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My highly biased opinion to the thread:
"This looks good to me - they are right on top of operational detail..."
Sure, except we are 3 years into a 4 year contract. Perhaps looking to discover inefficiencies/errors in reporting could have been done sooner? At least that is how a Centamin shareholder might look at the situation. But , yes - as a Capital shareholder, anything that might extend the contract beyond 4 years would be welcome. And let's not forget inflated figures would cost Centamin and benefit Capital with bonuses.
"Luckily Centamin aren't letting them get away with it"
Again, is this a case of closing the barn door after the horses get out? Also, it's more likely Capital initiated this trial - as it only involves Capital equipment, contract drivers, managers and so forth - so if they aren't delivering, in the end one would think it could reflect badly on Capital.
Then again it's possible EMRA is becoming more interested in how monies are spent - they have equal right to question and demand proof of such an expensive project's a) necessity b) delivery c) reimbursement (or denial)
Fair comments Cowichan,
This seems to confirm yet again that using contractors rather than keeping operations (In House) more often than not more costly .
The new management acknowledged three years ago that a contributing factor of the present Centamin woes were due to failing to have sufficient oversight of the contractors in the underground operations which were considerably more costly than if kept inhouse.
So to a shareholder it surprising and of some concern if as first impression suggest from these disclosures that the new Centamin BOD and on-site management may have been over complacent even "Sloppy" in their oversight and auditing of the Sukari waste clearance contactor.
From the information available if true it seems that the alleged contract and operational and auditing inefficiencies have been to the financial detriment of the Centamin shareholders whilst offering some very considerable financial benefit to Capital share holders .
Many civil engineering contracts include penalty clauses which require the contactor to payback or compensate the client for failure to abide by certain contractual obligations and so I wonder if such a clause is in place and Centamin will be able to invoke such a clause?
if not then how are shareholders to be compensated for this alleged overcharging by Capital?
If you think the management team are incompetent- what makes you think doing in house wouldn’t have been a disaster? Surely if the amount of work needing doing was exceptional, why would anyone do this in house and be limbered with all the on going costs of decommissioning much of the equipment post this? Also, if rented, what if took longer? Could have cost way more not to mention the disaster if they mucked it up…
No one on TV is forum has all the inside info to make the judgement, no matter what they think.
Of course, it’s good to debate though- no matter how I’ll informed due to guesswork
… ill informed.. I mean
In the case of the Sukari waste clearance start time was a critical factor so it made sense to use a known contactor who already had the expertise and importantly a large proportion of the specialist plant easily available.
However see below the advice from a highly experienced mining analyst and consultant on the subject-
In general using contractors for mining is almost always a bad idea!
Only when there is a short term mining project such as the pushback at the open pit there, you could argue to use contractors. It is not worthwhile and efficient to equip and staff up for such a project.
When you have a longer term mining project you should use an owner miner approach for the following reasons:
Mining is the core activity of any mining business.
If you outsource this activity you never build up an in-house expertise.
It would be similar for an information business to outsource design of information system and programming activities.
Also It is more expensive as the contractor will build-in a profit margin.
Should they miscalculate and go under, you will have to take over at short notice, which results in a shamble, loss of revenue, appointing another contractor which knows it has you by the balls, or you have to equip and staff up quickly, which in practice is impossible!
There is a loss of control in directing mining activities having to work through another party.
I didn't say the management team were incompetent, I said from the disclosures they may have been overly complacent or sloppy in their oversight of the contractor.
Long term holders are all too aware of the mistakes of the past and the need to be vigilant in holding the company to account and there is nothing to lose and possibly much to gain in many respects by shareholders asking the management for some explanation.
Only those on the inside know what’s going on-
And no one on this forum knows…