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Oh Master

ONE COULD SEE THE DROP IN SHARE PRICE AS A NORMAL PART OF THE MOANOUVERING BY A COMPANY TRYING TO TAKE OVER ANOTHER (PREY) COMPANY....IF THERE IS A LEGAL WAY TO GET THE PREYS'S SHARE PRICE DOWN, AND DRAIN CONFIDENCE OF THE EXISTING PREY SHAREHOLDERS, WHY NOT DO IT?..ALL FAIR IN MERGERS AND ACQUISTIONS...

THE GNOME

Is gold a good place for investors to hide?Glenn Freeman | 03 Dec 2019Text size Decrease Increase |
Low interest rates, volatile stock markets, ongoing US-China trade uncertainty and UK's looming Brexit election are a few reasons investors may be leaning toward gold as a safe-haven asset.
Australian interest rates were held at a record low of 0.75 per cent on Tuesday by the Reserve Bank of Australia, in its final meeting on interest rates this year.
RBA governor Philip Lowe highlighted the central bank continued to monitor weak consumer spending, stagnant wage growth and the lacklustre prospects for the latest set of GDP figures, due on Wednesday.
Low interest rates are also a feature of the US market. The general view is that the US Federal Reserve is done cutting interest rates, having cut them three times this year.
"All else equal, the change in the Fed policy has restored the attractiveness of investment demand for gold, a sharp turn from the trend during the last few years," Inton says.
He also highlights the gap in yields between 10-year US Treasury bills and the federal funds rate, which is nearly zero. This further increases the appeal of holding gold.
"As such, gold ETFs have seen strong inflows in recent months, as the FOMC’s return to rate cuts have led to gold’s return to popularity."
US, China industrial activity
Weak manufacturing data out of the US, which this week rekindled concerns about a slowing economy, has also helped bolster gold prices.
Gold initially fell overnight after manufacturing data from China was stronger than expected, which helped equity markets. But stock prices, credit yields and the US dollar have since fallen back again, which supported gold prices.
"We'll need to see a trend in weaker data through early 2020 to convince the market that we're going to get more cuts. Until then, there's no real impetus to see gold rally," McKay says.
There US Federal Reserve is due to meet once more in the remainder of 2019, on 10 December, but most market watchers expect the Fed to leave rates on hold until mid-2020.
"Gold on its own looks unappealing for the sensible investor; it pays no yield after all....not true, CEY div.

I think Endeavour have the inverse problem to CEY, in thet they have an excellent record of managing their tier 2 assets, whereas CEY ha s poor to dismal record of managing their Tier 1 assets.
I personally think putting the two together, building on strengths and eliminating weaknesses (CEY board and certain mngt) is very appealing (but the price must be right).
I have infinitely greater expectations and belief that Endeavour Mngt will know how to extract value and quickly, out of the West Africa assets (do CEY shareolders recall the 4-5 m oz asset in Burkina Faso that has slipped off the table and obviously become so insignificant that CEY board have decided to not talk about it to their owners [us shareholders!..the gold asset base is rapidly growing to 10m ozs [about 7 m ozs has come directly from Ampella acquisition] which is not a bad result from their foray into West Africa, but its ounces produced, EBITDA that really drives the SP]. I have no belief that CEY has the experience, the capacity or the mngt expertise to make these assets into real shareholder value. They are failing with what they have now, without expanding.
I like the relevant sway the Sawiris family bring in terms of their Egyptian background and their backing of gold.
The Endeavour exploration group seems be better resourced and managed/led
The CEY board has underperformed as reflected in the drop in shareholder value, which is their prime responsiblity in my view. The board costs north of us$4m pa, and some of the KPI's set by the remuneration comittee are less than inspiring, as I have commented on before. Asleep at the wheel comes to mind.
Centamin are currently seeking a new CEO and have had 3 negative guidance revisions for the last 18 months (amen RIP board)
So I would encourage Endeavour to up their bid to a level north of GBP 1.5...

CEY board? You need to have a good look at yourselves, and admit you have failed shareholders in terms of performance of a Tier 1 asset. Personally I think paying out US$4m plus per year, the shareholders could get so much better (dare I suggest fewer, more relevant experience, more demanding of perfromance and more punishing/quicker for non performance etc etc) people to direct the company.

Looking to the next round, but the present bid is underdone, and i understand you dont lead with the best card. But it was engagement with the board of CEY they wanted and this is what they have got. With the added bonus they have got engagement from the owners of CEY, who have a different vision for CEY, than the board.

best, and good luck to us all !!!!
the gnome

Australia's biggest gold miner is focused on the exciting copper and gold resource that lies beneath Red Chris, not the struggling open-pit mine that operates at the surface.
With their experience in block caving – a highly efficient form of underground mining that utilises gravity (when all goes well!!!! – Newcrest has backed itself to turn Red Chris into a replica of its golden goose, the Cadia mine in New South Wales.
Red Chris has now emerged as the biggest punt on M&A that Newcrest Mining has made while under the reforming stewardship of chief executive Sandeep Biswas.
Cadia was famously a marginal operation (defintely lowest of grades) until block caving turned it into Australia's most lucrative gold mine.Newcrest is excited by the fact the deep resource at Red Chris has been penetrated by less than 90 exploration holes; that means there could be exceptional treasures waiting to be discovered....or nothing there>?
But it could also mean Newcrest has bought something it doesn't fully understand. Most likely...
The presence of mercury in the Red Chris open pit has some observers worried, but Newcrest boss Sandeep Biswas is confident the mercury will be less abundant in the deeper resources at Red Chris.
The three-year itches..?Just as Evolution warned investors that Red Lake was unlikely to look good for at least three years, Saracen Mineral Holdings boss Raleigh Finlayson was last week urging investors to focus on what Kalgoorlie's Superpit mine would look like in mid-2023, when work to remediate a wall slide was completed.
Those remediation works are hurting mining efficiency, gold grades, production rates and unit costs, meaning Saracen investors will need to wait a while before the $1.1 billion acquisition of Barrick's 50 per cent stake in the mine starts to deliver.
There are similarities in the way Klein and Finlayson spoke of exploration potential at their new assets. Both expressed high confidence that their teams would find more gold in the ground and extend the lives of old mines. Really?
St Barbara boss Bob Vassie also asked investors to focus on future potential rather than existing realities when announcing the $768 million acquisition of Canada's Atlantic Gold in May. A dream?
Atlantic's Touquoy mine in Nova Scotia will produce about 100,000 ounces in fiscal 2020 at less than $US700 per ounce.
That's pretty good, and unlike Red Chris and Red Lake, the Atlantic acquisition bolsters St Barbara's earnings immediately.
But to justify the price paid by St Barbara, Vassie has talked up a plan to double production by 2023 by spending the best part of $200 million on securing government approvals and building new pits in Nova Scotia.
Neither of those tasks is without risk, and Credit Suisse believes St Barbara will also need exploration success to justify the price paid.
So.......

It's the year for risky acquisitions in Australia's gold sector, and not just because everyone is buying at historically high gold prices.
The common thread between the four biggest gold deals on the ASX this year is the acquirers' belief they can turn underperforming assets into something much better in a few years. Havent we
Evolution Mining's $US375 million ($555 million) acquisition of Newmont's Red Lake asset is just the latest example of an Australian gold miner announcing a deal that asks investors to show patience, belief in exploration potential and a willingness to spend significant sums on capital improvements before the new asset looks attractive. The company has Evolution warned investors that its Red Lake acquisition is unlikely to look good for at least three years.
Red Lake and the Red Chris mine that Newcrest acquired in March are aptly named; both are in the red at today's gold price of $US1452 per ounce.
Evolution executive chairman Jake Klein says Red Lake will produce gold at a cost of about $US1600 per ounce in 2019 but adds that this year's elevated costs are "an outlier, an anomaly" caused by safety issues and a general lack of love from Newmont. The fix won't be quick. Evolution expects Red Lake will be ''cash negative or cash neutral'' for three years, before Klein's turnaround plan starts to bear fruit. Hmmm
That plan will require Evolution to spend $US100 million on improving the fleet, mining and processing assets, plus a further $US50 million on exploration.
After those three years of work, Klein hopes the mine will be able to produce at least 200,000 ounces per year at an all-in sustaining cost of less than $US1000 per ounce.
''We had a long debate internally as to where we should set the expectation [for Red Lake's production rates after the turnaround] – we decided to go on a conservative basis on what we believed was very achievable,'' Klein says.
"But our aspiration is materially higher than that.
"We do believe that getting it back to historic levels of production [above 250,000 ounces per year] is something that we would aspire to do."
The Cadia mine dumped a truckload of earnings into the hands of Newcrest shareholders over the past year.
Tuesday's deal stipulates that Evolution will pay Newmont an extra $US100 million if it has exploration success at Red Lake, and Klein points to that kicker as a sign the vendor knows there is plenty of life left in the 70-year-old mine....really.....
''It was very important to them [Newmont] to share in the upside because they have a strong view of the geological 'prospectivity' of the area,'' he says. I bet !!!!!
If Red Lake is an ugly duckling with potential to become a beautiful swan, Newcrest's Red Chris is currently something far more grotesque from the darkest depths of the duck pond.
Newcrest paid $US806.5 million for 70 per cent of a mine that !!!!! well and more to come

Gold is looking more and more attractive! Surprised?
.... rather worrying that some investors and central bankers are talking up gold.

The Dutch Central Bank recently argued that if there were to be a major monetary reset, “gold stock can serve as a basis” to rebuild the global monetary system. “Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”..as it has done for centuries!

Investor Ray Dalio recently spooked attendees at the Institute for International Finance conference when he mentioned the possibility of a flight to gold because of his concerns about America’s fiscal position. Dalio warned that the American entitlement crisis meant the Federal Reserve would have to continue to inflate its own balance sheet indefinitely.

That is not a new point. Since at least 2016, financial titans including JPMorgan chief Jamie Dimon and hedge fund manager Stanley Druckenmiller have pointed out that unfunded pension and healthcare entitlements are a looming iceberg for the US economy, and if anyone has experiecned the US healthcare (or as they say HealthScare), this is very scarey.

Indeed, one theory about the recent crisis in the “repo” overnight lending market is that it was caused by the federal deficit and the increasing unwillingness of investors outside the US to fund it. you would have to ask why they should they bother, many of them having been bit (or mauled) before.
Dalio went further, concluding that the American entitlement crisis meant the US Federal Reserve would have to continue to inflate its own balance sheet indefinitely, and keep rates low (or even negative) well into the future so the US could keep paying its bills. They snuck through the last funding chrisis yet again last week (now it doesn't make the news as it happens so often)
That would depreciate the US dollar... never ends well. Prior experiments with rapidly falling currencies include late-third century Rome, Germany’s interwar Weimar Republic and Zimbabwe. At some point (now ?!!), Dalio argued, nobody would want to own US debt or the dollar, and investors would look to other assets for safety. “The question is, what else?” he asked. “That’s the environment I think that we’ll be in. And there’s a saying that gold is the only asset you can have that’s not somebody else’s liability.”
There is logic in believing that US blue-chips and bonds are no longer a safe haven while also believing that prices should stay high for sometime in the future.
Luke Gromen calculates that US annual entitlement payments (Medicare, Medicaid and Social Security, plus defence spending plus interest on the federal debt) adds up to 112 per cent of US federal tax receipts. And tax is coming down to stimulate the economy so says and does Donald T?The US has become “utterly dependent on asset price inflation for tax receipts”, and we know what happens next...

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