Member Info for ElProfessor

Fingers crossed!

Cowichan,
I would be ecstatic with that. Do you think it is likely?
Hope you are feeling a bit better after the horrible last week (and the one 2 before that).
Best wishes,
Prof

Might be a bit much to say gold is looking strong but it is certainly looking OK this morning having just pushed through 1905.
Gold miners however: FRES, CEY, HOC are all down this morning.

Morning Sotolo,
I am starting to take a look at HOC where I know you and a number of the others on this board are also invested.
I was interested to see that forecast for this year was 422k gold equivalent oz after producing 477k in 2019. I appreciate that in light of COVID and the resulting production halts earlier in the year the forecast is now 280-290 which was reconfirmed last week in Q3 prod results. I also note that HOC is approx 20% less market than CEY at current share prices.
Looking only at the next year, it seems CEY and HOC could be producing broadly similar gold/ gold equivalent oz. Have HOC given any insight as to what they expect to produce? HOC have traditionally paid a very low dividend which I get while they have been paying down debt. Given their debt is almost repaid is there any indication whether profit will now go to dividend or exploration/ CAPEX? Finally what do you make of the medium to longer term prospect of the two companies?
Would appreciate you informed thoughts. (Have posted on both boards as relevant to both companies and not sure where you look more).
Thanks,
Prof

Morning Sotolo,
I am starting to take a look at HOC where I know you and a number of the others on the CEY board are also invested.
I was interested to see that forecast for this year was 422k gold equivalent oz after producing 477k in 2019. I appreciate that in light of COVID and the resulting production halts earlier in the year the forecast is now 280-290 which was reconfirmed last week in Q3 prod results. I also note that HOC is approx 20% less market than CEY at current share prices.
Looking only at the next year, it seems CEY and HOC could be producing broadly similar gold/ gold equivalent oz. Have HOC given any insight as to what they expect to produce? HOC have traditionally paid a very low dividend which I get while they have been paying down debt. Given their debt is almost repaid is there any indication whether profit will now go to dividend or exploration/ CAPEX? Finally what do you make of the medium to longer term prospect of the two companies?
Would appreciate you informed thoughts. (Have posted on both boards as relevant to both companies and not sure where you look more).
Thanks,
Prof

Hi Miz,
Thanks for the thoughts. Didn't get in quite as low as you. I think my lowest were 40p.
Tedious to be so far back in so little time although I do keep putting that in the context we went up very fast in Q220.
Best wishes,
Prof

Hi Zambian,
Thanks for getting back to me. I agree with your point ref what is the alternative for dividends. If you take my most optimistic case below and say investors would be OK with 3%, which is still superb relative to banks or even most other companies, then you get a share price of 300p. I was, up until the past fortnight, confident we would see this beautiful number next year, now I would be grateful to claw our way back to 200p.
There is also the key question of confidence. Investor don't like surprises (well not the bad ones) so companies get punished through their SP for this. Now in CEY's case we have a new CEO at the helm so he will get some grace for that. There is also almost inevitably the usual going on here of a new CEO kitchen sinking it up front when we can blame it on his predecessor. Get all the skeletons out and then there is no danger of them coming out to get you later. Like you I would really like to see Horgan buying a very significant chunk at this price.
Best wishes,
Prof

Hi Mr Bond,
No I don't expect CEY to make a loss but they will make less than they would have before. I expect that there will be a dividend but worry that even with the increased POG it will be less than the year just gone. Take next year with AISC at 1250 and say gold at 1900 that means profits will be 650 per ounce. Take the mid-point of forecast of 415k and we get $270M of revenue. That means c$135M left for shareholders after EMRA's share. There are 1.15bn shares in circulation so 11.7c per share. As CEY dividend policy is to pay out a minimum of 30% as dividend that would be 3.5c for the year. They can pay more and last year paid around 68% which would see 8c. Last year with the 68% they paid out 10c. It is therefore not impossible that they maintain the dividend at last year's level but that use nearly all free cash-flow. Hence my question.
I would also point out that the cable is currently at $1.3 to £1 so the 11.7c equates to 9p. With the pay out at 30% that would give 3p and at 68% that would give 6.1p. With the share at the current price of 133p we are therefore getting a yield of between 2.25% and 5.11% so not bad. I would also add that CEY has in the past paid out all the free cash flow as dividend so if they did that we could be seeing 9p per share so 6.77%. This of course is where you get the key question of what will they do with the money if they don't give it to shareholders. Theoretically they should only be using it for other purposes if it will give a higher return to us later. Unfortunately therein lies one of the key worries that all this investment in prospecting over the past years has little to show for it. If you want the positive case then if all free cash flow was paid out i.e 9p and a yield of 4.5% was considered acceptable and sustainable then you get a share price of 200p. If you want the negative case then set average POG a lot lower than at present, after all it was just over $1500 at the turn of the year and went below that back in March. At $1500 POG and AISC of $1250 we get 250 per ounce so with 415k used above we get $104M profit so $52M after EMRA share which is 4.5c per share. If the minimum, as per CEY dividend policy was paid out we would get just under 1.35c per share so just over 1p. If investor felt they needed a 5% yield for the level of risk then that would mean they would pay just 20p per share. Again I am not for a minute suggesting that is a reasonable share price, not least because I have ignored in all of the above CEY's significant cash in the bank.
Please be aware I have not double checked my calculations and am going by memory for some of the figures. This is therefore only for illustrating my thought process and should not be taken as accurate. I am also just trying to illustrate, having come up with a price per share of between 20p and 200p, the extent to which how you value CEY depends on what you assume.
Hope this helps.
Best wishes,
Prof

Or something else?

Hi Zambian,
What is giving you the confidence the dividend will be maintained? Is that based on gold price rise off setting production dealing or CEY using their cash pile?
Thanks,
Prof

Hi Sotolo,
Good to hear from you. Sorry to hear about your double whammy of getting wacked on HOCS as well as CEY. Why do you think it was unfairly pulled down post results? Keen to understand as I may want to invest there rather than CEY with some of the money currently sat on the guidelines.
I share your fear ref price of gold. Imaging where Cey SP would be with gold back at the $1500 level it was earlier in the year. Having said that I expect gold to stay strong and even climb given the extent to which the Government printing presses have been in overdrive across the world. Basic economics says that more money being printed, which is basically what QE is just a posh name for, means that each unit of money is worth less.
It is only a few weeks that I was expecting 250 this year and 300 next. When will I ever learn?
Hope you find a way through with the house.
Best wishes,
Prof

Tiger,
They did indeed fail which would suggest an offer would have to be be higher. Conversely that was based on gold production forecast to be 510-525k for this year. We are now talking about 3 years before even getting to 500k.
Prof

Hi Vicmy,
Don't disagree that long term this is likely move up. My nervousness thought is that if we are not returning to 500k production until 2023 then the POG could be a lot lower by then and we would have failed to capitalise on the excellent gold price. Granted, as I mentioned in my other post, POG could also be a lot higher and we benefit from selling more gold then.
Best wishes,
Prof

Hi Razor,
Thanks very much for pointing me to DJRyan's post. I have just read it and it was an excellent summary of the call. Pleased to see he took so much positivity from the call.
Best wishes,
Prof

Thanks Razor, I will take a look.
Prof

Having just listened to yesterday's post results call I felt simultaneously comforted and alarmed.
On the plus side Martin Horgan came across superbly. He is charismatic, knowledgable, challenging what he has been given and asking questions of everything and seems fully in control. He is also clearly focused on cost reduction at Sukari and opening new ventures elsewhere.
The alarming bit is that is seems that Centamin has been failing to strip back adequately in the open pit for years and there is therefore enormous catch up to be done. He talked about a 3 year plan to get back to 500k oz per year which is way worse than I anticipated even after this week's awful forecast for next year. Granted that is stepped so with 400-430k next year we might then see say 450-475 before c 500 in what would be 2023 (assuming that he meant year 3 was back to normal rather than year three was last year to get us back to normal because that would mean 500 oz in 2024). My worry is that gold could be way lower by then (admittedly it could also be way higher).
Has anyone else listened to the call and if so what did you make of it? The link is below if you haven't or you can access it via the investors section on the Centamin website.
https://www.centamin.com/media/2346/centamin-q3-2020-quarterly-report-webcast-21oct2020.mp3
I would be particularly interested in the technical opinions of those of you with extensive mining experience like DASUT.
Best wishes to all,
Prof

Morning Razors,
Thanks for posting the quote. Very apt for many of us who have taken a bit of a pounding this week to top up the pounding of a couple of weeks ago.
Best wishes
Prof

Have sold just over 100,000 shares at between 147 and 133. Fortunately got 50,000 away at 147.
Still have a lot though.
Down from 230 to 130 in 3 months. Wow!

I take some comfort from the fact he bought 100,000 shares presumably knowing this.

Don't know but won't be good