focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Leaving my personal opinion aside a summary is given the 2017 end of year report.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed down a judgment in relation to a claim brought by, amongst others, an independent member of a previous parliament, in which he argued for the nullification of the agreement that confers on the group rights
to operate in Egypt. This agreement, the Concession Agreement, was entered into between the Arab Republic of Egypt, the Egyptian Mineral Resources Authority and Centamin’s wholly-owned subsidiary Pharaoh Gold Mines, and was approved by the People’s Assembly as Law 222 of 1994.
In summary that judgment states that, although the Concession Agreement itself remains valid and in force, insufficient evidence had been submitted to Court in order to demonstrate that the 160km2 exploitation lease between PGM and EMRA had received approval from the relevant Minister as required by the terms of the Concession Agreement. Accordingly, the Court found that the exploitation lease in respect of the area of 160km2 was not valid although it stated that there was in existence such a lease in respect of an area of 3km2.
Centamin, however, is in possession of the executed original lease documentation which clearly shows that the 160km2 exploitation lease was approved by the Minister of Petroleum and Mineral Resources. It appears that an executed original document was not supplied to the Court in the first instance.
Upon notification of the judgment the group took various steps to protect its ability to continue to operate the mine at Sukari. These included lodging a formal appeal before the Supreme Administrative Court on 26 November 2012. In addition, in conjunction with the formal appeal the group applied to the Supreme Administrative Court to suspend the initial decision until such time as the court was able to consider and rule on the merits of the appeal. On 20 March 2013 the Court upheld this application thus suspending the initial decision and providing assurance that normal operations would be able to continue whilst the appeal process was under way.
EMRA lodged its own appeal in relation to this matter on 27 November 2012, the day after the Company’s appeal was lodged, supporting the group’s view in this matter. Furthermore, in late December 2012, the Minister of Petroleum lodged a supporting appeal and shortly thereafter publicly indicated that, in his view, the terms of the Concession Agreement were fair and that the exploitation lease was valid.
The Minister of Petroleum also expressed support for the investment and expertise that Centamin brings to the country. The Company believes this demonstrates the government’s commitment to the group’s investment at Sukari and the government’s desire to stimulate further investment in the Egyptian mining industry.
The Supreme Administrative Court has stayed the Concession Agreement appeal until the Supreme Constitutional Court has
Thanks for posting the link again Chaspb.
I had seen the presentation but had not had time to read it until now.
There are some interesting aspects with regard to dividends, cash retention and forward development such as:
Page 21 unchanged absolute annual costs so +/- in ounces produced has a proportional impact on AISC.
Page 23 dividend policy:
➢ Minimum of 30% of sustaining free cash flow before growth capital.
➢ Cash in excess of $250-300m not needed for growth will be returned.
➢ Total 2017 full-year dividend represents 100% of free cash flow.
Pages 27 Doropo, ABC, Baties West Projects are still a pipe dream but consuming cash.
Page 33 Return cash to shareholders.
I have not mentioned forward development of Sukhari as that should be a given and is represented by oz produced a situation covered by the disastrous May update.
So the big question is what does this mean for the half / full year dividends and will Centamin return some of the surplus cash (GBP 426m - 300m) to shareholders?
Hi Siko and welcome back. It is interesting to compare the info from the CC File (thanks for posting) with the position taken by CEY Management who may be hiding thier heads in the sand re the possible outcome. Management do not state why they think they have a strong case other than "legall advice" and (unlike the Concession Agreeemnt Court Case) do not cite any law or clear legal basis. Re the CEY Management position I summarise from item 18 on page of the 31-Mar-18 Q1 Results a) In January 2012 Chevron informed CEY DFO (Diesel Fuel Oil) would be suppllied to the mine at Sukari at international prices instead of at local subsidised prices. b) In November 2012, Chevron demanded repayment of fuel subsidies for DFO suplpied from late 2009 through to January 2012, the claim is EGP403 million (approx US$22.9 million). It seems Chevron were forced into a) and b) by EGPC who in turn were informed by the Department of the Council of State that companies operating in the gold mining sector in Egypt were not entitled to DFO subsidies. c) In June 2012 CEY lodged an appeal against EGPC�s decision in the Administrative Courts. d) As a practical measure has paid the full "international price" for fuel since January 2012 however no provision has been made by CEY in the company accounts for the USD 22 million. CEY management believes that, notwithstanding an unfavourable State Commissioner�s report, the prospects of a court finding in its favour in relation to this matter remain very strong.
Hi Sotolo I offloaded 50% at GBP1:38 this morning. iii wouldn't accept a single large order so did it in five or six smaller lots. Now looking at the point to buy back in. Thought about offloading earlier in the week when the SP dropped through the 10 day SMA but I am too damned sentimental about this share. Good look to all and keep the faith.
Revised 2018 Outlook As a result of persisting low grades from the transitional zone in the open pit, combined with lower development grade from underground, production guidance for 2018 from Sukari has been revised to between 505,000 and 515,000 ounces, at a cash cost of production of US$625 to US$640 per ounce produced and an all-in-sustaining cost of US$875 to US$890 per ounces sold. The updated mine plan forecasts a weaker Q2 and strong Q3 and Q4 production profile. http://www.centamin.com/investors/regulatory-news
Well done Sparkle we know to not include second shipments in a week. To say I am disapointed is an understatement. Year on Year is not a true comparision. Not read the report yet but hope there is a valid explanation for the big drop form Q4 2017 to Q1 2018.
Sparkle and Fizz I have checked against the shipments list you so kindly posted and think the figures for actual shipments of dore in Q1 are: 08-Jan-18 467.00 15-Jan-18 403.00 17-Jan-18 291.00 22-Jan-18 385.00 26-Jan-18 255.00 29-Jan-18 324.00 05-Feb-18 385.0012-Feb-18 392.00 19-Feb-18 396.00 21-Feb-18 350.00 26-Feb-18 403.00 05-Mar-18 384.00 12-Mar-18 396.00 19-Mar-18 159.00 26-Mar-18 392.00 31-Mar-18 245.00 This is a total of KG 5,627 shipped So at 86% purity 5,627kg x .86 = 4,839.22kg x 32.1507 = 155,584 troy ounces So at 86% purity 5,627kg x .83.2 = 4,681.66 kg x 32.1507 = 150,519 troy ounces Both quantities of troy oz are close to and above above CEY prorate guidance of 580,000 oz �4 = 145,000 per quarter. If the second in the week shipments of 291kg shipped on 17-Jan, 255kg shipped on 26-Jan and 350kg on 21-Feb, a total of 896 kg, are stripped out the total kg dore shipped for Q1 2018 it would be as you say 4,731 kg and it is good of you to highlight the possibility of a lower figure for shipments. However there were second shipments when Siko was posting so it may not be necessary to strip them out. The data is what it is and is up to BMs to do their own research, analysis and assessments. Of course Alex is correct when she said the shipment figures are not accurate, however for me the data is good because of two things. Firstly it gives early info on the shipments trend and secondly over time a view on the purity shipped. Plus when compared with the actual shipped per quarter a view on the accuracy of the early shipment data. Yes there may be uncertainty over second shipments in a week but it is up to BMs to make their own decisions on that. There were second shipments in a week when Siko was posting so to delete all the second shipments above would be a worst case. We don�t have long now to see the actual Q1 2018 preliminary production results and it will be interesting to compare the actual oz produced with the data we have. Whatever you do please do not stop posting the shipments. It is really good information and is very much appreciated. If I can help to take some of the load please let me know how you find the info. I have tried and not succeeded. Also work commitments can and do sometimes get in the way. Fingers crossed for Monday 9 April.
2018 Q1 Preliminary production results will be announced on 9-Apr-18 http://www.centamin.com/investors/financial-calendar/2018
By my reckoning (DYOR) In Q1 2018 CEY seem to have shipped 4,831 kg of dor� bars. This does not include the 405 kg shipped on 01-Jan-18 which is probably included in Q4 2017 total. I read somewhere, may be right or wrong, that shipments within 5 days of the end of a month are counted in the previous month total. The above 2018 Q1 total shipped does include the 245 kg shipment kindly advised by Sparkle and Fizz yesterday. From the above, actual gold ounces for 2018 Q1 may be in the range of 150,519 troy oz (83.2% purity) to 155,584 troy oz (86% purity) or more or less depending on the purity. 86% has been used previously by BMs but I did a check on 2017 Q4 and that seems to be 83.2 based on CEY reported au oz versus my log of shipments which may or may not be correct. So where does this leave us: 2017 Q4 au oz = 154,298 2016 Q1 au oz = 109,187 2018 guidance = 145,000 per quarter (even spread). It will be interesting to see the market�s take on this. A big increase on Q1 2017, a 4% to 7% increase on 2018 guidance or just maintaining 2017 Q4 production. It would be interesting to see Sotolo's take on current situation on cash flow and profitability
Excellent approach Sparkle. I for one am most grateful for you taking the time and effort to keep us informed of shipments. You post the links so we can we all can interpret the data as to double shipments or not. Again many thanks for posting the information.