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Bend over backwards to accommodate the overspending by Mr Horgan & team
the claim being there were no cost effective alternatives to move the waste other than by contractor , becuase somehow Centamin has no experience with such procedures
you bunch of hypocrites - Centamin has a decade of experience doing the exact same waste removing procedure - but you will not acknowledge this because it would make things uncomfortable
also, you claim you know Capital can manage the equipment leases better , the costs of maintaining the fleet better and so forth - so that implies Centamin doesn't manage it's own earth moving fleet as efficiently - you bunch of hypocrites - pick one - either Mr Horgan is doing the best at managing costs or Capital is -
the excess cost to Centamin shareholders is exactly equal to the excess profit Capital has been enjoying for nearly three years now - it is in the magnitude of $100 million plus - so no, hypocrites - it was not in Centamin shareholder's best interest to gift Capital the untendered, un-PFS-ed , un-cost-efficient contract
but go ahead and continue to claim it was - your dreamland of misinformation is amusing
It is simple Cowichan, it has been established that the previous management were incompetent, evil & fraudulent (despite their accomplishments) therefore the new management must be beyond reproach & unquestionable.
It is similar logic to the heavily supported orange man was bad therefore a senile puppet who is pushed to remember his own name is a good president argument.
Some people simply choose to blind themselves from common sense, the Kool Aid is just too tasty 😋
OK I am not sure where you get the information that the contract wasn't tendered other than by Capital.
Are you aware given that you have the information that I don't have what the cost per tonne or cubic metre was for the total contract period?
Rebess where do you get the information that the equipment was leased because I very much doubt this to be the case given the cross border nature of such a transaction?
Yes Centamin know how to move waste material and I haven't said that Capital or any other contractor know better or that Centamin don't know how to move waste.
What I am saying is that Centamin don't have enough equipment to move what is an abnormal amount of waste over a relatively short period of time (although feels like an eternity) and maintain production and the normal mining waste that comes with mining in an open pit.
I have already said that I am not happy with the SP being halved BUT even though I have many years experience having visited and discussed material movement with senior managers in large and small mining concerns, also discussed the predicament at Sukari with current mining and equipment professionals, can't come up with an alternative solution other than a major cut back/waste material blitz.
So given the waste needs to be removed the question is do it yourself or get someone else to do it.
Horgan has already answered that question and basically it is doing it themselves wasn't cost effective as at the end of the 4 years the equipment would be owned by EMRA not Centamin/Pharoah Gold. I don't know the detail of the EMRA/Pharoah Gold contract but if we accept that Centamin doing it themselves over 4 years then writing down machines over 4 years becomes way more expensive than the depreciation that would normally apply to such equipment.
So it isn't that Centamin doesn't know how to move waste of course they know how to move waste but in this instance they can't use the existing valuable resource of equipment and people to move the abnormal waste AND maintain mining.
So Cowichan rather than calling us names for raising questions for debate which is what this forum is extremely good at, please tell me given that you are far better informed than others on this board what do you say should have been the alternative to using a contractor to remove the abnormal waste?
At no time have I said that Capital know better or can manage equipment better than Centamin what I said was to achieve 30% ROI they must be very efficient and have minimal downtime over the period reported but suggest the next reporting period might not be so rosy and when the contract ends they could well take a hit to the bottom line when the demobilisation costs are accounted for.
Spoonington, Not praising or criticizing anyone just asking the questions behind the criticism hopefully using logic and common sense to discuss an issue.
Cowichan, I would also like to pick up on misinformation as you claim a loss of $100 plus million due to excessive profits. Given the contract awarded to Capital in January 2021 was for Both Waste Removal and a 15 month extension to the Drill and Blast contract valued at between US dollars 235 and 260 million, I am confused as to how the profit equates to $100 million.
The contract is to remove 120 million tonnes of waste over 4 years and therefore we are looking at about $2 per tonne, I say about because I don't know the split between waste and drill and blast contract values.
Is $2 per tonne expensive in the grand scheme of things too right it is but Is it 30% more expensive compared to doing it yourself well doesn't appear to be when you look at Centamin mining costs over the years.
You also say Capital enjoying for over nearly 3 years when contract was awarded January 2021 and then needed to mobilise.
When I was looking at costs per tonne and I am going back over 10 years a rule of thumb was about $1.50 to $1.80 so we are now talking just over 30% increase on the lower figure so is this now about right, don't know but would certainly add that doesn't sound like anyone is tearing the a..e out of the deal?
Spoonington the good and bad question how good would the previous guys have looked if they had moved the 120 million tonnes of waste when they were producing record ounces I would suggest about $200 million less good.
Hi Dasut,
Thank you for an excellent explanation, also agree with your last paragraph !
Tibbs I am not sure Cowichan will agree but feel it is important to be constructive with criticism but believe me I am livid that the necessary evil is hurting Centamin's bottom line and SP, after all I am a long term investor.
I certainly welcome anyone constructively questioning my summary and other contributions without saying that the contributor's are stupid or hypocrites.
If someone genuinely feels there is a better alternative then we should all listen and discuss and respond.
I also feel it would be helpful for one of the accountants on the board to explain the difference between ROI and profit as an accountant I am sure will be better placed to explain than me.
ROI is return on investment, from original cost, so if you inveated 10000 and finished at 100000 including in this case less any costs to your investment / ROI would be 90% higher.
This could be over several years ,wheras profit is annually.
So it is slightly different in that respect.
Its many years since I was in accountancy.To many to mention.
Mr Bond take a look at Capital Mining's (Capdrill.com) Financial's for 2021 and 2022 on their web site because if they are bringing in abnormally high profits I can't see them in fact 2022 is way down on 2021 albeit not bad numbers.
As I read ROI if I buy a house for £200,000 and rent it out for £1,000 per month my ROI for the year is £12,000 or 6% per annum and over 4 years 24%. This doesn't however cover the costs of maintenance, cost of finance and tax or any other costs, so nice that there is a ROI but this isn't profit.
Yes you would need to adjust your apparent earnings by reducing it by all your maintainance costs.
Capitol gains tax if you sell your property after 20 years is similar so its important to keep a full record of every improvement or other expenses over the years.
That reduces your liability,
And also take into account inflation.
Gets complex, so best a sypathetic accountnt,many are not.
Mr Bond I am not buying to rent just using it as an example to understand Capital's waste contract who is said to be earning 30% ROI at Sukari for their waste contract and a figure of $100 plus million earning that Capital are making on a $2 per tonne waste contract which doesn't compute in my calculations.
So if Capital has a contract at $240 million and they have a ROI of 30% then they are achieving approx $72 million divided by 4 as it is a 4 year contract so an annual return of $18 million before costs.
Profit margin vs. return on investment (ROI)
When trying to determine how much profit you stand to make on the sale of a listing, there are two main methods for calculating profit: Profit Margin and Return on Investment (or ROI).
https://help.informed.co/en/articles/1651384-profit-margin-vs-return-on-investment-roi
Return on investment and profit margin sounds like they are the same thing. Is this the case or are they different? I know that ROI deals with the investment value of a product, but is this not the same as when you calculate your profit margin?
https://beprofit.co/a/community/business-metrics/are-roi-and-profit-margin-the-same-thing
Tibbs yes I understand just emphasising a point when it comes to questioning the accusation that Centamin has gifted Capital a contract that is lining the pockets of Capital's shareholders with over $100 million of cash at the expense of us Centamin shareholders.
It means Capital would have to move 120 million tonnes for $140 million or $1.20 per tonne of waste
I don't understand Cowichan's motive for claiming that we are hypocrites working off misinformation unless of course he does have other more accurate information.
Hi Dasut,
Fair comments!
As you will have gathered like you I am still livid that we are where we are because of the failure by those who know better to carry on bad mining practice by digging ever deeper into a hole with no regard for the consequences!
Tibbs yes but hopefully we are getting back on track and the pain will stop once the waste contract is completed. Although I would hope the mine is already benefitting from the waste that has already been moved with flexibility. The problem with the waste contract is it impacts on costs regardless of how it is accounted for. Every truck load costs approximately $260 for no return, whereas every truck load carrying ore contributes approximately 130 grammes of gold.
Hi Dasut,
Thank you for your excellent explanation based on personal professional experience, as always greatly appreciated!
Tibbs
and the thing is, if centamin were doing the waste removal themselves, then there would be less gold getting mined. their own trucks and workforce could not be in two places, doing two things at the same time.
i'm guessing that they should be getting on top of the waste removal now and that things should be starting to open up and give a bit more flexibility now? in another 6 months, i suppose things will be looking a lot better as they will be nearly 3 years into the 4 year contract.
also with the price of gold being higher recently, i'm still hoping that the dividends will start to go up a bit after this one. it will help to ease the pain of the last few years. i think the estimate was with gold being at $1850--------and hopefully we will stay at least $100 above that and maybe a bit more. i think prof an sotolo did the *** packet calculations and with the price being around where it is now, another 2p on the dividend should be possible, and encouraged as it would reward us lth a bit and restore some confidence in the share.
Paul, a few phrases from your latest comments stand out :
i'm guessing
i suppose
i'm still hoping
and hopefully
that used to be me
the thing is Capital needed to hire the entire crew working the waste moving contract -
let's not perpetuate the lie that anything Capital is now doing would have been more difficult, more costly or more lengthy should Centamin have chosen to source the workers & equipment in-house rather than pay a 3rd party to do the same
Cowichan you keep criticizing what others say.
Tell us what you believe should have been done hopefully with some quantifiable numbers and facts so that we can understand your logic.
What information do you have that discredits the information that has been provided by Centamin and also what appears on Capital's web site?
DASUT
nothing needs to be discredited - Centamin has not provided the cost comparison of hiring a 3rd party vs doing the job themselves - no PFS , nothing - so why not ask them to provide those details at the AGM ?
when it was decided to switch from contractor to owner operator underground the happy coincidence was that such a move saved money - does that surprise anyone? Given the infrastructure Centamin has existing at Sukari it's obviously cheaper to do the job in-house for the simple reason the 3rd party needs to make a profit
in fact, the sweetheart deal Centamin made with Capital is full of free perks - which add to the ability of Capital to make an ever expanding profit at the expense of Centamin shareholders
why not ask these questions at this week's AGM :
1) who pays for the housing/feeding of Capital 'waste moving contract' employees living on site in Centamin's accommodations ?
without Centamin's existing facilities it would be difficult and much more expensive (if not impossible) for Capital to provide
2) who pays for the fuel services (storage tanks belong to Centamin) and fresh water supply that's used constantly to keep the dust controlled along route out of the pit ?
without this infrastructure and raw materials provided it would be cost prohibitive for a 3rd party contractor to operate
3) who provides the import and safe storage explosives ?
ditto
the list goes on and on - all this existing infrastructure use cost Centamin shareholders but since a PFS doesn't exist - shareholders cannot see the full picture
as far as Capital not making a profit ? it's not because of Centamin - try reading their actual financials :
https://www.capdrill.com/media/investors/Presentations/CAPD-2023-AGM-Presentation-May-0003.pdf
https://www.capdrill.com/media/home/Capital-Limited_Annual-Report_Final-signed.pdf
a summary
2021 dividend 3.6cps
2022 dividend 3.9cps
2021 revenue $ 227 million
2022 revenue $ 290 million
2023 revenue $ 320 to 340 million (guidance)
EBITDA 2021 $ 73.3 million
EBITDA 2022 $ 90.1 million
2023 EBITDA & dividend will follow guided revenues UP
the Sukari waste moving contract saved Capital from a dismal showing on their 'equity based' investments - where they take equity in a project in lieu of cash payment for work done where they lost money on paper - a write-off to profits - it's all in the Capital annual report page 25 above
Well said Dasut.
Paul do not be put of by someone that Centamin customer relations ,no longer answer.
Someone who cannot stand being criticiced, themselves and only ansewers by insults or trying to put you down .
I will listen and make my mind up,and of course all people have their right to voice their opinions, but based on facts,not just supposition.
As for the trivial costs of Bunkerage of fual and explosives etc. possibly food from a canteen
Including what is descibed as dust control by fresh water, thats ridiculous ,its sea water pumped from MarsaAlam, peanuts in the grand plan.
Many if not some of Capital best workforce may be in the future employed directly by Centamin, that saves a lot of time,having had a trial period to assess their suitability.
Cowichan
When I have provided an on site contract the costs of things like accommodation, food, fuel, lube and any other expenses such as workshops, parts storage etc are all agreed at the time of tendering and or final negotiation.
At the end of each given period contractors are billed for such costs, believe me there's no such thing as a free lunch, although not sure why it worries you so much because added costs inflicted on the contractor encourage higher costs plus a margin to the customer.
The question as to why Centamin didn't do the waste removal inhouse was asked at the last retail shareholder presentation and phone in and the simple answer was the write down over 4 years was too expensive.
Explosives will have to be imported by the license holder and I would suggest that would be Centamin but the experts will likely be whoever is awarded the Drill and blast contract and in this instance it will be Capital. So not sure I understand the question, why charge for the explosives when the contractor is carrying out contract on your behalf only to be charged back with a margin?
The underground contract or inhouse decision would have been different because the underground contract was at an end so renew or go it alone? Length or life of mine says there are long term savings, if there was only 4 years to run doubt that owner mining would have been considered.
I have never said that Capital aren't making a profit of course they are making a profit BUT at $2 per tonne there is no way they can possibly be making what you claim is over $100 million on approximately $240 million contract.
The advantage Capital had over all other contractors is that they actually have the majority of the infrastructure and management/supervisors already in place given the length of time that they have been on site.
For the well known mining contractors to start afresh in what would to each of them be a new market puts them all at a disadvantage from the standpoint of set up costs and timelines. Also wouldn't surprise me if the larger contractors declined to bid given the short duration of the contract.
Do I personally need to see the detailed costs to justify $2 per tonne well no I don't because I know this isn't a rip off number and it will need to be worked at to make a good return.