanding the open pit to enable additional ore resources to be exposed and mined rather than rely on just a few areas available to mine as the pit gets deeper and tighter.
I would also suggest the expanded area is already contributing ounces and the additional flexibility to enable and provide some confidence to achieve the ounces required this year.
Mr T I would hope that Centamin have written into the contract that they have first refusal of the Capital Fleet at the end of the 4 year contract and would also hope that Mantrac had a maintenance contract for the fleet with all important accurate records to ensure the equipment is in good order.
Paul, Firstly I retired back in 2008 albeit I did some consulting for a number of years and Burkina wasn't/isn't a country that I have a great deal of experience and I have no first hand knowledge of Martin Horgan. I have however spoken to people who have met him and or been involved with mines that he has had some degrees of responsibility and I am told that he is extremely knowledgeable on all aspects of mining and that he is a straight talker and well respected.
What would I have done to sort out the possible collapse of the North Wall, to be honest I have no idea because it depends on how bad the fissure is but first priority is to stay very clear and get in the experts and I am not an expert.
This stopped the mining of the North Wall and from what I understand or remember this was the area that was necessary to meet production estimates as the grades were predicted to be 2 grammes per ounce.
There was at that time very little that could then be done to maintain production because there was limited alternative ore resources that could be mined.
As far as I am concerned I would have liked the mining contract reduced to less than 4 years but what I hear and read is that the 4 years is described as a blitz or fast track so guess 4 years was deemed as being the optimum.
Don't get me wrong I would rather that this waste contract didn't have to happen and without walking the mine with the guys on the ground it is really difficult to fully understand why they got into this situation.
I will give you my opinion because looking from the outside it seems as though the waste removal is really like opening up a new mine where there is no free dig.
I am going to try now to explain what the mine will look like before mining starts. Imagine a barren landscape with out crops of rock. Free dig means the earth has gold fines invisible to the human eye weathered through the centuries known as oxides. Easy and relatively cheap to process through simple leach pad technology.
No free dig means the need to clear the top levels of waste to get down to ore bearing material hopefully oxides but the deeper you go less likely it is weathered so start getting into transitional and sulfides which will be processed through the plant.
This waste removal will involve drill and blasting, construction of haul roads, laying down dump sites, as I say like opening up a new mine or pit with little or no return but necessary to get to the ore bearing material so in my view the quicker the better.
Kees Decker is a well respected analyst but even with all of his experience without spending time on the mine much of what he is saying is based on what he is able to glean from reports not first hand knowledge that he can gather from questions and looking at the operation.
I hope my maybe over simplistic response helps answer the questions that you asked of Cowichan.