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3 bear you are right it is the sterling price of gold that matters to our shares, so gold is down only 5% from the high at £1550 to £1480, however the problem is costs which in sterling will have soared, aisc will have doubled from around £600 or so only 2 or 3 years ago (2020 was forecast $895) to around £1200 reducing profit per ounce from near £1000 to around £250 and falling. hence share price fall though not yet as far as profits, presumably in hope of recovery, so all eyes on the aisc coming down as expected in next results, despite inflation.
Finder it doesn’t really produce a high amount of silver any more an with Pallancata likely to close next year silver will be quite minor. Als o the costs aren’t “equally relative to the market”. They are higher. Hence the cheap price.
Niklol the share price will either reach zero if metals tumble and it faces years of loss making/government closes mines, or return to £1.08 which I think is more likely, however £1.08 will be worth less given inflation. I still think the market thinks this is a silver miner and as silver is an industrial metal that will be hit heavily by the coming depression values it as such rather than what it is, a gold miner which might be saved if gold turns in time
Mike thanks, hope you are right! Anyone her notice slp tumbling the past couple of days, is that catch up after their share buyback, that has been propping up the pric, ends; finally worrying about falling PGM prices to which they are entirely exposed or something more ominous?
So it is your fault Niklol…. But then who was responsible for the fall from 320 to 107 where you bought? Niklol if you thought it was a good buy at 107 hand on and don’t worry but as I and other have suggested, I wouldn’t buy more till it turns up and goes through your buy price! Remember catching falling knives is a most painful game
That would give a forward e of around 17, hardly low if you (like I) expect profits to fall further in this cycle pushed down by increased costs and taxes, the hedge ending and Pallancata having to close, and fewer ounces again. Hope of course that I am utterly wrong, madly holding on on the basis that some rabbit will pop out of a hat, oh and I just saw a pig fly by. However I do have to say our management got couple of things very right, Edouardo Hochschild selling a large chunk of shares at over double this price, and then offloading Arcat(at a high cost to us as we I for one ended up paying double their value in tax because of their uncaring mess of shareholders (other)), just before its permits failed, so they may be wilier than I think, just wish it also applied to mining, well let’s see
Freedom, inflation should have hit the aisc hard so say $300 profit a gold ounce reduced by hefty tax so around £30m profit, anyway with my very rudimentary maths and of course going down as metal prices fall and costs and tax rise further.
Freedom I think Emma takes half the profit, we only get the other half then pay a further 2.5% royalty on it. However this is not so much worse than the tax regimes in some other countries, but of course did hit our net profits hard as it kicked in and ratcheted up to the full 50%, hence also not helping the share price over the last few years.
Thanks Mike, however a quick question, you say profits go near zero with PGM basket at $2000 and chrome at $200, yet in a slightly earlier post you report management predicting 2023-2034 PGM basket $1630-1666/oz, and chrome $145-150/tonne. Are they and you predicting large losses, or have you got the break even price much too high even with inflation? Thanks
Freedom, yes indeed however a third of our silver - the expensive Pallancata output - is sensibly hedged around $26 till the end of next year. If silver is at this price or lower then, Pallancata will probably have to close as Arcata did a few years ago. However worth remembering we are mainly a gold mine. If costs become $1500 as I expect with inflation at least, and gold were to stay around $1800 we would still be making probably £30k a year, which would give a sensible share price below where we are. But if gold and silver were to rise….
Two thoughts: Cey is now under 70p in last year’s money, given inflation, sadly. And will Andrew MaGuire ever be right forecasting again today a large scale revaluation of gold and silver. By the law of averages and random events surely he must be right one day, just hope it is in any of our lifetimes, if not mine.
earnings per share will not be as high as those estimates, these estimates didn't take account of exceptional rising costs and falling sales price heavily denting profits, I think we will be luck if they are half that - assuming things don't get worse. eps was 3c in 2020, 15c only in the very good 2021. So if we actually get 5c div won't be bad at all. historical y we have got 3 or 4 c, maybe 6.
Rob, much as he might like to I sadly can’t see any way of Brad getting the share price up enough for the warrants to be exercised? What can he do? This is an exploration stock with a long time till any gold might be mined. Sadly in a rising interest rate environment such distant jam tomorrow companies are marked down further as rates rise more. Poor Brad, poorer us.
No one else here? I have waited over a week to reply. Sorry Visitor I thought I was very clear that I think next year’s PE is very hard to calculate as no one knows next year’s PGM (and chrome) prices. However I have been suggesting they will fall (as they have begun to) and believe if the world enters recession they will continue to. In a bear market people see prices falling and assume PE’s will too, just as the US S&P PE has fallen over 20%, however they forget that earnings will fall too, pushing PEs up again unless prices fall further. I too am holding on but expect THS to a pound at least and even at that price with considerably lower earnings a higher PE next year. Let us all hope I am wrong, but each week shows lower metal prices and thus much lower profits.
Gold only 3% off its sterling all time high, of course needs to make up about 12% inflation since then, so about 15% off high so IF Cey got costs back to just 15% of where they were, and production back where it was profits would only be down 50% from when gold was at all time high, so share price should be back up above a pound, so come in Centamin we are waiting for the promised lower costs and extra ounces afte this crazy two years
Mike thanks for your kind words and thoughtful analysis, this is such a lovely and respectful board. Visitor, thanks too, however the much appreciated detailed sums you do with past and current figures dont really apply looking beyond this year’s figures, that are happily over half baked in, as no one can calculate next year’s profit or this PE without making a big assumption about next year’s prices. Looking forward to the next year the biggest thing affecting us will probably be PGM and chrome prices, (even more than higher costs), one can only shoot from the hip taking a macro view on these. If a recession were to halve this year’s average price, which is perfectly possible, then profits might quarter. On the other hand if inflation put them up 50% profits might double. I admire your detailed analysis of where profits would be at these prices, and thank you for it, most encouraging as long as next year prices stay the same, but my view is that the current fall will continue for now as rates rise, so this year’s profits will be a bit lower than you expect and next year our PE might be considerably higher (or share price lower), but as we know even the experts have very little prescience.
Mike, sad that I posted less than two working says ago how amazing THS holding up in light of much reduced basket, and that the share price has immediately fallen over 10% .....but I didn't sell. Story of my life is posting when a fall is coming, as also often on Centamin, and never being able to bring myself to do so, I imagine this will near 100 again relatively soon but I am still not selling, hope others are wiser. I remain a long term holder tho expect either PE will double to 8 as profit falls or price will fall to keep it the same, but will still get a decent dividend and hopefully the tightening will end before the electric takeoff stops PGMs picking up with the economy, so will come good. I think you are right Mike that this will fall less than some investments but a fall is still a fall and while miners benefit form inflation they certainly don't from recession; always very much appreciate your wisdom
Chas. Sadly you are looking in the rearview mirror, with gold at these sorts of prices and falling, and costs they are even if they come down a bit, the dividend is likely to be substantially lower next year, hence a lower share price in my humble opinion tho should still be a decent yield on a much lower share price than previously