Member Info for mrtibbles

I agree Somnamna, I was disappointed and very angry that the BOD should advise accepting this deal considering all that has been spent on the clear up to make Sukari safer and able to deliver an annual guidance of 450,000oz to 500,000 oz with reduced AISC.

The recommendation to accept this offer remains somewhat of a puzzlement when Horgan and the BOD claim that part of the ethos of the company is to increase and deliver value to shareholders?

So then considering the POG and if all is going as well as claimed at Sukari then it appears that this proposed deal falls well short of increasing value to retail shareholders, quite the contrary in fact unless there is something that retail shareholders are as yet unaware of?

I have held shares on the US exchange in he past and found it to be less than convenient to say the least so I have no wish to hold US listed shares again which is why I cashed in.

I am however waiting hear the next quarterly update and to see how the vote goes, but however it goes I think its time for a BOD change and a new CEO!

In some ways they are just behaving like the West did when it had occupied these continents, then divided them up and exploited anything of value .

It's not the pinching from the multinationals that causes me any concern,the worrying thing is that dictator led miliary Junta's such as this wont car a jot about the local workers or environmental damage caused by not running the mines properly!

The US administration quickly developed a detailed plan that was signed by President Truman in 1949 as NSC 26. Developed along with the British government and American and British oil companies without the knowledge of governments in the region, the plan called for the covert placement of explosives throughout the Middle East. In the event a Soviet invasion could not be repelled, as the last resort, the oil installations and refineries would be blown up and the oil fields plugged to make it impossible for the Soviet Union to use the oil resources.

https://www.thoughtco.com/oil-drive-us-invasion-of-iraq-3968261

Hi Dasut,

I agree that the clear up was long overdue and there was no alternative to carrying out and it made sense to go with Capital as they were already an approved contactor with the necessary experience.

So having come so far and if the predicted future prospects for Sukari are as good as we have been led to believe than why accept the Anglo bid?

Something not right here or the BOD are just not up to the job!

Trump is always going on about America first and how it is taken advantage of by the rest of the world, but in reality America has always been first since the Boston tea party and post second world war when the dollar became the worlds trading currency!

The reaction to the latest US jobs figures demonstrates just how much control and influence he US has!

I appreciate that its a make the mistake judging a mine purely by its production numbers and grades because of greater importance are a healthy cash flow and low cost structure, which allows a company with capital discipline to reap the rewards of a high gold price when times are good, but protect its margins when the price takes a hit.

So that said then and considering the over $400 million spent on the waste clear up and the additional costs to implement more efficient and reliable future production and considering the slick presentations by Martin Horgan to the market why then wasn't this reflected in the share price prior to this what appears to be a sell out on the cheap by the BOD?

Surely if Martin Horgan and the BOD are confident in their strategy and that it will deliver their predicted future production guidance then why not rebuff this Anglo offer because it may well not be in the best interests of their shareholders in which case Martin Horgan and the BOD will have failed in their responsibilities?

There seems to be more to this than retail shareholders are being told.

In a conversation Martin Horgan once stated that the people he dealt with wanted at least a 30% return on their money, possibly then this is just such a deal?

To be frank I was hoping for a lot more, that being a more efficient Sukari delivering his predicted 450,000 to 500,000oz per annum, but it seems unless the big shareholders vote this deal down that isn't to be at least not for former Centamin shareholders!

Accepted Dasut, but all dependant upon the pog holding , but that said the whatevr profit 50% is lost to profit share and the AISC dont seem to be reducing that much

Hi Dasu'

From one of our LSE members -Open pit grades of 0.67 gst/Au seems very low - Barely a grain of rice amongst a ton of rock?

Correct, it is terribly low. I doubt they make positive cash flow at that grade after capex spending. Kees Dekker always maintained that the cash flow predominantly comes from underground mining. I would say that at this grade it comes exclusively from underground mining.

This seems rather simplistic approach because I understand Run-of-Mine leaching has the advantage of very low processing cost and is used as an add-on that can generate cash flow as the overheads are carried by the higher grade ore than is treated conventionally. However it has usually a much lower metallurgical recovery.

However It cannot be main production.

Re: Centamin Plc - ERRATUM – Group Resource and Reserve Statement Wed, 24 Jan at 12:00

Not too serious a change. The reserves remain essentially the same in terms of gold content and grade.

About the “other former mining professional”s opinion, of course pit grades vary, the thing with Sukari open pit is that they are mining consistently at a lower grade than originally envisaged. Strange that your man is not shocked by the stripping ratios in the new LOM plan:

> 2024 6.4 / 2025 10.0 / 2026 11.4 / 2027 10.0 / 2028 11.1 / 2029 7.5 / 2030 5.8

For such a low grade deposit, these are very, very high rates.

Then again, in the past their plans had higher grades and lower strip ratios which proved wrong. Question: why does the presentation avoid showing the forecast open pit grades. As usual they give you half the story. One thing is certain, the financial performance for 2025 - 2028 will cost probably be poor.

I have no idea about what you contact concludes that the operation needs the open pit to be viable. Closing down the open pit and mining from underground will cut a lot of the overheads, the process plant can batch process the feed from underground allowing for only one shift with the rest of the day available for maintenance and repaid. Without detailed cost accounting it is however not possible to conclude either way. My original modelling showed the open pit to be very marginal and that was at higher grade and lower strip ratio.

Regards,

Hi Steve,

I have to agree with you, I would rather take the money off the table, especially considering how many times I have seen a good profit on Centamin suddenly fade away first thing in the morning after yet another RNS of unexpected events!

I very much doubt there will be another offer because the existing Sukari profit share is no incentive for other big miners to bid, this is why the concession terms were amended on for the recent bidding rounds.

From past experience there is more to this than at first meets the eye and I am of the opinion that the BOD realised that this was their get out of jail free card because the grades at Sukari show no sign of improving any time soon," quite the contrary!"

The CEO of Anglo has already stated that they may well be open offloading Doropo, rather surprising if the resource potential is a good as Centamin's recent admittedly overdue update claimed?

I hope that my suspicions are unfounded for those that have stayed put , but at present I'm glad to be out, wished I sold years ago before the wall , but there you go hindsight is a great thing!

Tibbs

Please see from an excerpt of an old email and post - Share holders need to familiarise themselves with this

5 July 2014 :The profit share relates to a joint venture partner, ie the government, sits in the 50% owned subsidiary Sukari Gold Mines. The management board of this subsidiary has representatives of the government and an equal number from Centamin. All of the investment into the Sukari mine is audited, with Sukari Gold Mines very much being a part of this process. Similarly, all gold sales go through Sukari Gold Mines, where the operating surplus will be divided 50/50 between the government and Centamin, once the original capital has been repaid back to Centamin and its shareholders. The 3% royalty has been paid to the Egyptian Treasury ever since production started (this also goes through SGM).

The money that has been ploughed into Sukari, particularly the costs of Stage 4 (c.$350m) – this needs to be recouped before any of this operating surplus can be shared. This is not due to kick in until later this year, or possibly in Q1/Q2 next year. It is all a function of the ramp up in production and the gold price.

Centamin also advanced the country a few million dollars as a demonstration of their faith in this deal – this will also be recouped out of future operating surpluses due to the government).

The 50/50 deal is effectively a 50% tax on free cash flow.

The 50% DID not kick in until 2016, SO in 2015 it was 45%.

To counter this there is no VAT, no corporation tax, no other taxes to pay all beyond the above and the royalty, which on a blended rate compares reasonably well with other 1st world mining jurisdictions (like the US, Australia, Northern Europe etc).

Gsmudge,

On the contrary I have been concerned about the grade problems since they were first highlighted first in 2015 , then again in 2018 , the poorer the grades the harder it is to make a profit because all the extra operational work involved pushes up the AISC .

The golden years at Sukari problems were achieved by high grading , unfortunately this was glossed over and shareholders were unaware until the crack in the wall forced the admission by the previous management.

https://tinyurl.com/2e8m4pwz

https://tinyurl.com/yw4scpk4

So whilst Anglo may be getting Centamin for a bargain price in some respect it is the only offer so far and it may be to the good for those who stay in because Anglo as a multi mine operation can better cope with lower grades from one of its mines due to the economies of scale.

However I have no wish to hold shares listed off the UK market because this isnt convenient to me.

Question -The viability of the Sukari mine depends on the underground grades,?

Observation: - Open pit grades of 0.67 gst/Au seems very low - Barely a grain of rice amongst a ton of rock?

Sorry the comments in the previous post were from three of our LSE forum members, not the mining analyst whose observations are below-

Thu, 18 Jan at 17:18

These may well all be valid comments. The fact of the matter is that with such grade the open pit operation makes no to very little cash flow.

In my reports I have also always pointed out that the resource model is based on Multiple Indicator (“MI") Kriging and that I suspect that the assumed selectivity of distinguishing between ore and waste is not possible resulting in more blocks of waste being designated ore and send for processing.

I think that MI is a very dangerous method of grade estimation and usually overestimates grade. In practice the selectivity does not occur resulting in lower grade. There are a number of other examples (Moose River, Brucejack) where they had to find out the hard way.

Re QUARTERLY Report

for the three months ended 31 December 2023 (unaudited)

Analyst opinion

1.The open pit grade being lower arose as waste ore from the top of the Sukari Hill in stage 7 was reclassified and utilised as it contained some gold. As a result the stripping ratio in Q4 was lower at 5:1 instead of 6.7:1 as in previous quarters. The grade in the open pit should get higher in 2024 and hence probably why they have forecast a 20,000 increase in production. I believe the cut-off grade is 0.3g/tonne?

2. They were stripping waste rock and found it contained gold at very low grade - an unexpected bonus - thousands of tonnes of worthless rubble became pay dirt and went straight to the dump leach. It did bring down the average grade from the open pit but it was a good thing!

3.I had to have a look at Centamin's results myself to confirm such a low open pit grade.

Considering they probably wanted to finish the year on a positive note it's surprising they had no better open pit grades to draw upon to fluff up the results. But I see they did meet their target - almost to the ounce! Also noted the guided AISC for 2024 to be only marginally better than 2023 - I guess we now know low open pit grades could be a key reason.

I seem to recall a chart indicating elevated waste movement from 2025 and beyond - which gives even more credence to the idea of abandoning the open pit to focus on the more lucrative underground.

So many considerations -

What to do with the above ground workforce?

Maybe blast and drill contracts are already fixed?

Some holders will probably be oblivious to these considerations and happy as clowns (not to say there isn't reason to be positive!) Today is a win!

3 bear, you have to take into account that because of the low grades a lot of extra effort and expense is required, that is moving and processing more low quality ore to achieve the said guidance which pushes up the AISC.

325,000 oz isnt anything that special, at least 450,000 oz was more like the norm and there is the 50% profit share.

Tibbs

Hi Mike,

Fair comment and a good question, it's also worth considering as to why Barclay's didn't increase their holding when the share price was lower before Anglo bid?

Barrick have visited Sukari in the past, whether they would bid seems doubtful as like some of the other majors they don't like the original and existing T&C of the Sukari concession, if you recall this is the reason why most miners didn't invest in Eygpt in the past and why any new concessions are on more attractive terms.

An analyst I know did say that Anglo isnt a badly run company, so possibly Barclay's see more future potential with Centamin being absorbed into a much bigger outfit that offers the economy of scale which isnt just dependant upon the one Sukari operation that is still suffering the problems of inherent mediocre grades.

Considering the amount of money spent on Sukari by the present management the existing and projected guidance is nothing special and the despite all the introduced economy measures the AISC remain stubbornly high, although that is likely because of the extra effort involved in trying to make the best of low grade ore.

Let's face it , it seems the 'Bonanza grades" were wishful thinking , (possibly a publicity ploy to try and counteract a Liberum downgrade note at that time) also nothing much has happened in Egypt with the new concessions and the handling of Doropo has been pitifully slow, possibly mismanaged in many respects, or like pulling hens teeth!, whilst the other abandoned West African projects have just been a case of chucking staggering amounts of investors money down the lavatory!

Possibly Martin Horgan's sales pitch is running out of steam and the present Centamin BOD management are out of their depth, so they see the Anglo bid as a very welcome "Get out of jail free card" without them losing too much face!

If the Anglo bid is voted down then surely any confidence in the present lot is shot to bits and the present BOD with Martin Horgan should be sent down the yellow brick road!

Panmure Liberum regards AngloGold’s 163p offer as a decent premium to underlying value but it only includes 9.6p cash.

“Any competing bid will likely sweeten the cash component rather than offering significantly more, we believe”. https://tinyurl.com/2s3eds4f

Hi Mr Gnome, I agree with your opinion off the Centamin BOD, I have no confidence either!

Tibbs

Hi Mr Gnome,

Considering you confidence in the POG are you intending to hold Centamin and take the offer by Anglo should it get voted through?

Thank you Sotolo for your analysis, all the points you raise are valid and no doubt times have changed an awful lot, te fact is that Sukari suffers fro inherantly low grades which was glossed over with the tears of high grading until the inevitable a in the wall forced a very expensive reality check!

But despite the $4million clear up the AISC still remain stubbornly high whilst the output remains slightly better, although still disappointing and the dividends are little more than table scraps now!

Despite Martin Horgan's proclaimed 'Bonaza" grades they are nowhere apparent and unlikely to appear anytime soon if ever!

So the Sukarii operation now has work a lot harder with the mediocre grades available so likely the AISC aren't going to reduced that much anytime soon or if ever !

Could the reason that is that Martin Horgan and the were quick to accept the Anglo bid was because they realised that sooner or later they were going to have to admit that despite all the CAPEX and the slick presentations that the Sukari grades really aren't going to get any better any time soon and the mines viability is dependant upon the POG remaining where it is or higher!

If Anglo take over Sukari to be absorbed as part of its multi operations then possibly it may be easier for them to cope with the grade problems due to the economics of scale.

That said it would seem from Anglo's share price that the proposed take over hasn't so far impressed!

Tibbs

Since selling out of Centamin I haven't bought anything because quite simply it's difficult to tell who to believe certainly in the mining industry as it seems that the vast majority of CEO's and BOD in general have scant regard for their retail shareholders treat them like fools, or gullible cash cows whom they can milk and lead by the nose by offering them over optimistic promises that they usually fail to deliver on, the only guarantees are the never ending excuses and reasons for non delivery because that's mining and to be expected and retail shareholders couldn't possibly understand as to why the good times have moved just that bit further away, but maybe they are just around the next corner, if only share holders will be patient and put in a bit more cash whilst the board awards themselves huge bonus share awards for basically not doing much more than they are paid for anyway, or in some cases quite a bit less!

Tibbs

Hi Sotolo and everyone else,

I haven't bought anything because quite simply it's difficult to tell who to believe certainly in the mining industry as it seems that the vast majority of CEO's and BOD in general have scant regard for their retail shareholders but treat them like fools, or gullible cash cows whom they can milk and lead by the nose by offering them over optimistic promises that they usually fail to deliver on, the only guarantees are the never ending excuses and reasons for non delivery because that's mining and to be expected and retail shareholders couldn't possibly understand as to why the good times have moved just that bit further away, but maybe they are just around the next corner, if only share holders will be patient and put in a bit more cash whilst the board awards themselves huge bonus share awards for basically not doing much more n fact likely a bit less than what they are paid for anyway!

Tibbs

I agree Mr Bond, certainly the case if the deal goes through , although I get the impression that Martin Horgan isnt a great fan of shareholders dividends as we have become accustomed to in the past.