Sent to Cey IR & PR6 Jul 2018 13:15
I appreciate that you may not be aware of this article by Kees Decker, it is the one I referred to yesterday when asking the question concerning the sale of shares last year by Josf El-Raghy.
I understand that when Kess Decker published this article his findings and conclusions were challenged by Centamin as being unsound and he later stated that there were some errors in the information he had used.
However in 2018 it would seem that the 2015 article is surprisingly accurate and predicted the very situation in which the company and share holders find themselves now.
Many share holders may now feel that the Centamin management may not have not behaved as honourably or professionally as they should have done and seem to have been gilding the lily to investors in some respects.
I realise that the most recent RNS alerted investors of a reduction in guidance in Q2, but in reality Centamin knew all about some of the grade problems they were going to encounter when 2018 Q1 results were announced and yet Andrew Pardey still stated that 580.000 oz would be achieved this year,
True it was explained to me by IR that Andrew Pardey did flag up potential grade problems, but this was well buried in the report detail so as only the eye of those that realised the importance of such information would find it.
(Notification of major potential problems should be bullet pointed and flagged up on the first page with along with all the good stuff that attracts investors such as predicted 580.000 oz)
Centamin has admitted on numerous times running plant at over capacity obviously to push up production, but professional management should realise that running plant beyond reasonable operating tolerance is not good practice and can only be done for so long before it fails, as happened with the LHDR.
So it would appear that Kees Decker was hitting quite a few nails on the head when he originally published his article.
Yours Sincerely
The report of Kees Decker
Management has put a gloss over this in their latest 5-year production plan, artificially holding down the strip ratio and assuming continuation of underground mining at a very high level,
https://seekingalpha.com/article/3695246-centamin-get-going-good
Summary
The positive factors supporting the historical performance will soon come to an end.
Management's 5-year plan sacrifices long-term future.
Open-pit reserves need a much better gold price to be economical.
Executive Summary
This valuation is based on a cash flow model which uses the latest 5-year production plan of Centamin (LSE: CEY) (OTCPK:CELTF), combined with the long-term schedule in the 2015 feasibility study, to deplete the reserves of material destined to be treated in the Carbon-in-Leach (CIL) plant of the Sukari mine at a rate of approximately 11 million tonnes per annum. Using the gold price as per 17 November 2015 of US$1,070/oz, a net present value at a discount rate of 5% of minus US$89.2 million was arri
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