Member Info for ElProfessor

Hi Supercharger,
Provided we don't get sold to Endeavour for a ridiculously low price then I am confident that we will see a good increase in the share price over the next 6 months as the market rerated CEY.
I am also confident that the Board of CEY are in no mind to let CEY go on the cheap. Why would they? The strong Q4 results and statement will have strengthened the hand to either stay independent or get a far higher price (share of Endeavour) of the merger.
Best wishes,
Prof

Hi Supercharger,
Having another Quarter to do go while in a rich vein would be nice but unfortunately CEY work on a calendar year for their financials so the figures just released are it.
On the plus side that means that the second 'annulus horribilis' is now behind us without it having ended up too horribilis and it is looking good for next year with a clean slate.
Here's hoping.
Best wishes,
Prof

Hi Bob,
Given how long you have been a shareholder and how little you have posted until recently I am delighted that you have decided to add your opinions and thoughts to the Board.
I haven't looked into Endeavour closely but from what the little I have seen it is clear that they have high debt so cash-flow will be a at a premium for them. It follows that CEY with its big cash pile and strong cash-flow will be very attractive. It also follows that they are unlikely, short of some VC backing, likely to be able to make anything other than a share offer. The trouble they have is that to make a share offer that will be of interest to CEY shareholders, particularly after yesterday's Q4 production announcement and strong estimates for next year's production, they are likely to have to offer Centamin shareholders more than 50% of the new company which would effectively be a Centamin takeover (simplistic view of the complex reality I know). As such unless they are really desperate and it is either that or them going to the wall, and I really don't know their financials well enough to comment on that, then I don't think we will see an improved bid.
I suspect this was an opportunistic bid that will go nowhere.
Best wishes,
Prof

Hi Sotolo,
I can't quite follow how you have done your calculations so difficult for me to check them but on the basis you are usually right on these matters I suspect what you write is correct.

I was just reading some section of last year's Annual Report and revenue in 2018 was $603M. If gold averages $1,500 next year then even at 500k production revenues are up to $750M. As we know the scale of Production has a major impact on AISC so a falling AISC combined with a high gold price should really put CEY in the sweet spot.

Best wishes,
Prof

The last 2 years we have had prod figures that were back loaded: ' it will be a slow first few quarters but then it will be great!'. (I paraphrase).
I will be really interested to see what they say this year. If another backloaded then I will have little faith we will see the numbers predicted. If front loaded or even spread then I will pretty good about it and will hopefully have ever increase confidence as the quarters unfold to plan.

Sometimes you get a stone in your shoe. It is not painful but very irritating and a real drag on your ability to walk.
The Endeavour suggested merger feels like that stone. Let us hope that Monday, when the extension comes to an end, we either get a significantly improved offer, or they clear off and leave CEY in peace. I think I prefer the latter option unless the offer is obscenely good.

The market does not like surprises, well not bad ones anyway. One of the reasons why CEY SP is low at the moment is the company has given the market far too many bad surprises over the past 2 years. To get the premium rating back, that we could easily enjoy as a debt free company with great reserves in the gold mining sector, CEY need to be boring in delivering what they say, quarter in quarter out, with the only surprises being to the up side. Add to that diversification beyond Egypt, strong gold price and a weak global economy with a turbulent geo-political backdrop, and we would really be soaring.

Well it is a relief to have such a good quarter. Clearly it is still a miss for the year of the bottom end of what was the estimate and later became the 'target' of 480k. Were the market expecting us to get to 490k then we could be looking at disappointment for this year however the scale of the Q4 challenge was such that I don't think anyone truly believed it and I hope therefore the market will be pleased with such a good quarter.
I suspect what will particularly interest the market is the call for next year of 510-540 which is significantly above this year's initial call which from memory was 490-520. The question is will the market believe this after a couple of years of over ambitious calls. Well the failure to deliver in the two previous years will linger in the market's memory but for my part:
1. I can't believe the new regime would be so stupid as to call something they can't hit after the past two years
2. New regimes usually low ball it not high ball it
3. Q4 was such a strong quarter, although I acknowledge the points DASUT had made a number of times regarding it doesn't necessarily carry through and depends upon the grade you are working.
Overall I think this should give confidence to the market and stands us in good stead for a strong rise today followed by a significant rise throughout 2020, provided gold behaves.
The analysts call will be interesting.
Best wishes,
Prof

Sotolo,
If I use $984 then additional profit drops from $136M to $86M which means the post EMRA share drops from $93M to $68M which is 73%. Applying that 73% to the 8.25 cents we get 6 cents so adding, as before the 2.75 we get 8.75 cents per share dividend.
Against that if we are through the poor production and back up to 525k level (remember as recently as 2018 over 600 was being talked about) then we would get an additional 1300x25K= 32.5M so 16.25M post EMRA therefore approx 1.5cent extra dividend or were it 550k prod then an extra 3cents dividend. That would make the dividend numbers looks as follows:
PRODUCTION DIVIDEND PER SHARE
500k 8.75c
525k 10.25c
550k 11.75c

Again all this is just playing with numbers but it is still interesting.

Best wishes,
Prof

Hi Sotolo,
Agreed. I am assuming that as Prod increases to a sensible level AISC will fall significantly. Is 850 over-optimistic for next year - it could well be. I note DASUT's post a few minutes ago ref hoping it would be back to 940 for Q4.
Best wishes,
Prof

Dasut,
Thank you. That is a brilliant explanation for the non-miners like myself. One of the most helpful posts I have seen.
Fingers crossed for Q4 and for that carrying across to next year.
Best wishes,
Prof

Production:
- 2015 439k
- 2016 551k
-2017 545k
-2018 472k
-2019 TBC but would guess 480-490k
In short while production is at the lower end or just below this year's original forecast it is still pretty respectable. All years prior to 2015 were lower production than 2015.

Last year (2018) AISC was $884, revenue was £603.2M on the 472k ounces produced with an average price realised of $1267 (which was pretty stable vs 2017 when average price realised was $1261.

As at Q3 for this year YTD average price realised was $1362, heavily improved by Q3 being $1478. I would expect with the strength of gold in Q4 combined with the increased production we will see an average for the year ending up c$1425 in other words over $150 up on the previous year.

For next year if gold were to average around the current price then at $1567 we would be generating $300 more per ounce than last year (assuming AISC constant - yes I acknowledge oil is up but then we have the solar program). At a conservative 502,000 we would generate $150M more profit virtue of the extra $300 per ounce and approx an extra $36M for the additional 30,000 ounces produces [502k-472k =30k ; 1500-300 (to avoid double counting) =1200 ; 1200 x 30,000 = 36M) giving an increased profit $186M vs 2018. Half of that would go to EMRA leaving $93M. Given any capital investment will already have been dealt with then we could assume that would all be distributed as dividends. In 2017 $63.M was paid in dividends to give 5.5cents per share. $93M would equate to an additional c. 8.25cent per share on top of what would have been paid anyway. 2017 required all free cashflow to be paid out which is unlikely to be done every year but even if only half paid out then dividend would be 8.25+2.75= 11cents per share.

In no way am I saying this is what will happen for sure , and errors in my maths or assumptions are possible (corrections / alternative hypothesis welcome) but I though I would share why I am reasonably optimistic regardless of Endeavour.

Best wishes,
Prof

Good luck Sotolo. It really does feel it could go either way at the moment. Q4 Prod at or very near the amount required for 490, good forecast for 2020 and continued merger/takeover interest all combined with rising gold - this would take us up and away. Or a Q4 miss, a disappointing 2020 forecast, gold starting to fall away and Endeavour drop out with no one else showing interest in their place - CEY SP drop away as so many times before.
I have to say I think the first case is more likely than the second although I don't think all will materialise. With gold above 1570 we do seem to have a lot of negative news priced in . Provided we are close to 490 and 2020 Okish then this should move up nicely. I hope!
Best wishes,
Prof

HOC currently 5th biggest faller today on FTSE250 down 2.72%. FRES also not looking so good at down 1.66%. We are just about level pegging but had an awful day yesterday. Not a lot of love being lavished on PM miners at the moment.

Closed out with the uncrossing trade at 122.85p with just over a million shares. Gold down slightly but still well in the 1560s. Gold miners as a whole not performing as you would expect today with rising gold and significant geo-political risk and yet the Dow is pretty much shrugging it all off with just a small 0.14% move down.
Go figure; I can't!
Prof

CEY was at 120p and gold at $1288. Today CEY is at 125p and gold at $1576.
That is an increase for CEY of 4% and gold of 22.4%.
All else being equal the rule of the thumb is that a gold miner goes up 3-4 times gold. At 3 times that would put CEY at 200p and at 4 times at 226p.
Obviously there are other factors at play and we all know that CEY has had a bad year on top of a previously bad year however it does seem, particularly given Endeavour sniffing around us, that the market downer on CEY may be a little overdone.
Have bought some more today.
Best wishes to all,
Prof

Gold knocking on the door of a seven year dollar high and a merger being discussed and yet we are under £1.30. That is quite some negative sentiment on this share as a result of two years of failing to deliver. On the one hand that is a horrible headwind to our share price, on the other when that sentiment turns this could pop upwards like a champagne cork. An awful lot is riding on Q4 production and what will be called for production for next year. If good, confidence should return and the share price will, in my opinion, get its mojo back big time.

Best wishes for 2020 to all,
Prof

Siko,

As always you are a font of great info. Thank you so much.

Best wishes to you and yours for 2020.
Prof

Rebess, Dansul,
Thanks for your replies. I certainly hope all is good and Q4 Prod gets us to 490k. If it does and a semi-decent 2020 is announced then we should motor.
The Chairman design, Jim Rutherford, has an extensive mining background albeit not on the production side:
https://www.angloamerican.com/about-us/leadership-team/board
Best wishes,
Prof

On seeing Pardey's sudden departure I wondered whether the Q4 production targets could be a miss and this was the final straw for the board.
I now have this troubling thought in my head. What do others think?
Best wishes,
Prof