Member Info for goldgnome

A true champion can bat through the good times and the bad times, as well as the uncertain times. Be interesting to see how Josef bats it out. But of course there are far more running the company, and I am sure they will fire the poor performing mngt and recruit the better.]

gnome

Great buying opportunity.....so happy

Hope the Lemmings are all OK?

the gold gnome

Yes, and interesting article and certainly academic. In this sense I would note that there are any number of long term curve fits that would far better fit the price variation over that extended and heteogenos time period, and hence lead one to a far more well thought out conclusion. Not withstanding a better fit on the maximum window, it begs the question of time segmentation of the long term price variation into time windows, and what the nature and reasoning of those segments are. For instance why compare the gold price variations before the world went off the gold standard to what happened after the gold standard...etc.... a barely interesting academic read.

https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

BUFFET ON GOLD

What motivates most gold purchasers is their belief that the ranks of the fearful will grow.
During the past decade that belief has proved correct. Beyond that, the rising price has on its
own generated additional buying enthusiasm, attracting purchasers who see the rise as
validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.”

DALIO
Gold is a very underowned asset, even though gold has become much more popular. If you
ask any central bank, any sovereign wealth fund, any individual what percentage of their
portfolio is in gold in relationship to financial assets, you'll find it to be a very small
percentage. It's an imprudently small percentage, particularly at a time when we're
losing a currency regime.

Following from the above, I think a better analysis and more important and articulate read is Dalios book on navigating debt crisis, and despite what some may think, the historical trend dicates that this will happen again. Its available as a freed pdf by following the below link...some brief reviews ...

“RAY DALIO’S BOOK IS MUST READING FOR ANYONE WHO ASPIRES TO PREVENT OR MANAGE THROUGH THE NEXT FINANCIAL CRISIS”
LARRY SUMMERS

“A TERRIFIC PIECE OF WORK FROM ONE OF THE WORLD’S TOP INVESTORS WHO HAS DEVOTED HIS LIFE TO UNDERSTANDING MARKETS AND DEMONSTRATED THAT UNDERSTANDING BY NAVIGATING THE 2008 FINANCIAL CRISIS WELL”
HANK PAULSON

“AN OUTSTANDING HISTORY OF FINANCIAL CRISES, INCLUDING THE DEVASTATING CRISIS OF 2008, WITH A VERY VALUABLE FRAMEWORK FOR UNDERSTANDING WHY THE ENGINE OF THE FINANCIAL SYSTEM OCCASIONALLY BREAKS DOWN, AND WHAT TYPES OF POLICY ACTIONS BY CENTRAL BANKS AND GOVERNMENTS ARE NECESSARY TO RESOLVE SYSTEMIC FINANCIAL CRISES. THIS SHOULD SERVE AS A PLAY BOOK FOR FUTURE POLICY MAKERS, WITH PRACTICAL GUIDANCE ABOUT WHAT TO DO AND WHAT NOT TO DO”
TIM GEITHNER

Happy reading

the gold gnome.

Indeed. SP of C$11.75 and Mkt Cap of C$2.1b
Do you think CEY is undervalued?

https://www.bnnbloomberg.ca/investing/video/rick-rule-discusses-detour-gold~1533474

Razor

Yes, indeed if you are a daytrader. If you are a long term value investor you might have a totally different view

best

the goldgnome

Interesting take by the Fed on the US Economy. More interesting take on the way forward by Trump.

Powells views on the eocomy was in sharp contrast to what I saw and heard in the US recently where I spent 3 weeks in NY and LA. Lot of people doing it tough, saving nothing week to week, year to year. Day to day drudgery. Bit of buoyancy in Grenwich Village, good trading in some of the restaurants, but there were a lot with not a lot going on. Few of the PE guys taking haircuts, and some very badly. Upbeat talk, at best a few whispers late at night, in the bar.

Is the devil in the detail .... ?

At the same time, the central bank adjusted one of the tools that keeps the Fed funds rate within its target range — the “interest on excess reserves” (IOER) — to 2.35% from 2.4%.

Powell explained away the move as a “small technical adjustment” that does not signify any change in the central bank’s policy stance.

Powell also stated that “solid underlying fundamentals” are supporting U.S. economy, including job growth, rising wages, strong consumer sentiment, and business investment. “Incoming data has been broadly in line with expectations,” he said. “Inflation has been weaker than anticipated.”

Powell also pointed out that “core inflation unexpectedly fell.” He later clarified that the Fed suspects that “transitory factors are at play,” with the central bank projecting for inflation to return to 2% over time.

Sounds to me that there is more unexpected and unanticipated stuff going on in the economy, than the economic modelling suggests. But then again economic modelling has been shown year on year to have severe shortcomings.

When the emotional reaction/buying/selling goes away, the trend of POG will be steadily higher.
CEY is undervalued at this price, in my humble opinion..

best

the goldgnome

Interesting to see the CEY share price go up. Sadly it may mean that the investor group is actually sobering up and going off their prescription drugs, and thinking more clearly about the value proposition. Loved the buying opportunity at 0.80 (near divine), and I think the value is still there.

Still undervalued, but please give me some more time to get more shares!

best
the gnome

The chamber of mines works reas. well in Burkina and Mali. Not sure about CdI.

One of the other things that struck me in comparing Endeavour and Centamin is both in NE sector of Core I'Voire.
The possible merger may not happen now (say next 12 months), but I imagine it may not go away either

the gnome

Interesting Tiger,
thanks

Also Blackrock is a significant owner/shareholde (>10%) of both companies, and is in the business of making as much money as it can in as short as time as possible (or something like this). Must be hurting?

best
The Gnome

Probably a conservative opinion. The ASM (Artisinal and Small Scale Mining) is the gaming grounds of corrupt politicians, civil servants, military (etc), who hinder every move to try and reform the abysmal state of affairs. Its not just the lack of tax being paid, tax would help to alleviate the poor condition of many of the countries, but the working conditions and massive exploitation of young children (need less air, smaller bodies, more vulnerable), and not to mention women. The environmental degradation is beyond belief, and areally and time wise is devistating.

A recent report in Burkina Faso for instance, in October 2016 by a parliamentary commission of inquiry on mining titles and the social responsibility of mines, the Burkinabè state suffered a profit loss of almost a billion US dollars between 2005 and 2015 due to corruption, mismanagement and speculation in the mining sector. It was rumoured that Compaore's family was in it up to their necks, and even had a small refinery in country !

A 2017 Danish, Oz collaboration is worth a read

"Illicit natural resource trade continues to benefit corrupt officials, criminal and terrorist networks and
to divert resources away from development, security and the common good in West Africa. How are
Liberian timber, Sierra Leonean diamonds, Malian gold and Nigerian oil traded outside, and intertwined
with, legal value chains before ending up in what is often legal consumer markets? By collating recent
knowledge of the ‘shadow value chains’ of these resources, this paper seeks to explore if and how illegally
traded natural resources sponsor other types of illicit activity, such as organized crime and terrorism.
Furthermore, how are these activities facilitated by corruption in the different cases? The paper gives a
number of recommendations. The perhaps most important one is that in order to improve interventions,
in-depth understanding of local power relations and incentive structures in these individual shadow value
chains is crucial. Such knowledge should be paired with increased attention to how international actors
and networks facilitate and accommodate illegitimate private gains stemming from lootable West African
natural resources. "
https://www.u4.no/publications/shadow-value-chains-tracing-the-link-between-corruption-illicit-activity-and-lootable-natural-resources-from-west-africa.pdf

The guess is that about 100 million people world wide are invlved in this appalling exploitation, and this extends globally. Mercury usage and environmenta impact is staggering.

https://arcominero.infoamazonia.org/GIATOC-OC_Illegally-Mined-Gold-in-Latin-America-3c3f978eef80083bdd8780d7c5a21f1e.pdf
https://globalinitiative.net/wp-content/uploads/2017/11/tgiatoc-case-study-peru-1878-web-lo-res.pdf

https://www.philstar.com/business/2016/07/22/1605232/small-scale-mining-immeasurable-damage

and lets not mention the DRC

best
the gnome

Have been fascinated by the complete disappearance of the Burkina Faso assets off the resource graph and off the presentation entirely! Something is brewing. Thinking "aloud" again...One of the well proven ways gold companies grow quickly is through M and A.

Centamin took over Ampella for about $40m (I forget Ampella's cash position) to get a toe hold into West Africa, which is one of the fastest growing gold regions in the word, as one see very well by looking at the Endeavour Mining strategy presentation I previously posted. I presume that they are not mentioning the Ampella Burkina Resource (including any upgrades through their drilling there), as it is not material to them and they do not know how to make the project work and deliver the financial metrics they need for a new project/allocation of capital, and possibly because the ex Ampella discovery at Doropo presents a better set of financials, including upside. Also, could be thinking they do not want to overexpose themselves to too many jurisdictions. All good.
But another question is how does CEY leap forward in terms of value creation for shareholders, manage their development risk in a new and very different jurisdiction (West Africa) to Egypt, diversify their sovereign risk, increase their reserve/resource and production profile (etc). How does Endeavour achieve their strategic goals, and create value by their existing asset base (which seems to me to include a fairly good development team)?
https://s21.q4cdn.com/954147562/files/doc_presentations/2019/04/190306-EDV-Corporate-Presentation-vf.pdf
Endeavour seems a good fit to me, to provide the mutual strategic goals.

A combined entity would have

A resource base of in excess of 32 million ounces of gold
A reserve base of in excess of 15 M Ozs
A production profile of 1.1-13. M ozs per year at a AISC <<$900/oz
Mine lives of >>10 years in 3 countries
Significant quality exploration ground and upside
A combined Market Cap of in excess of $2.7b, and my guess would be that it would be a significant mark up.
https://www.relbanks.com/rankings/gold-mining-companies
Endeavour Share price has languished since about 2016, basically flatlined with some ripples. Centamin has done what we all know in the same period.

Endeavour seem to have a very good West African development team, know the laws, know how to do successful mining and exploration business in West Africa

I see some interesting synergies.

Thoughts anyone?
the Gnome

The Resolute Solar Hybrid move is projected to save 40% on Power Costs. With solar prices falling dramatically (from $US178/MWh to just $US50/MWh over the past eight years), large-scale solar is already one of the most attractive options for new generation.

A lot of mines are positioining for this energy mix/solution.
https://www.ignite-energy.com/news/
But the mines are not leading the pack. The amount of large-scale solar installed around Australia jumped from just 34 MW in 2014 to 450 MW at the end of 2017 and is expected to have another significant rise in the coming years as 25 projects have already been completed in 2018 and a further 59 projects are in construction or due to begin construction soon (this includes hybrid projects combining wind and solar). Considering only four large-scale projects became operational in 2017, this is a huge jump in the number of solar plants being built around the country.
Genex Power’s 50 MW Kidston Solar Farm in Queensland was the largest solar project commissioned in 2017. 2018 has seen the completion of the 189 MW Coleambally Solar Farm, 148 MW Ross River Solar Farm, 138 MW Darling Downs, 125 MW Sun Metals Solar Farm, 110 MW Wemen Solar Farm and the 110 MW Bannerton Solar Farm, along with many others.

The bigger solar farms (and they are getting bigger, far bigger than Centamin's enviasged)
1. Noor Complex Solar Power Plant, Morocco

Noor Complex is the world’s largest concentrated solar power (CSP) plant, located in the Sahara Desert. The project has a 580-megawatt capacity and is expected to provide electricity for over 1 million people once completed by 2020....the first phase of the three-part project provides 160 MW of the total 580 MW capacity

2. Kamuthi, Tamil Nadu, India

This solar farm in the southern state of Tamil Nadu in India has a capacity of 648 megawatts and covers an area of 10 square kilometres. In 2016, this project was deemed to be the largest solar power plant at a single location. The project comprises 2.5 million individual solar modules and cost approximately 679 million USD to build.

3. Longyangxia Dam Solar Park, China

Spread over more than 25 square kilometres, the Longyangxia Dam Solar Park consists of 4 million solar panels. The plant’s sheer size and 850 megawatts capacity made it the largest solar farm in the world in February 2017. This impressive solar project is located in the Qinghai province of China. The park generates around 220-gigwatt hours of electricity per year.

4. Kurnool Ultra Mega Solar Park, India

With the Longyangxia Dam Solar Park, China took over the title of the largest solar farm however, India soon reclaimed this with the launch of its 1000 MW Kurnool Ultra Mega Solar Park

AISC with 40% saving in power comining up?
the gnome

Tiger

I have no clear evidence other than looking at Endeavours startegy presentaiton, and knowiing that in the old business everyone seems to think bigger is better, esp at the top end of town, M Bristow, Newmont, Barrick, Randgold, so I am not going to be at all surprised to see some other developments in the mid tier space! If gold Price is linked ot uncertainty/political upheaval then its going to go a lot higher. When you start to see comedians getting elected in Italy and now Ukraine its telling you something. We have a second rate comedy act down here in Oz, with some ordinary talents, even as comedians!

Always pays to keep a look for the M and A game

the gnome

Actually I think an Endeavour - Centamin tie up would make sense!.

Centamin now have probably of the order of 5 m ozs in Burkina, and lets say 3 m ozs in Cote Ivoire and more ouncs ot come for sure.

Endevaours wants to (se the link below for their latest strategy presentation)

https://s21.q4cdn.com/954147562/files/doc_presentations/2018/11/EDV-2018-investor-day-presentation.pdf

1. expand its west african profile by 10-15 m ozs in 5 years AND THIS WILL NOT HAPPEN BY NORMAL EXPLORATION PROCESS FOR SURE

2. Reach a $890/oz AISC (Centamin are at this level)

3. Production profile of 670-720k ozs pa (Centamin can make a major contribution)

well a merger with Centamin will deliver this in one sweep.

Can they work out a vallue proposition?

Looks very interesting to me....on the edge of my seat ...

best
goldgnome

Might be some new form of DD, for a smart bit of M and A. Highly speculative of course, but sillier things have happened!

Thats not a bad set of numbers, and there is room to go down in the AISC, depending on how they have factored in or not Solar and some other factors which Ia m sure they are onto. The grades are interesting for underground, and some of the runs of ~200+gpt Au, + nice thicknesses ...

PTAH UGRSD0947 630 depth 4m@450.7
PTAH UGRSD0969 627depth 7m@198.1

Sure htye have learnt ,and sure Blackrock is assisting ....

best
the goldgnome

Torn, looks like good progress on the SOLAR FRONT...makes a lot of sense, short and long term

Outlook ....

· The Company is on track and reiterates annual guidance for 2019: gold production of 490,000 - 520,000 ounces, at cash costs of US$675-725 per ounce produced and an AISC of US$890-950 per ounce sold.

· Completion of 40MW (AC) solar power plant feasibility study at Sukari during H2 2019, with the scope to significantly reduce power costs and reliance on fossil fuels.

· The Company will release 3-year outlook, including 2020 and 2021 guidance, in Q2 2019.

Just a quick comment, perhaps obvious to all, but the underground ore does not look homogenous, as evidenced by variation in historical drilling and photos of ore samples. Some of the ore is simply dripping with gold, and would have phenomenal high grades

This 3d variation would be hard to predict from 20-40m spaced drill holes, which are essentially like tooth picks....

cheers

Thanks C

Some of the key info I am interested in, given that a company prob does not want to simultaneously develop 2 mines in different jurisdictions, esp when they have things to focus on and get right in their op mine...

1. What are CEY's hurdes they look for in a project, techically...risks willing to run with, production profile e.g will they only consider projects which will produce more than x00,000 ounces pa...etc
2. What are CEY hurdles financially for a project ...ROI, IRR, NPV , payback etc

thought anyone?

the gnome

regards
Peter

MrT
Brexit and the way it is being managed by all and sundry is a total disaster. Like the middle east, no solution in sight.
I love Greg Sheridans analysis
https://www.theaustralian.com.au/nation/inquirer/and-so-this-humiliating-brexit-omnishambles-goes-on/news-story/911e65475df8b28fa7663da18984f374
and more today, scolding hot, pointting to the mass stupidity int he land of common sense. Obviously common sense left the sunny isles a long time ago

https://theconversation.com/brexit-is-not-just-theresa-mays-disaster-britains-whole-political-class-has-failed-a-nation-114463

glorious stupidity all round

there are good reasons I like gold

the gold gnome